You Down with TPP? (Yeah, You Know Me!)

Every industry has its set of confusing and obscure acronyms. In the world of economic development, we often talk about STEM degrees (science, technology, engineering and math), which are the key to job creation in Washington’s economy (especially now). In baseball, we’ve got BABIP and VORP: “batting average for balls in play” and “value over replacement player” respectively.*

International trade is certainly no different. Hopefully, the least confusing acronym to you is WCIT (Washington Council on International Trade…hint: you’re reading their blog right now), but it gets harder from there. TPA, FTA, USTR, GSP…OMG!**

While I’m not going to do a series of blog posts breaking down acronyms for you, I am in the middle of a series of blog posts on WCIT’s policy priorities. And one of our major areas of focus these days is TPP: the Trans-Pacific Partnership. So, sit back with your BFF and learn everything you need to know about this important (IMHO) issue.

You may have noticed here on the State of Trade blog that we spend a decent amount of time talking about free trade agreements. And sure, it’s particularly acute now, with the three pending free trade agreements soon to come up for a vote. But increasing the international competitiveness of US products is always at the top of our list. Currently, the United States has 17 free trade agreements, and South Korea, Panama and Colombia would get us to 20….out of 195 countries recognized by the US State Department! So, only 90% of countries in the world left to go…

Now, certainly, we’re not planning on negotiating free trade agreements with every country in the world, at least not anytime soon, but it sure would be a lot easier to do a batch at a time rather than one by one. Which is exactly what the Trans-Pacific Partnership proposes to do. The TPP is an Asia-Pacific regional trade agreement currently being negotiated among the United States and eight other partners: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam.

Why do we want an Asia-Pacific regional trade pact? It’s the economy, stupid! (As someone once said…I forget who at the moment.) The Asia-Pacific region comprises 40 percent of the global population, and the economies of these countries generated 56% of global GDP in 2009. More directly, the Asia-Pacific region is the largest market in the world for U.S. exports and receives two-thirds of U.S. agricultural exports.

As Washington residents, we would benefit significantly from an Asia-Pacific pact because, well, we’re one of the major Asia-Pacific trading states. In 2009, 64% of Washington exports went to Asia-Pacific countries. And, as I’ve mentioned before, we also benefit from the significant imports that come from the Asia-Pacific region because of the major retailers headquartered in Washington.

Now, the current proposed TPP wouldn’t encompass all Asia-Pacific countries, but one of the exciting impacts of this negotiating effort is that it serves as a framework into which other Asia-Pacific countries might eventually enter. So, it’s not only a nine country agreement that could be significant for Washington’s trade economy, but something that could eventually become a 12 or 15 or 20 country agreement including many other of Washington’s key Asia-Pacific trading partners. For now, though, the goal is to reach the outlines of an agreement with these nine countries by the APEC meeting in Honolulu in November.

By the way, the Trade Development Alliance’s 2012 International Study Mission is to Chile, so there’ll be a great chance for Washington business leaders to learn and discuss this issue further. In the meantime, check in next week when we tackle yet another WCIT policy priority – the Harbor Maintenance Tax.

*Relevant to this blog, of course, because we know that baseball statistics and trade statistics relate.

**That’s, in order, Trade Promotion Authority (aka “fast track”), Free Trade Agreements, US Trade Representative, Generalized System of Preference…and “oh my gosh!” (as the kids text each other these days).

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