TPP to Bring 'Economic Benefit' to U.S. - Modern Distribution Management

TPP to Bring ‘Economic Benefit’ to U.S.

MAPI analysis points to increased trade benefit with participating Asian nations.
Eric-Smith-84x84

Analysis of the full text of the Trans-Pacific Partnership coupled with the most recent trade deficit figures show that the agreement could greatly benefit the U.S., according to Ernie Preeg, senior advisor for international trade and finance at the Manufacturers Alliance for Productivity and Innovation.

The TPP, a trade agreement connecting 12 countries including the U.S. and Japan, was designed to remove a host of trade barriers among participating nations, such as tariffs, quotas and regulations, with hopes of stemming China's economic power in the region.

First and foremost, Preeg wrote, the U.S. needs a free trade agreement with Japan.If the TPP fails and a proposedChina-South Korea-Japan tripartite free trade agreement goes through, the U.S. will be at an economic disadvantage.

"China is already the No. 1 trading partner for South Korea and Japan, and if this tripartite free trade agreement goes forward and the TPP fails, the United States will be left outside, paying higher, 'most-favored-nation' import charges in the Japanese and Chinese markets," Preeg wrote.

The TPP could increase U.S. trade with Asia-Pacific nations, shifting some of the balance away from NAFTA countries. For the first nine months of 2015, 76 percent of U.S. exports of manufactures went to Canada and Mexico, while only 21 percent went to TPP participants in Asia.

Preeg also writes that the TPP could become a "building block for a broader free trade agreement within the Asia-Pacific region and even beyond," with countries such as Indonesia and India possibly joining.

"A TPP agreement could provide the initial steppingstone toward a more balanced, rules-based trade relationship across the Pacific, of economic benefit to the United States," Preeg wrote.

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