On November 5, the United States Trade Representative (USTR) publicly released the 30 chapters, side agreements, and other attachments that comprise the 6,300+ page Pacific Rim trade pact known as the Trans-Pacific Partnership (TPP). The agreement, which includes 12 Pacific Rim nations and took more than five years to negotiate, represents the largest regional trade agreement in history, encompassing 40 percent of the global economy and a quarter of the world’s trade. 

Approval of TPP is a top priority for President Obama, and his administration is leading an all-out effort to sell the deal to the public and to Congress. It won’t be easy. Although major U.S. industries, ranging from software to aerospace to agriculture, have come out in support, there is also strong opposition from influential interest groups, including labor unions, human rights advocates and environmentalists, who argue that enforcement measures are inadequate. The debate has created some unlikely allies in Washington. Republicans generally support the president, while most Democrats are either reserving judgment or opposed.

Without U.S. approval, the deal will fall apart. Other member countries, including Japan and Malaysia, face tough domestic opposition as well. They will wait for Congress to vote on the pact, most likely next spring, before trying to win approval. The entire approval process is expected to take up to two years.

According to USTR, major benefits to U.S. manufacturers include:
 
  • Tariffs on U.S. manufactured goods exported to TPP countries will drop to zero, amounting to a significant price reduction for U.S. products (a third of a product’s price in some cases);
  • Other TPP countries are prevented from maintaining, expanding or creating new trade barriers (such as currency manipulation) as they eliminate tariffs. Exporters will have updated and complete information about import licensing requirements to partner countries, so that they cannot be used as trade barriers;
  • Rules of origin that provide incentives for companies to keep production and manufacturing jobs in the U.S. are established; and
  • Long delays in customs processing should ease for U.S. products.
U.S. interests are near unanimous that the language ensuring compliance should be stronger, and that it will require vigilance to identify and act on violations.

 
What’s next?

Additional analysis and review: Once the public review is over and the president signs the TPP, the International Trade Commission will conduct a comprehensive analysis of the potential economic impact of the TPP that will also be made available to the public.

Submission of legislative text: The administration will then submit draft legislative text to Congress that will implement the agreement if passed by Congress.

Congressional consideration:  After the legislation is submitted, House Speaker Paul Ryan (R-WI) must introduce the implementing bill on the first day the House is in session. Since the bill is a revenue bill (as tariffs are revenues), it must originate in the House, and Ways & Means is the committee with jurisdiction. W&Ms will have 45 days to report the bill, or it will be automatically discharged. The House will then have 15 days to vote. After the Senate receives the House-passed bill, the Senate Finance Committee will have another 15 days to report the bill or it will be discharged, and then the Senate will have another 15 days to pass the bill. The president’s bill cannot be amended, either in committee or on the floor, and debate is limited to 20 hours in each chamber, preventing the possibility of a Senate filibuster. Final passage requires a simple majority vote. This entire process can take no longer than 90 days.

Presidential notification: If Congress passes the TPP implementation bill (and, right now, that’s a big IF), the president 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 he determines that each meets its obligations under TPP.

How will your company, your customers and your competitors be affected?  AMT is on record as supporting the principles of TPP. Our staff is continuing to review the agreement before a final determination is made about the impact on our members. You can help by taking a look at the agreement and letting us know what you think. To access the TPP text, go to www.USTR.gov. AMT members should take notice of chapters 5, 8, 14 and 18, as well as the non-conforming measures and letters of exception of specific countries of interest. It will be available on the USTR website for 90 days.