Representatives from 12 Pacific Rim nations, including the United States, have signed the Trans-Pacific Partnership, a wide-ranging trade and investment pact. Now the hard work and potentially bruising process of getting the agreement ratified begins.
After more than five years of negotiations, the agreement was signed Wednesday evening in Auckland, New Zealand, by the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
But if the two big players, the United States and Japan, can't get the pact ratified, it won't go into effect, said Ken Okaniwa, consul general of Japan in Miami. That's because it can’t enter into force until ratified by countries that represent 85 percent of the GDP of the entire TPP area — a threshold that is impossible without the United States and Japan joining in.
Stefan Selig, U.S. undersecretary of commerce for international trade, was in Miami Thursday to discuss the local benefits of TPP, which covers about one-third of all global trade, as well as the impact of free trade on Latin America.
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In a keynote address to the Association of American Chambers of Commerce in Latin America and the Caribbean, which was meeting in Doral, Selig said the agreement goes beyond stimulating trade and investment. “As the first major multi-party agreement of the innovation economy era, TPP will enhance and optimize engagement between our innovator communities by criminalizing the theft of trade secrets in cyberspace; prohibit tariffs on digital goods; and secure the free-flow of cross-border data,” he said.
In June, Congress approved an Obama administration request for crucial fast-track authority that allows the president to present trade deals to Congress for an up or down vote without amendments. But Senate Majority Leader Mitch McConnell, R-Ky., has yet to back the pact and has indicated that maybe Congress shouldn’t vote on TPP until after the November elections.
“There’s no specific clock. ... but it’s a commercial and economic imperative to get it done as soon as possible,” Selig said in an interview with the Miami Herald. He pointed to a recent study by the Peterson Institute that showed a year’s delay in ratifying the agreement would result in $90 billion in permanent economic losses.
Delaying ratification, he said, would not only have economic costs but would be “costly in terms of U.S. leadership in the world and in this very important part of the world.”
Selig, who was in Tokyo last week, said he found the Japanese very enthusiastic about pushing the TPP export agenda forward to jump-start their sluggish economy.
Okaniwa thinks TPP is not only a good deal for Japan but also for Florida, and he's already been working to drum up support for the pact in the Sunshine State.
Economic data from the Business Roundtable shows that U.S. trade with the 11 other countries in the TPP supported more than 941,000 Florida jobs in 2014 and that 22 percent of all Florida product exports went to TPP countries. In 2014, Florida exported $12.5 billion in goods to TPP nations, including $1.1 billion to Japan.
Okaniwa said Japan also is Florida’s second largest foreign direct investor with 200 Japanese companies that contribute about 26,000 jobs.
Among the beneficiaries would be Florida grapefruit growers, Okaniwa said. The pact eliminates high tariffs on more than 18,000 American products over time, including the tangy citrus popular in Japan.
“[Japan is] the largest importer of Florida grapefruit by far. I think we will be eating a lot more Florida grapefruit if TPP enters into force,” he said. “The best and most expensive grapefruit we have in Japan is from Florida. When we hear the word grapefruit, we identify it with Florida.” Japan imports close to 90,000 tons of Florida grapefruit, he said.
Beyond agricultural products, Okaniwa said Florida beneficiaries would include growing industries such as aviation and aerospace, medical equipment, pharmaceuticals, telecom equipment, and computer software and hardware, which could capitalize on lower trade barriers and duties for their exports to TPP countries.
Provisions in the pact that make it easier to do e-commerce abroad also should help the state’s small and medium-sized businesses, he said. “I think Florida and Japan are natural partners,” he added.
China is not a part of TPP and the United States has emphasized that if the agreement isn’t ratified, competitors will end up setting the rules of the road for trade among Pacific Rim countries. “The United States and Japan are taking the lead in the Asia Pacific to establish rules for economic activity but it’s also of strategic importance because more vibrant economies lead to better peace and security,” Okaniwa said.
However, TPP is controversial. It generated protests around the world Wednesday. Protesters, who contended the pact gives too much power to U.S. corporations and raises sovereignty concerns for the signatory countries, were out in force and blocked traffic in central Auckland during the signing ceremony.
Among the concerns is the potential negative impact on food safety, privacy and healthcare.
In Japan, those who oppose the pact’s agricultural provisions, have raised concerns about food safety issues. In the United States, auto workers have contended that TPP gives too many concessions to Japanese automakers.
“With trade issues there are always concerns, but the important point with TPP is that the benefits outweigh the negatives,” Okaniwa said. “The United States and Japan took the lead in the negotiations, so it’s very important for them to also take the lead in the ratification process.”