WASHINGTON (BLOOMBERG) - US technology companies, banks and farmers are among the biggest beneficiaries of falling tariffs that are part of the trade deal designed to liberate commerce among 12 Pacific Rim nations, according to a text of the agreement released Thursday.
The Trans-Pacific Partnership, which will affect almost 40 per cent of the global economy, maintains protection for a handful of politically sensitive US industries by keeping existing tariffs in place for as long as 30 years for pickup trucks and 13 years for some types of footwear.
The text released on Thursday, after negotiations wrapped up last month, includes thousands of tariffs that affect a broad variety of US-made products from Harley Davidson motorcycles sold in Malaysia, to toilet seats shipped to Vietnam to General Electric Co. turbines. "We do see pretty widespread benefits across the economy," US Trade Representative Michael Froman said in an interview.
Along with Canada, Mexico and Chile, the other countries joining are US, Australia, New Zealand Brunei, Japan, Malaysia, Singapore and Vietnam.
Release of the TPP text starts the clock ticking for ratification by the 12 Pacific Rim nations involved. In the US, that means a 90-day notice to Congress and at least a 60- day public review period before a vote by lawmakers, which probably will come no sooner than March. With the publication, supporters and critics now have fodder for their arguments.
The Trans-Pacific pact is a central part of Mr Obama's strategy for balancing China's expanding economic influence and will bolster his diplomatic position when he travels to Asia less than two weeks for meetings with regional leaders.
The TPP will eventually lower all tariffs among its member countries on all goods to zero. Eighty per cent of imports the US from the 11 other countries are already brought in without tariffs, and goods subject to tariffs are hit with a levy that averages 1.4 per cent. The deal also addresses regulations and practices known as non-tariff trade barriers, which are ways countries protect industries.
Trade officials said the administration hasn't completed an analysis of the economic impact. They pointed to research by the nonpartisan Peter G. Peterson Institute for International Economics, a pro-trade research organisation, that estimates the TPP would add US$77 billion (S$ 108.2 billion) to the US economy annually by 2025. That's second to the US$105 billion Japan would gain, according to the analysis.
Critics, such as the consumer group Public Citizen, said the agreement will make it easier to send jobs overseas and increase income inequality in the US by driving down wages of low-skilled employees who will face more competition from those paid far less in Vietnam and Malaysia.
Trade barriers will drop for sales of heavy machinery such as construction equipment, power generation equipment and large vehicles, particularly in countries such as Vietnam and Malaysia that don't already have free-trade agreements with the US, according to Caroline Freund, a senior fellow at the Peterson Institute.
Each country has thousands of tariffs with duties ranging from zero to the double digits depending on whether there are domestic producers to protect and how much a country depends on imports of certain products.
The impact of the pact will be greatest in Japan, Malaysia and Vietnam because the US already has free-trade agreements with most of the countries and the others have such small economies that more trade isn't likely to boost the bottom lines of US companies.
Tariffs won't fade away all at once. Vietnam imposes a 70 per cent tariff on cars it imports from the US. That would stay in place for three years and then begin dropping to zero over the following decade. In Malaysia, tariffs of 25 per cent on road rollers, 20 per cent on pile drivers and 10 per cent on bulldozers will fall to zero over several years.
The thousands of pages of TPP text released on Thursday also address barriers to trade that are less obvious than tariffs. Countries protect markets through regulation, with US trade officials pointing to Asian nations that keep US cosmetics at bay by requiring eye shadow to be inspected as if it were a pharmaceutical.
The agreement standardises rules of origin for products made in any TPP country, as the North American Free Trade Agreement did for the US, Canada and Mexico, meaning that a product made in any of the member countries is treated as a domestic product for trade purposes.