What is the Trans-Pacific Partnership (TPP)? Guest Post by Arun Gupta, PhD

Arun Gupta recently went to a conference of the TPP in Washington, and was invited to share some insights on his visit and what he learned in a guest blog.

In its current form the Trans-Pacific Partnership (TPP) is a potential free trade agreement (FTA) between the US and 11 Asia-Pacific (APAC) countries (Canada, Mexico, Peru, Chile, Japan, Vietnam, Brunei, Singapore, Australia, Malaysia, and New Zealand).  The United States currently has FTA’s with six (6) of the 11 TPP countries.

The goal of the TPP is to have a “comprehensive and high-standard” agreement that eliminates tariff and non-tariff barriers for trading goods (including agricultural) and services (including financial), address trade issues not addressed in existing FTA’s, and establish rules for economic activities across the TPP partner countries.  It is envisioned that other countries will join the TPP to develop trade partnerships with TPP countries.  The TPP will also serve as a framework for bilateral, regional, or multilateral (e.g., WTO) negotiations.  Issues such as governance, dispute settlement, processes related to executing the TPP, and buy-in from various government and private organizations are an integral part of the negotiations.

The TPP has major ramifications for supply chain performance, especially in situations where supply chain components fall within the TPP participant countries.  Trade, trade barriers, and market access involving all types of goods (including agriculture), services (including financial and foreign investments), and small- and medium-sized enterprises also are under the umbrella of the TPP and can impact the performance of supply chains.  Further, policies related to government procurement, state-owned enterprises, intellectual property rights, rules of origin, transparency, competition, trade remedies, and regulatory coherence are all elements of the TPP that can be detrimental to supply chains.  With E-Commerce as a part of the TPP the negotiators are aiming to streamline processes of effectively doing business across national boundaries for the TPP participants.  However, local content and the desire of countries to internally host data and servers is a challenge for the E-Commerce aspect of the TPP.  In addition, negotiators are facing challenges in labor and environment aspects of business.  Further, there are challenges in negotiations around tariff-free market access to components instead of only finished products, remanufactured products, and government procurement.

The TPP is a significant FTA that will have ramifications to the global supply chain.  Be on the lookout for more information on TPP on this blog.

Arun P. Gupta, Ph.D.

APICS Certified Supply Chain Professional