By Ted Pitts, president & CEO, SC Chamber of Commerce
Congress needs to step up and pass the Trans-Pacific Partnership (TPP). When it comes to trade and the economy, numbers matter. According to the U.S. Chamber of Commerce, the jobs of 41 million Americans rely on trade. With the passage of the TPP, Congress has the chance to ensure that American companies and workers have the opportunity to sell U.S.-made goods and services to more than 500 million people in 11 different countries. In South Carolina alone, one in every five jobs are supported by International trade. Of the over $30 billion in goods exported by South Carolina in 2015, almost one-third, or nearly $9 billion was exported to TPP countries. These numbers are staggering– and growing every day. Goods exports to TPP countries are up 59 percent since 2009.
So what does the TPP do, exactly? The TPP builds on existing trade agreements between the United States and 11 other countries (Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru) to facilitate American exports, decrease barriers to trade, and bring foreign labor and environment standards closer to levels found in the United States. The TPP also eliminates 18,000 foreign taxes – in the form of tariffs– so American manufacturers, farmers and small businesses can be competitive players in the Trans-Pacific region. In the age of increased globalization, the ability for our companies to reach this international market is not just important – it’s critical to our economic success as both a state and a nation.
The reality is, our global economy has become tri-polar, with North America, Asia and Europe each accounting for roughly a third of the total global GDP. What makes the TPP so important is that Asia is growing more than three times more rapidly than the other two thirds. According to the International Trade Administration, this growth isn’t slowing anytime soon. They project that by 2030, the middle class population in the Asia-Pacific will be 10 times the size of the United States’. The U.S. Department of Commerce estimates that soon, the region will be home to over 40 percent of the global GDP and more than 800 million consumers.
As a state with a strong trade economy and one of the largest ports in the nation, more than 500,000 jobs statewide could see the benefits of this agreement. Some countries included in the TPP, like Vietnam and Malaysia, currently have tariff rates in the double digits for certain top South Carolina exports. Under the new agreement, these financial barriers will be removed, clearing the way for an increase in South Carolina exports and boosting activity for our manufacturers and our ports.
Apart from expanding trade with our existing partners and opening trade with new markets, passage of the TPP will have a direct impact on investment ties with all 11 Trans-Pacific countries included in the agreement. According to Business Roundtable, over 180 South Carolina businesses are subsidiaries of companies based in TPP countries — serving as an essential source of job creation, revenue, and business investment in the state. For example, Honda of South Carolina announced in August that they’ll be investing $45 million to expand their manufacturing facility in Timmonsville, creating 250 new jobs. The agreement encourages companies based in TPP countries like Honda to increase their business investment in South Carolina by strengthening existing partnerships and removing barriers to make new ones.
A 2016 study by the Peterson Institute for International Economics found that the TPP will increase annual real incomes in the United States by $131 billion and boost annual exports by $357 billion by 2030, when the agreement is nearly fully implemented. Congress must put the political posturing aside and pass the Trans-Pacific Partnership to ensure the economic competitiveness of South Carolina and the entire United States for years to come.