ITC Report Shows Expected Non-Tariff Benefits to TPP
An International Trade Commission report on the Trans-Pacific Partnership says the deal’s elimination of technical barriers to trade will benefit express couriers, automotive manufacturers, and the agriculture industry, among others, but some in those industries remain skeptical about whether TPP will live up to the expectation. ITC released its congressionally mandated TPP report (here) on May 18 (see 1605190024). The assessment charted gains for U.S. automakers exporting to Japan, which ITC said would face fewer certification-related hurdles; and it projected success for seed and cheese producers shipping to Canada, which ITC said would encounter fewer registration and standards-related obstacles under the agreement. TPP’s technical trade barrier chapter will be particularly helpful for U.S. exports to Japan, Malaysia, and Vietnam, ITC said.
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Groups like the American Chemistry Council, National Association of Manufacturers, and U.S. Fashion Industry Association said the technical barriers chapter would increase transparency and discourage discriminatory trade practices, according to the report. However, Ford has expressed “strong” concerns over automotive standards, and the USA Poultry and Egg Export Council has said the deal does not contain provisions to address barriers related to the certification of halal foods required by Malaysia of U.S. beef imports, the report says. TPP’s automotive rules of origin would require at least 45 percent regional value content, while NAFTA currently requires 62.5 percent (see 1601120051). The National Foreign Trade Council told ITC during its analysis that the impact of technical barriers provisions would depend on their execution.
While TPP does not alter any existing or create any new mechanism for antidumping/countervailing duty procedures, it allows the restoration of a duty or suspension of further tariff reductions if increased U.S. imports are harming a domestic industry. While the International Trade Advisory Committee on Steel on the Trans-Pacific Partnership told the ITC that TPP’s trade remedies chapter will have an overall neutral effect on U.S. steel producers, “which is viewed as a positive,” the committee also noted that U.S. steel companies could not benefit from the duty language, because steel tariffs are already at zero.
Under TPP, express couriers will operate with greater liberalization and transparency, which ITC believes will afford companies ability to gain more market access. “The chapter also requires parties to expedite customs treatment of express shipments by streamlining the documentation required to move freight through the importation and customs clearance process,” the ITC report says. “Streamlining this process would help boost the competitiveness of U.S. businesses, especially U.S. SMEs.” Other industries that could benefit from TPP’s customs and technical barrier provisions are semiconductor manufacturers, wine producers, and makers of information and communications technology products, ITC said. Notably, the technical barriers chapter secures new related commitments from Canada, Mexico, Chile, and Singapore.
The commission also said TPP “goes into much greater depth” on customs and trade facilitation matters than U.S. bilateral free trade agreements with Peru, Chile, and Australia. For example, all parties would be required to enforce an objective protocol to assess penalties if a customs law or regulation is broken, and issuers must give suspected violators specific written details about the nature of a penalty.
U.S. Trade Representative Michael Froman on May 19 continued his effort to frame the ITC report in a positive light despite mixed findings and initial stakeholder reactions. He highlighted that the report found that small businesses and businesses using e-commerce are some of the most likely beneficiaries, and that the report found that TPP would boost agricultural, apparel, footwear, and communications exports. During a call with stakeholders, Froman urged listening business leaders to tell the Office of the U.S. Trade Representatives their companies’ experiences with trade, and “how TPP will address” any difficulties. “As I talk to members of Congress, they are eager to know how this is going to help businesses in [their] district, businesses in [their] state,” Froman said. “Having your voice out there, whether it’s in op-eds or town meetings or however you want to express yourself, I think it would help contribute to this debate in a very positive way, making real for members of Congress, the impact on the community.”