TPP to Boost US Consumer, Chemical Exports to Japan, Other Pact Members, Says Commerce
The Trans-Pacific Partnership will cut critical consumer and chemical goods access barriers on U.S. exports to TPP members that the U.S. doesn’t currently share free trade agreements with, the Commerce Department said in a set of reports released on Nov. 6. The reports surfaced just a day after TPP parties unveiled the pact’s heavily-anticipated legal text (see 1511050020).
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Japan, the second largest economy in TPP behind the U.S., will immediately remove duties on 93.5 percent of consumer goods. “Under TPP, Japan will immediately eliminate its quota for leather goods and leather footwear before phasing out all remaining tariffs,” said Commerce. The leather footwear quota has rankled U.S. industry for years. The American Apparel and Footwear Association recently lauded TPP for cutting that barrier (see 1510300025).
New Zealand will remove duties on 86.4 percent of U.S. consumer exports immediately, but that number will increase to 93.1 percent within four years. Duty cuts on U.S. recreational transportation products, such as boats RVs, in Japan and New Zealand will boost U.S. industry, said Commerce. “Additionally, the elimination of tariffs on recreational transportation products in Malaysia and Vietnam (which apply tariffs as high as 70 percent) will provide U.S. producers greater access to the growing middle class in those markets,” said the report. The U.S. does not currently share existing free trade agreements with Japan, New Zealand, Malaysia, Vietnam and Brunei. The U.S. has pacts in place with all other TPP members.
Vietnam will make cuts to 92.9 percent of consumer goods over the course of four years, Commerce said in its consumer goods report (here). Malaysia will immediately slash duties on 80.3 percent of U.S. consumer goods exports, the agency said. “U.S. exports of consumer appliances face tariffs as high as 35 percent in Vietnam and 30 percent in Malaysia,” the report said. “The elimination of the tariffs will provide U.S. producers the ability to compete more effectively with China for access to the growing middle class in Vietnam and Malaysia.”
Meanwhile, the U.S. chemical industry is also poised to reap the benefits of the pact, said Commerce in a separate report (here). Japan will immediately lift tariffs on all U.S. chemical exports, notably including plastics, fertilizers and bio-chemicals. Malaysia will eliminate duties on 88.7 percent of U.S. chemicals immediately and 92.8 percent within four years, said Commerce. Vietnam will follow with cuts to 87.5 percent of U.S. chemical exports immediately and 99.7 percent over four years. The pact will also force New Zealand to cut duties on 83.2 percent of U.S. exports immediately and 89.5 percent within four years, Commerce said.