The TPP & You: What the Trans Pacific Partnership Means for your Business
This article is the first in our series on the Trans Pacific Partnership and it’s impact on Canadian industries.
Canada and 12 other countries have been in talks to create a cohesive and comprehensive agreement that will allow 40% of the global economy to open up borders and free up trade tariffs in a new and exciting way. This agreement is called the Trans Pacific Partnership, or the TPP. Canada joined in on the TPP talks in 2012 – with growing scepticism from critics. The goal of the TPP is to eliminate tariffs, and barriers on goods and services coming through the following countries:
- Brunei Darussalam
- New Zealand
- United States of America
As of October 5, 2015, preliminary negotiations have concluded and direction agreed upon for the TPP. Canada is now part of the largest trading block the world has ever seen.
The global economy has seen free-trade agreements such as the TPP in the past, but none of this size and scope, with so many different countries at varying levels of development. The TPP will help facilitate the development of production and supply chains among the members of the agreement, as well as building a standardization of labour laws. Industrial goods, food and agriculture products, and textiles will be the most affected by the Trans Pacific Partnership agreement.
Currently, according to the Government of stats, “Canada’s average annual merchandise exports to TPP markets (2012-2014) was valued at over $366 billion, while two-way investment in 2014 was valued at more than $782 billion.” – and these shipments are subject to high tariffs and duties. Ultimately, as the Office of the United States Trade Representative states, part of the TPP is to help cut “the red-tape of trade, including by reducing costs and increasing customs efficiencies, will make it cheaper, easier, and faster for businesses to get their products to market.”
The TPP will aim to help create a mutually positive environment where all the participating countries will receive a lower rate of taxation and offering a way for businesses to succeed in an ever-competitive marketplace. This will help cut costs for businesses globally and level the playing field for many developing nations. Growing numbers of critics consider the TPP to be the “NAFTA on steroids” – and many “expect tariff removal through the TPP to worsen the erosion of the Canadian manufacturing sector and its well-paying jobs that has been underway since NAFTA.”
The TPP has a potential market of 658 million people, with an estimated GDP of 420.3 trillion dollars. It will open up commercial avenues to Asia and help to diversify Canadian trade and help us gain footing in markets beyond the United States. Currently, many economists assume that there are little to no measureable change in GDP for both the United States and Canada.
Many of our systems and supply chains are in dire need of modernization, and the same can be said for many other developed and developing nations.
The TPP negotiations have concluded, but there is still much to determine for each country. Read on to find out more about the Trans Pacific Partnership’s impact on various sectors, as well as how Mantralogix can help you adjust and prepare for this change.
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