Insights & News

What is the Trans-Pacific Partnership, and How Might It Affect Your Business?

Posted On July 24, 2016

The North American Free Trade Agreement (NAFTA), enacted in 1994, and China’s inclusion in the World Trade Organization (WTO) in 2001 both dramatically impacted the flow of goods and the nature of manufacturing across the world—and created a debate that has lasted for the last two decades.

The debate about globalization and free trade has grown in the past few years with the forthcoming Trans-Pacific Partnership (TPP). What is the TPP? Glad you asked. Here are a few things you should know:

1. It’s a really big deal.

There are twelve countries included in the agreement: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Together those countries have a population of about 800 million people, which is roughly twice the size of the European Union.

Combined, the annual Gross National Product (GNP) of the countries involved is $27.5 trillion.

It’s a lot of people, a lot of money, and a lot of business that will be impacted.

2. It’s really complicated.

Think back to a time when you served on a committee that tried to design something, for example, your school’s PTA or a Boy or Girl Scout committee. Remember how you went in with good intentions, but then you realized everyone had different perspectives and had brought their own agenda?Remember how those individual agendas and perspectives ended up creating a bake sale that looked kind of like you thought it would—but not completely like you thought it would?

Now imagine that committee was composed of politicians. And that the bake sale was actually an agreement that impacted trillions of dollars of business, and hundreds of millions of people.The result would be complex, and the TPP is tremendously complicated. The agreement as it stands today is thirty chapters long, and includes changes to regulations and tariffs on agricultural goods, manufactured goods, and even intellectual property. There is a saying that a camel is a horse designed by a committee. And there should be a saying that a trade agreement is a law designed by a committee—of politicians.

3. It just made the world that much flatter.

NAFTA and subsequent free trade agreements reshaped the world’s economy. Goods now flow into and out of the United States with greater ease, and world markets are open to the advanced manufacturing that has become the competitive advantage of the manufacturing sector in the United States. When TPP is eventually ratified (likely after the Presidential election), a process will begin that will eventually open new markets to American companies and make the economy even more globalized. Taking advantage of those new markets and opportunities does require creating superior products.

It doesn’t require you to know the complexities of managing a global supply chain.That’s what we are here for. RAM International and the Flat World family of companies (Flat World Supply Chain, Flat World Hospitality, RAM Custom Crating, and Prologue Technology) are your supply chain partners in a complex, changing, globalized, and “flat” (yes, we call ourselves the Flat World family for a reason) economy. Want to learn more about how we can partner together, today?

Contact us, and let’s start the conversation.