NAM’s ITC Testimony on TPP: Reader’s Digest Version

By January 11, 2016Shopfloor Policy, Trade

This week, the International Trade Commission (ITC) will begin a three-day-long hearing focusing on the economic impact of the Trans-Pacific Partnership (TPP). The TPP is the most complex free trade agreement the United States has negotiated since the Uruguay Round Agreements establishing the World Trade Organization. Once implemented, the TPP will provide an enormous boost to manufacturers’ business opportunities in the Asia-Pacific.

The NAM will testify on the second day of the hearing and submitted pre-hearing testimony last Friday, which is available here. The testimony reviews the economic and trade landscape among the TPP countries and key TPP outcomes. For those looking for an overview of the testimony, look no further than the summary below:

Introduction: NAM’s Position
The NAM has endorsed the TPP. Manufacturers believe the agreement will open markets and put our sector in a much stronger position to compete in the important and growing Asia-Pacific region. It will substantially improve opportunities for the export and sale of U.S.-manufactured goods, which means more economic opportunities for manufacturers and their more than 12 million workers here in the United States. That said, there remain some principled concerns about the TPP outcome, which the NAM will seek to address by continuing work with its members, Congress, the Obama administration and the other 11 TPP governments.

Manufactured Goods Tariffs
The TPP achieves a top goal of manufacturers in the United States—it eliminates all foreign tariffs on U.S.-manufactured goods exports. In fact, over the course of the full implementation of the agreement, the TPP will eliminate the hundreds of millions of dollars in foreign tariffs that are paid on U.S.-manufactured goods annually. Based on the NAM’s analysis, 86 percent of the TPP-Five countries’[1] manufacturing goods tariff lines would be duty free immediately upon the TPP’s entry into force, 91 percent would be duty free within four years, and 96 percent would be duty free within 10 years.

Non-Tariff Barriers/Technical Barriers to Trade and Sanitary and Phytosanitary Measures
The TPP provides strong new disciplines to increase transparency and prohibit a wide range of discriminatory export and import restrictions, technical barriers to trade, trade-distorting export taxes and restrictions and the differential treatment of remanufactured goods. The TPP also requires—for the first time in a free trade agreement—that food-related import checks be based on actual risk, a timeline for action and proper notification of a product’s restricted importation.

Digital Trade
For the first time in a free trade agreement, the TPP requires countries to allow the cross-border transfer of data by electronic means and prohibits localization requirements for computer and information technology facilities. TPP’s digital trade outcomes are positive not just for manufacturers of advanced technology, but also for the many manufacturers, in particular small businesses, that use new technologies and the Internet to create new products and make sales to customers overseas through Internet sites enabled by cloud computing.

Intellectual Property
The TPP outcomes generally advance intellectual property (IP) protection and enforcement for all forms of IP in the TPP-Five nations, which had not previously undertaken high-level IP obligations with the United States. These rules are particularly important for manufacturers in the United States given the international epidemic of IP theft and misappropriation, a substantial threat to manufacturers big and small in every sector and in every U.S. state. Concerns remain, however, that the TPP outcomes related to new biologic medicines provide too weak a standard and will undermine the innovation, manufacturing and jobs this industry produces.

The TPP provides new access and protections for U.S. property and investment overseas that are critical to grow manufacturing exports and competitiveness. The TPP extends the highly important investor-state dispute settlement (ISDS) enforcement mechanism (explained here) to address unfair foreign government treatment of U.S. industries overseas. Concerns remain that the TPP excludes from ISDS regulatory activity related to one industry and its supply chain, contrary to basic requirements of nondiscrimination, fair treatment and property protection recognized in the United States for all government action.

The TPP will improve customs operations among the TPP countries, helping to improve trade flows by reducing delays and unnecessary red tape, particularly the TPP-Five that have not previously undertaken these commitments.

The TPP includes a strong chapter to require transparency and stronger anticorruption activities by the TPP governments that is very important to manufacturers across all sectors.

Government Procurement
The TPP agreement provides important new transparency, fairness and nondiscrimination rules to expand opportunities for U.S.-manufactured goods exports into the procurement markets of Brunei, Vietnam and Malaysia.

Dispute Settlement

The vast majority of TPP commitments are subject to binding, time-limited dispute settlement provisions, which is critical for manufacturers that commitments are implemented and enforced.

More information about the NAM’s trade priorities for free trade agreements can be found here.

[1] The TPP-Six are those countries with which the United States has preexisting FTAs—Australia, Canada, Chile, Mexico, Peru and Singapore—and the TPP-Five are those countries with which the United States does not have pre-existing FTAs—Brunei, Japan, Malaysia, New Zealand and Vietnam.

Linda Dempsey

Linda Dempsey

Linda Dempsey is the vice president of international economic affairs at the National Association of Manufacturers (NAM). In this capacity, Ms. Dempsey leads the NAM’s efforts to improve the global competitiveness of manufacturers in the United States by advocating intellectual property protection, increased export financing and the elimination of trade barriers as well as pushing for agreements and treaties to open up new export markets to create jobs. Ms. Dempsey is noted for her experience on a wide range of international trade and investment policy issues.
Linda Dempsey

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