Symbolism or substance? Proposed Trans Pacific Partnership impact unknown

Many have high hopes for the Trans-Pacific Partnership, otherwise known as the TPP. However, few seem to have a thorough understanding of the potential impact of the multinational agreement. With details still unknown, industry professionals have only opinions to offer on the proposed agreement.

On Oct. 4, 2015, 12 countries signed this trade agreement, including the U.S., Canada, Mexico, Australia, Brunei Darussalam, Chile, Japan, Malaysia, New Zealand, Peru, Singapore and Vietnam. According to the office of the United States Trade Representative, the TPP promises to be a step towards improved trade and investment, while also protecting the rights and well-being of workers in the countries included. While Congress has yet to approve the trade agreement, there is plenty of debate on if it is truly beneficial for the U.S., or merely a “friendship pact” for the countries involved.

“Until we know precisely what’s in the agreement, it’s hard to make a judgment,” said Patrick Westhoff, FAPRI-MU director.

Westhoff notes that there is still a great deal that remains unknown about the TPP’s many components and that few fully understand what the agreement could do. To explain one of the key pieces of the TPP, think back to high school history. The American colonies and Great Britain had tariffs, similar to taxes, for imported and exported goods. Fast-forward to present day America, and you can see that we still have tariffs in place with many countries. The TPP promises to eliminate or reduce virtually all tariffs and barriers between the countries in the agreement. This could be a big boost for made-in-America products and jobs in our country.

The USTR estimates that over 95 percent of the world’s consumers live outside U.S. borders. Currently, over 18,000 taxes are placed on a variety of American exported products. With the potential for elimination and/or reduction of said taxes, businesses and producers could be placed on a level playing field with other countries and have a better chance for more of our American-made exports to be competitive in the global market.

Two American groups that might feel the impact of TPP the most are the agriculture and automotive industries. The USTR points out that the agreement, with its lift on taxes for American-made products, will help automotive groups and farmers unlock new opportunities in global trade. According to Westhoff, some agricultural groups are divided on the TPP’s possible implications for the industry. Cattle and hog producers are generally optimistic due to the possibility of the lucrative Japanese market being opened even further.

“I believe that the TPP will be overall beneficial to the agricultural industry, including significant additional market access with commodities like beef and pork,” said Rachel Groves, an MU agricultural economics student. “By having more market access, this would provide economic growth and jobs in agriculture.”

Dairy producers, on the other hand, are less sure of the benefits the TPP could provide. Crop producers are left out, as little discussion has occurred regarding the agreement’s potential reach to crops.

Focusing on the automotive industry, the TPP addresses several issues that have kept American-made cars and trucks out of a few countries in the agreement. Japan and the U.S. have a long history of trade barriers, tariffs and non-tariff stipulations that have keep American-made vehicles and their parts out of trade. The TPP promises that U.S. automotive manufacturers will have better regulations, transparency and a more open market to do business with Japan.

Many may ask, will we see any effect of the TPP in mid-Missouri if approved by Congress? Probably not, at least in the automotive sector. The agreement deals with more of the American export side than goods imported. Car dealerships in Columbia aren’t anticipating any impact just yet. Al Morgan, a sales manager with Columbia’s Joe Machens Automotive Group, says that dealerships and customers won’t be seeing any major changes when it comes to prices. He sees the agreement as a spreading of rules and regulations across the globe, with a slight “abide or suffer” tone. Morgan also notes that while customers in mid-Missouri won’t be seeing any changes in car prices, dealerships on the coasts may feel the impact.

“Everything is affected by everything,” Morgan said, meaning that the clientele of coastal car dealers will probably be affected through a chain of events.

One country left out of the TPP that surprises many is China. Initially, countries in the agreement chose to leave China out, with talk of possibly letting the country enter the agreement in years to come. Morgan sees the TPP as “these twelve countries coming together against a monster that they created,” and considers China to be “a monster in the economic industry.” He notes that the market would see a drastic change if China ever enters the TPP, and that the impact would be ultimately negative. Westhoff also acknowledges the underlying motives of the trade agreement.

“The agreement is more about symbolism than about substance,” Westhoff said.

Westhoff notes the TPP is something that consumers should keep following in the news and legislative chamber, and that the agreement is simply “not just a yes or no sort of thing.” The next step for those who have strong feelings about the TPP is to contact their representatives and senators at the state and federal levels as well as the interest groups that are affected by the agreement. With an approval date unknown, there is still time for consumers and producers to find out if the TPP will be beneficial.

Taylor Washburn

About the Author Taylor Washburn

My name is TaylorAnn Washburn – I am a science and agricultural journalism student and MU Law Scholar at the University of Missouri. I am an active member of Mizzou Collegiate Cattle Women and MU Little Sisters of the Gold Rose. After earning my undergraduate degree, I plan on attending law school or pursuing a master’s degree at Texas Tech University. Once I have my education completed, I hope to work in public relations for an agriculture company. I want to help industry professionals educate the general public, and mend the gap between producers and consumers.