Tradeology, the ITA Blog

Tracy Gerstle is an International Trade Specialist in ITA’s Office of Materials Industries.

Second only to the European Union in terms of total global exports, the United States personal care and cosmetics industry holds nearly 20 percent of the world market (2014). In 2014, the sector contributed $10.22 billion in exports to U.S. GDP, with a 5 percent rate of average annual growth since 2009. The personal care and cosmetics sector comprises a broad mix of companies from household names including Procter and Gamble, Avon and Estee Lauder, to a large number of nimble and small enterprises, often characterized by women and minority owners. In addition, the industry makes important contributions to the U.S. economy on other fronts, employing 48,513 people in 2013 with an average wage of $45/hour. The industry is characterized by high levels of investment in innovation and marketing, with U.S. companies maintaining competitiveness through the constant introduction of new products and marketing campaigns.

American-made personal care and cosmetics

Once implemented, the Trans-Pacific Partnership (TPP) will pave new in-roads for U.S. personal care and cosmetics companies in some of the largest and highest potential markets for the industry. Comprising 48 percent of U.S. global personal care and cosmetics exports, the TPP countries offer the industry 800 million consumers. This base includes consumers in well-established markets for U.S. products such as Mexico and Japan, which together accounted for more than $1 billion in U.S. exports in 2014. Also important, the TPP countries will provide unprecedented access to some of the highest potential future markets—including the growing middle class in countries spanning from Vietnam to Malaysia. These consumers aspire to the quality and sophistication for which U.S. products are known, and they are increasingly willing to move beyond basic products such as shampoo and soaps to skin care and premium products. Under the TPP agreement, U.S. products will become more competitive in new TPP markets where the United States does not have an existing free trade agreement and will result in an estimated duty savings of $11.1 million on U.S. exports to Japan, Malaysia, Vietnam, Brunei, and New Zealand. For example, in Vietnam tariffs on U.S. products from makeup to skin care to shaving cream range as high as 30 percent, all of which will be duty free within four years.

TPP is a milestone for the U.S. personal care and cosmetics industry, as the first regional trade agreement in which the United States participates that includes an annex specific to this sector. The Cosmetics Annex to the TPP’s chapter on Technical Barriers to Trade promotes international best practices in cosmetics regulation, with all of the TPP signatories committing to processes that are timely, objective, and transparent. Under the agreement, TPP countries agree to consider transitioning any product registration requirements for cosmetics to notification systems and post-market surveillance. Further, TPP countries agree to recognize all relevant international standards, guidance and recommendations, including when preparing or adopting guidelines on Good Manufacturing Practice, which is one of the greatest trade impediments for the sector in terms of countries’ customs requirements. In addition, the industry will receive considerable benefits regarding time and cost-savings with the elimination of costly documentation requirements such as certificates of free sale across the TPP countries. In some TPP countries, such as Chile, these requirements currently cost companies hundreds of dollars per product to prepare and submit for processing, in addition to several weeks for preparation, submission and approval. Also, relabeling will be allowed across the TPP countries, reducing requirements on companies for new packaging. Another important element of TPP to note is its recognition across the countries that cosmetics should be regulated differently from medical devices or pharmaceutical products, in terms of product risk. TPP provides that there will be no animal testing requirements in product safety assessments, unless there are no other means available.

In terms of global market share, Japan is the world’s fourth largest market for personal care and cosmetics products and accounts formore than 30 percent of the aggregate Asia-Pacific market. As the second largest exporter of cosmetics to Japan, the Unites States is well poised to benefit from the TPP. Additionally, U.S. businesses often find that expanding to Japan creates heightened visibility for their products and brands, which in turn leads to regional market demand. In this way, the Japanese market offers U.S. exporters a stepping stone to the greater Asia-Pacific region. Best prospects for U.S. companies include dual-use products that offer beauty and skin care benefits, natural or certified-organic products, men’s skincare and personal care products, as well as personalized skin cleansers and niche fragrances.

The International Trade Administration offers the cosmetics and personal care industry a number of services and tools to reach the TPP markets, including market research to support their identification of high value markets; targeted support via trade shows, e-commerce, and business partner vetting; and links to other USG agencies that offer assistance in financing, insurance and other services. For more information on this historic agreement and export opportunities for U.S. personal care and cosmetics exporters, contact one of our local offices or visit us on the web.

Joanne Littlefair is a Senior International Trade Specialist at the International Trade Administration

The global trend toward more sustainable construction has created an enormous opportunity for U.S. building product exporters. Across international markets, the recognized impact of the built environment on resource usage, environmental conditions, energy and water consumption, and air emissions links higher performance in buildings to important national priorities. High-quality solutions are in demand, making building products a competitive global industry.

Building products

Construction is expected to be one of the more dynamic sectors of the world economy over the coming decade, with activity in the Asia-Pacific region driving much of the sector’s growth.  Global construction output is expected to grow in the range of 85 percent by 2030, creating a $15.5 trillion marketplace worldwide.  As American exporters gear up to meet international opportunities, they can expect some traditional barriers to be reduced based on the recently negotiated, Trans-Pacific-Partnership (TPP).

This new trade deal will open doors for U.S. exporters by allowing tariff-free access and easier export pathways to new and emerging economies abroad.  Building products manufacturers across America, including numerous small and medium-sized companies, have helped to build and sustain our homes, schools, medical facilities, and places of work. In 2014, the industry employed more than 753,000 workers. Once enacted, this new agreement will help expand opportunities by leveling the playing field and supporting their interest in reaching new markets.

These exporters currently face up to 60 percent in tariffs when doing business in TPP markets. An estimated $78 million in duties are levied on these exports every year. This sets back a lot of our businesses that manufacture products such as lumber, HVAC equipment, insulation, electrical circuitry equipment and parts, and other building products.

The TPP implementation offers new opportunities for U.S. exporters. For example, the Japanese construction market is large, highly stable, and reflects trends that will continue to drive demand for the advanced building products U.S. exporters offer. Japan’s population has high disposable income, a commitment to energy and other resource conservation, and a strong interest in new technologies to achieve greater environmental friendliness in construction. Since 2012, the Japanese Government has embarked on a focused roadmap for a series of building energy efficiency policies. The Japanese market holds solid prospects for U.S. wood products and innovative U.S. lighting products, in both retrofits and new construction, as examples. U.S.-sourced insulation products make up over one fifth of Japan’s import market.

Another great example is New Zealand. In 2011, earthquakes destroyed approximately 1,000 commercial buildings and 10,000 residences in the southern city of Christchurch. The city’s massive rebuild is anticipated to continue over the next 15 years creating strong demand for building supplies. In particular, non-wood building supplies are anticipated to be in high demand.

American-made building products have captured the attention of architect designers around the globe, particularly in our TPP partner countries. Sixty-two percent of the total U.S. building product exports to the world went to these countries.

Increased global interest in green building and sustainable construction also creates enormous opportunity for U.S. suppliers of architecture, design, and other services.

In an effort to support industry exporters, our Industry and Analysis team recently produced a series of Top Markets Reports that highlights future export opportunities based on a sector-specific methodology.  The 2015 Top Markets Building Products and Sustainable Construction report is available here.

For more information on how TPP impacts American workers and businesses, visit us on the web.

Jim Rice is Director of the Office of Consumer Goods at the International Trade Administration

With Valentine’s Day a recent memory and the Groundhog predicting an early end to winter, the focus of the American public turns to consumer goods; items such as jewelry for your loved one, recreational vehicles, or sports gear for the summer.

In a five year period, U.S. consumer goods exports to the world employed more than 780,000 workers.

It’s no surprise that the world enjoys many of these items that are made in the United States, leather goods, contact lenses, footwear, sporting equipment and musical instruments are sought after across the world. In 2014, more than 10 states saw consumer goods exports to Asian countries exceed $50 million. These states were spread across the country. Both coasts, as well as the heartland were represented across the Asia-Pacific.

And there’s no sign of stopping. In a five year period, U.S. consumer goods exports to the world employed more than 780,000 workers (2014), and grew by 21 percent, totaling $43 billion in consumer goods exports to the world, with 47 percent of those exports going to the TPP region!

But we can do more.

The newly negotiated, Trans-Pacific Partnership (TPP) is an opportunity to expand this industry beyond our borders. In addition to the United States, 11 countries across the Pacific Rim will use the new agreement to break down barriers, allowing tariff-free access, and easier export pathways to new and emerging economies. Once enacted, TPP will also protect American workers, business owners and small-and medium-sized businesses by leveling the playing field and creating more opportunities to do business abroad.

For example, when doing business in Japan, most leather goods from the United States currently face high tariffs (up to 189 percent), or quotas, restricting the amount of sales and goods that can come into the country—restrictions that can hamper businesses of all sizes across the country. Under TPP, Japan will immediately eliminate their quotas for leather goods, and will start to phase out remaining tariffs.

Another great example is the opportunity that TPP provides to U.S. exporters of home appliances. They face tariffs as high as 35 percent in Vietnam and 30 percent in Malaysia. Under TPP, Vietnam will eliminate all its tariffs on U.S. consumer appliances within four years; Malaysia will eliminate most of its tariffs on consumer appliances immediately with the remaining tariffs eventually phased out. The elimination of the tariffs will provide U.S. producers the ability to compete more effectively with China for access to the growing middle class in Vietnam and Malaysia.

In December 2015, Deputy Secretary of Commerce Bruce Andrews talked about the improvements TPP will bring to retailers and businesses, “[TPP] also includes requirements to facilitate e-commerce, the final agreement improves efficiency by promoting paperless trading between businesses and the government.”

The Federal Reserve reported in a working paper that trade agreements, such as TPP, do increase the number of U.S. firms that are exporting and, by extension, establish new export markets which  generate increased profits and support high-paying export-dependent jobs.

With a high percentage of U.S. consumer goods being exported, the International Trade Administration’s Industry and Analysis team has prepared a TPP sector report that captures what exporters can expect as a result of the recently negotiated trade agreement.

Consumer goods are not the only sector that will benefit from TPP. The agreement will also benefit other leading U.S. industries. Stay tuned for Tradeology’s ongoing coverage of the benefits of this trade agreement.

To learn more about how TPP benefits U.S. workers and businesses visit our TPP site. For more information on this historic agreement and opportunities for U.S. consumer goods exporters, contact one of our local offices.