CalChamber-Supported Trans-Pacific Partnership Agreement Text Released

The Office of the U.S. Trade Representative (USTR) has published the final text of the Trans-Pacific Partnership agreement (TPP).

The TPP includes the 12 Trans-Pacific Partnership economies of Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

The California Chamber of Commerce-supports the TPP trade agreement process as an important vehicle for economic integration throughout the Pacific. This regional agreement of 30 chapters sets a high standard that will enhance the competitive of the countries that are a part of it, helping facilitate trade and promoting investment between participants in the agreement, increasing their economic growth and development.

“First and foremost, TPP will position Americans to compete and win in tomorrow’s global economy,” said USTR Ambassador Michael Froman. “This is the first trade agreement to put a real focus on American small businesses who will gain powerful tools to help them export. This is the first trade agreement to put disciplines on state-owned enterprises to make sure that when they compete against our private firms, there’s a level playing field.  And this is the first trade agreement to take on the digital economy, ensuring that individual[s] and businesses in America and around the world will benefit from the expanding opportunities offered by a free and open Internet.”

So far, the Obama administration has made the following TPP materials public:

TPP eliminates more than 18,000 taxes on Made in America exports

According to a fact sheet released by the White House, TPP levels the playing field for American workers and American businesses by eliminating more than 18,000 taxes that various countries impose on Made in America exports, providing unprecedented access to vital new markets in the Asia-Pacific region for U.S. workers, businesses, farmers, and ranchers. For example, TPP will eliminate and reduce import taxes – or tariffs – on the following Made in America exports to TPP countries:

  • U.S. manufactured products: TPP eliminates import taxes on every Made in America manufactured product that the U.S. exports to TPP countries. For example, TPP eliminates import taxes as high as 59% on U.S. machinery products exports to TPP countries. In 2014, the U.S. exported $56 billion in machinery products to TPP countries.
  • U.S. agriculture products: TPP cuts import taxes on Made in America agricultural exports to TPP countries. Key tax cuts in the agreement will help American farmers and ranchers by expanding their exports, which provide roughly 20% of all farm income in the United States. For example, TPP will eliminate import taxes as high as 40% on U.S. poultry products, 35% on soybeans, and 40% on fruit exports. Additionally, TPP will help American farmers and ranchers compete by tackling a range of barriers they face abroad, including ensuring that foreign regulations and agricultural inspections are based on science, eliminating agricultural export subsidies, and minimizing unpredictable export bans.
  • U.S. automotive products: TPP eliminates import taxes as high as 70% on U.S. automotive products exports to TPP countries. In 2014, the U.S. exported $89 billion in automotive products to TPP countries.
  • U.S. information and communication technology products: TPP eliminates import taxes as high as 35% on U.S. information and communication technology exports to TPP countries. In 2014, the U.S. exported $36 billion in information and communication technology products to TPP countries.

TPP Impact

A TPP agreement provides global income benefits of an estimated $223 billion per year by 2025, according to a 2013 analysis supported by the Peterson Institute. Real income benefits to the United States are an estimated $77 billion per year. The TPP could generate an estimated $305 billion in additional world exports per year by 2025, including an additional $123.5 billion in U.S. exports.

The market size is nearly 800 million consumers with a combined gross domestic product (GDP) of $28.1 trillion in 2012 (39% of world GDP). Trade with the TPP countries supported 15.3 million American jobs, and 44% of U.S. goods exports went to those countries in 2013. In 2014, U.S. exports with the TPP members reached $726.5 billion and California exports were $71.6 billion, according to the U.S. Department of Commerce.

Next Steps

The next steps will allow for a period of careful and extensive review and consideration before TPP is signed by President Barack Obama, and before Congress then votes on the agreement. Here’s what can be expected:

  1. 90 Days for Public and Congressional Review Prior to the President Signing the Agreement: While Trade Promotion Authority requires thefull text of the agreement to be publicly available for 60 days before the President signs the agreement, the administration has taken the additional step of committing to have the text publicly available for longer than required—a full 90 days—before the President signs the TPP.
  2. Additional Resource for Analysis and Review:Once the President signs the TPP, the International Trade Commission (ITC) will conduct a comprehensive analysis of the potential economic impact of the TPP that also will be made available to the public.
  3. Submitting Legislative Text:In advance of congressional consideration, the administration will submit draft legislative text to Congress that would implement the agreement, if passed by both houses of Congress. The legislative clock for consideration will not begin until the administration sends final legislative text to Capitol Hill.
  4. Congressional Consideration:After legislation is submitted, per the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, the U.S. House of Representatives and the U.S. Senate each have a certain number of legislative days to consider the legislation in the committees of jurisdiction and on the floors of each chamber.
  5. Presidential Notification:If both houses of Congress pass the TPP implementation bill, the President then is empowered to sign the implementing legislation into law. The President will notify Congress in writing 30 days in advance of the agreement taking effect with respect to each of the 11 other TPP countries, once the President determines that each meets its obligations under TPP.

For more information, visit www.calchamber.com/TPP

Staff Contact: Susanne T. Stirling