What is the Trans-Pacific Partnership and Why does it Matter to Colorado Business?

Some of you may have heard of the Trans-Pacific Partnership, but if not, you want to know about it, because it is important for Colorado businesses.  What is the Trans-Pacific Partnership, or “TPP,” as it’s sometimes called?  The TPP is a comprehensive trade agreement, five years in the making, that includes the U.S., Canada. Ten other countries bordering on the Pacific, including Australia, Japan, Mexico, Peru, Chile, Singapore, Vietnam, and New Zealand, are also parties (but not China or Hong Kong). It’s an important development in international trade and business for the U.S. economy.

When the TPP goes into effect it will eliminate tariffs on thousands of goods and services, remove many other barriers to trade, and set out measures protecting patents and copyrights, the environment, e-commerce, and food safety, among other things. The U.S. Trade Representative has a very comprehensive website covering all aspects of the TPP, which you can access by clicking here.

You may ask, Colorado isn’t near the Pacific Ocean, so why should Colorado businesses care about the TPP?  The TPP is very important to Colorado because Colorado businesses have truly gone global.  Some relevant statistics:

• 5,700 Colorado companies export goods or services
• 81,000 jobs in Colorado are supported by exports, including more than a quarter of all manufacturing jobs
• 47% of Colorado export goods currently go to TPP countries (and that’s with the current tariffs and other barriers in place)
• The dollar value of Colorado goods and services exported to TPP countries alone exceeds $4 billion (nearly $9 billion worldwide)

Of particular interest to Colorado business are expected tariff reductions on export products such as beer, cheese, tea, and ski equipment, all made here in Colorado. The TPP will also require its members to remove laws that discriminate against service providers, which is a growing part of Colorado’s economy.  These services include engineering, telecom, financial services, internet and software, accounting, and consulting. Customs procedures, often a way to bar exports, will be made more transparent. These include technical and product standards, such as the units in which weight or size are expressed, or requirements for government procurement that are tailored to favor domestic sources.

The TPP has a number of provisions designed to benefit small and medium-sized businesses, including a requirement that each member country create a website specifically informing small and medium-sized companies how to take advantage of the agreement.  These websites must include information on standards and regulations, protecting intellectual property rights, taxation, business registration, employment laws, and foreign investment requirements.  This will help U.S. companies navigate an often confusing forest of laws, rules, and regulations more easily and more cheaply.

The U.S. and the other parties to the TPP signed the agreement just this month.  Congress now has to approve the agreement before it will take effect.  The agreement does have its opponents, including organize labor and some human rights groups, environmental, consumer, and food safety groups, among others.  Given this opposition, as well as the distraction of an election year, the TPP is not guaranteed to pass, but if it does, there are many benefits to Colorado businesses seeking to do business in that region.

This blog site will keep readers updated on its progress.