The Trans-Pacific Partnership (TPP), a free trade agreement (FTA) among 12 countries, is expected to pass this year – and could have enormous consequences for world trade.

The FTA agreement encompasses 12 countries, including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam comprising approximately 40 percent of world GDP, equivalent to $27.5 trillion annually.¹ 

(1. http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/tpp-ptp/index.aspx?lang=eng)

The agreement, in effect, can be considered a unification of the Trans-Pacific Strategic Economic Partnership (a 2005 agreement between Brunei, Chile, Singapore and New Zealand) with NAFTA (the United States, Mexico and Canada) with the addition of Malaysia, Vietnam, Japan, Australia and Peru.

The negotiations also deal with the increased control and regulation of intellectual property (IP), copy right laws, and patenting enforcement and may become a milestone for future FTA negotiations, as countries have different interpretations and understandings of how IP should be protected.

Passage of the TPP is expected to increase competitiveness of U.S. exports, helping companies grow their businesses worldwide and might also jump start other trade negotiations with the European Union and China.

However, companies need to have the appropriate structure in place to take advantage of TPP. To fully utilize TPP, companies must have knowledge, flexible architecture, and accurate record keeping.

Knowledge

Up to date trade information, such as harmonized tariff schedules, rules of origin, product classifications, taxes and duty rates, is needed to take advantage of TPP. Not only must this data, which comes from multiple different sources, be comprehensive and up to date, you also need to be able to access it quickly. Further, information on product eligibility needs to be obtained from your supplier of origin. Shippers must identify which products may be eligible for preferential treatment, based on Harmonized Schedule (HS) classification and source country. Two ways to streamline and more easily access the information required for eligibility include access to a comprehensive trade database and using a supplier portal, where suppliers can enter information directly into the system.

Flexible and easy to use structure and processes

For manufacturers of finished goods, it can be challenging to analyze each product’s bill of material (BOM). Once analyzed, you should tie those qualification results back to the product record for a complete, centralized view of each item. Qualifying and managing thousands of products can be difficult without automation. Consider automating the supplier solicitation, qualification and certificate management processes for large volumes to minimize effort and eliminate hours of manual work, decreasing operational expenses. Additionally, your TPP qualification process should be scalable and repeatable – i.e., it should work for multiple trade agreements. Currently the United States has free trade agreements (FTAs) with 17 countries. Once your TPP qualification framework is in place you should be able to support other trade agreements quickly and easily.