The TPP & You: What the Trans Pacific Partnership Means for Manufacturing

This article is the first in our series on the Trans Pacific Partnership and it’s impact on Canadian industries. Check out the introduction for some quick background facts. 

Thanks to the TPP talks, we recognize the massive shift that will take place in many of our Canadian industries. The TPP aims to help create a mutually positive environment where all the participating countries will receive a myriad of benefits. Along with this and the messaging we are receiving from the government, it’s claimed that the partnership will ultimately help Canada grow and flourish in the following ways:

• Increased and privileged market access for Canadian goods, services and investments in one of the world’s most dynamic economic regions;
• Canada shaping “gold-standard” rules that will facilitate global trade and investment for generations to come, while preserving public policy objectives; and
• Maintaining a strong North American production platform and ensuring Canada remains a partner of choice.

While there are a number of positives that could come from the agreement, there are many issues that arise from it. For the manufacturing industry, the TPP will have a tremendous impact, whereby the codes of practice and standards will be overhauled and expected to reach higher levels. But the partnership could also mean trouble for many of our ailing industries, such as the automotive industry and parts manufacturers. Under the TPP, countries such as Japan have been lobbying heavily to allow for the tariff-free movement of automotive parts and the vehicles themselves. These vehicles could contain as little as 30% of content produced by the TPP countries.

This means a potential risk for Canadian manufacturers, as they could lose business to low-cost Asian producers that exist outside of the trade agreement. While other trade agreements such as NAFTA require vehicles to contain 62% North American content to remain duty free, the TPP will only require 30% of the content to be present.

This is a case that can be applied to other industries in Canada – and not only in labour-intensive industries, but in service-based ones as well. Furthermore, it is clear that in some cases, the negative aspects of implementing a trade agreement of this magnitude will only serve to cripple already ailing industries. There will surely be benefits arising from innovation, licensing and standardization that will aid in filling in the blanks of where the TPP leaves off.

In a more positive light, it seems that the TPP will have some very positive implications for the global labour market, but it will undoubtedly be a shift from what nations are currently used to. A step in this direction could mean a worldwide change in how we trade, and could ultimately level the playing field and help developing nations grow – something which would impact the entire economic marketplace.

Positive or negative, it is difficult to determine what the economic impact of the Trans Pacific Partnership will be until it actually happens, but there are ways to be prepared.

Many manufacturers and exporter groups have come out and publicly stated that the TPP is in the best interest of Canadian businesses, as it will help us cast a wider net. For a list of groups who have publicly supported the TPP, please see this link.

Mantralogix has been offering ERP services to companies who use supply management for years. Supply chain management software helps to support a company’s management and movement of raw materials, inventory and finished products from the beginning of production to the end point: consumption. Supply chain management is a company’s main source of profitability. Using the proper software is critical to a company’s success, and Mantralogix can help you find the perfect fit for your company’s supply management needs – while taking into account the upcoming changes that the Trans Pacific Partnership will bring.

Contact us here at Mantralogix today! Stay up-to-date with our TPP series. We’ll be unrolling a new blog post every week!