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U.S. Consumer Goods and TPP: Supporting jobs and Economic Opportunities for Americans

February 17, 2016

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.

Workers

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.

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