Farrell: Trans-Pacific Partnership to Bring Unprecedented Benefits to Small Businesses
Diane Farrell Gives Insight into TPP Agreement; Asia Opportunities
by Stacey Pierce, Florida SBDC at USF
Update (January 27, 2017) – In his first week in the Oval Office, President Donald Trump signed an executive order paving the way for a withdrawal from the Trans-Pacific Partnership, for the United States.
“There’s a disconnect between the nightly news cycle and the stories that we hear as it pertains to the economy and trade, and the actual economic reality is, of course, that small businesses are the foundation of the U.S. economy,” Diane Farrell said. “It’s also small businesses that make up a large percentage of exports to all markets overseas.”
On Thursday, June 2, Farrell, the Global Markets Deputy Assistant Secretary for Asia from the U.S. Department of Commerce, broke down the Trans-Pacific Partnership agreement for 23 small business entrepreneurs at the Selling to Asia luncheon in Tampa.
The luncheon was the result of a partnership between the Florida SBDC at University of South Florida and the local Export Assistance Center, U.S. Commercial Service.
Farrell said she was excited to have the opportunity to talk about the Trans-Pacific Partnership (TPP), “because it’s the ability to translate this sort of high order policy making that happens in Washington, D.C., to the more practical reality aspects of what the policy is going to mean for businesses across the United States.”
The TPP is an agreement between 11 Pacific Rim countries and the United States, intended to level the playing field for US businesses. Countries include: Canada, Mexico, Peru, Chile, Japan, Vietnam, Singapore, Brunei, Malaysia, Australia and New Zealand.
The agreement, which Farrell touted as the first 21st century agreement of its kind, is intended to create new partnerships with some countries, and strengthen current trade agreements with others.
“When the agreement goes into force, 95 percent of all tariffs and taxes that are a problem for exporters now, will evaporate,” she said. “Everything that’s gone into TPP is available to those countries we already have free trade agreements with. It enhances the [current] agreement.”
Other advantages Farrell identified are:
- It cuts through shipping “red tape” with more efficient and transparent customs procedures; streamlines documentation for express delivery.
- It requires fair regulatory procedures for product and technical standards.
- It allows products tested in the U.S. to be imported into any TPP country.
- It includes the strongest standards for transparency and anticorruption of any previous trade agreement.
- It supports e-commerce and promotes paperless trading, including allowing electronic authentication and signatures.
- It safeguards intellectual property through strong rules.
- It makes it easier for businesses to search, register and protect intellectual property.
- It protects from unfair competition by state-owned companies in other countries and protects investment.
Farrell also cited statistics that reinforce why TPP works for the United States and small businesses. More than 3 million jobs were supported by goods exported to TPP countries in 2014, according to the U.S. Department of Commerce. In addition, of the more than 175,000 U.S. companies that exported goods to TPP countries in 2013, 30 percent of those were small-to-medium sized enterprises exporting to TPP countries.
During the presentation, Farrell highlighted opportunities that exist in Asia specifically, focusing on the five new trade agreement partner countries: Japan, Vietnam, Malaysia, New Zealand and Brunei. Key economic indicators and highlights include:
- The Japanese economy is valued at $4.6 trillion.
- It is the third largest economy in the world.
- 6 percent of Japanese individuals use the Internet.
Best Prospects: Aircraft and related parts, equipment and services; Analytic Scientific Equipment; Cloud computing; Health IT; Medical equipment, Pharmaceuticals; Renewable energy; Safety and security; Semiconductors; and Smart grid.
- Has a population of 94.3 million.
- Economy valued at $185.9 billion.
- Implementation of major infrastructure projects continue to be a major source of commercial activity for US firms.
Best Prospects: Telecommunications; Information technology; Oil and gas exploration; Power generation; Transportation infrastructure construction; Environmental project management and technology; Aviation; and Education.
- One of the largest economies in southeast Asia.
- Very strategically placed along the Strait of Malacca.
- Malaysia’s economy is valued at $338.1 billion.
- 5 percent of Malaysian individuals use the Internet.
- Airlines in the region continue to grow.
- Government has plans for Malaysia to become a regional crude oil trading hub, including a major build out of the country’s transportation and storage capacity.
- Projects to reduce waste and increase efficiency are a priority.
Best Projects: Aircraft maintenance, repair and overhaul; Energy (Oil, Gas and Renewable).
- Has a population of 4.4 million.
- New Zealand’s economy is valued at $197.5 billion.
- 5% of New Zealand individuals use the Internet.
- They have trade agreements with China and Australia.
- They rank very high on the scale of transparency and honesty and integrity.
- Business practices are really very similar to the way the US operates.
Best Prospects: Innovative technologies; Mechanization for agriculture; Building and construction; Green technologies; Infrastructure upgrades: roads, telecommunications and irrigation.
- Smallest country in the TPP.
- Oil and gas represent 96 percent of their total exports.
- Government is intense on diversifying the economy.
- No personal income sales or export taxes.
- Brunei’s economy is valued at $17.1 billion.
Best Prospects: Oil and gas, upstream and downstream; Commercial aviation; Construction; Defense industry equipment; Franchising; Renewable energy and Clean technology; Information and communication technology; Food imports/food production; and Fishing industry/aquaculture.
During the Q&A at the close of the session, Farrell discussed the expected time frame for ratification of the Trans-Pacific Partnership. “We have spent a great deal of time on the Hill educating our members of Congress to familiarize them with what’s in the agreement,” she said. “We are committed to consideration this year and are on track to move forward.”
While she added that there are some industries not as pleased with the TPP as they could have been, there is “great optimism,” regarding its ratification by the U.S. Congress and that the Administration is confident that TPP’s implementation and enforcement will offer opportunities to continue to clarify the many benefits of the agreement.
Stacey Pierce is the Marketing and Communications Officer for the Florida SBDC at USF. Pierce is a Certified Marketing Executive with a 20 year background in journalism and content marketing. She provides consulting services for small businesses in social media strategy and business branding.