What’s in it for me – TPP?

FTATrans Pacific Partnership Agreement (“TPP”) is in session. No one knows if or when it will be executed. The details of the negotiation are not known as the meetings are closed door sessions. We know some information that the participants share with the press with some intentions. Until you see the wording of the agreement, you can not make a final judgment.

But, I would like to take a wild guess about how TPP will affect you. Assume that you are in the U.S. or in Japan and you are not in the areas of Sugar, Rice, Daily Products, Meat and Wheat industries, the effect to you is very minimal, I think. This is why.

US and Japan have fully discussed their duties in the past and under the current duty systems of each country, the rates are generally very low and even if the rates are reduced, the change will have very minimum impacts to you. So, if you are in importing machine tools from Japan, TP will have a minimum impact. If you are exporting sporting goods to Japan, I believe you will have almost no impact from TPP.

What will be affected will be seen in mostly less developed countries. Their duties will be lowered and their trade barriers will be reduced. This is to encourage growth and building supply chains with those countries. Relatively developed countries will place more investments in less developed countries as a part of a supply chain. As a result, we may see more imports from those countries and the US may export more to those countries.

TPP covers 12 nations and they are Mexico, Chili, Australia, New Zealand, Malaysia, Brunei, Singapore, and others. Therefore, TPP in general will help those countries and the transactions that involve those countries will likely increase in the future.

Koh Fujimoto

Koh is the Principal-in-Charge of the International Practice. He concentrates his practice in the areas of financial statement audits, transfer pricing and internal audit services. http://www.cdhcpa.com
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