WASHINGTON — The National Retail Federation outlined how the 12-nation Trans-Pacific Partnership trade deal will positively impact retailers and consumers in a new report released on Wednesday.
“This report shows the importance of international trade to the U.S. economy and how TPP creates economic growth and opportunity in the United States,” said NRF president and chief executive officer Matthew Shay. “Congress should move quickly to approve this agreement so American workers, consumers and businesses can begin to realize those advantages as soon as possible.”
International trade ministers signed TPP in early February. It includes the U.S., Australia, Japan, Mexico, Canada, Vietnam, Malaysia, Peru, Singapore, Chile, Brunei and New Zealand and aims to remove barriers to trade to encompass nearly 40 percent of the world’s gross domestic product if enacted.
But the deal faces opposition from key Republican leaders in Congress, all of the remaining presidential contenders, labor and environmental groups and growing numbers of the American public.
President Obama has said he will need to cobble together a bipartisan coalition, including GOP leadership, to get the trade pact passed. He has support from major business trade groups such as the NRF, U.S. Chamber of Commerce and National Association of Manufacturers.
According to the report, which was prepared for NRF by The Trade Partnership, prices of imported retail merchandise are “driven up considerably by tariffs” that can range as high as 67.5 percent on footwear and 32 percent on certain kinds of apparel.
The U.S. fashion industry has a big stake in the agreement. The U.S. imports $22 billion in apparel, textiles and footwear from the TPP countries and exports around $14.25 billion. Vietnam is the second-largest apparel supplier to the U.S. after China and a big sourcing hub for companies.
The total amount of duties imposed on imported industrial and consumer goods from TPP countries was nearly $6 billion in 2015, according to the report, noting that a majority will be eliminated if TPP is enacted.
The estimated amount of tariffs imposed on consumer goods alone from TPP countries was $4.17 billion in 2015, according to U.S. Census Bureau data, the report pointed out. Of that total, $1.33 billion of tariffs was imposed on knit apparel, while $758.8 million was on woven apparel, $576.4 million was on footwear, $68.3 million was on jewelry, $129.3 million was on leather handbags and travel goods, $65.4 million was on watches and $13.8 million was on hats and headgear.
“Where TPP eliminates those hurdles [such as tariffs] the costs [of doing business with foreign suppliers] disappear, enabling retailers to lower product prices,” the report said. “Alternatively, retailers may sell a higher-quality substitute good at the price of the lower-quality good it replaces. Either way, U.S. consumers win.”
Not all duties will be eliminated on imports on day one if the TPP is implemented however. Industry officials said there will be a 12-year phaseout for duties on “sensitive” woven products and a 10-year phaseout for duties on sensitive knit products. Products that fall within those baskets will still see their tariffs cut by either 35 or 50 percent on Day One, according to industry officials.
Other areas where retailers would benefit from TPP’s enactment, include e-commerce and intellectual property rights protection, according to the report.
“Online retail sales in the Asia-Pacific region have been growing at rates in excess of 35 percent annually,” the report said. “The TPP contains a whole chapter devoted to e-commerce that stipulates that parties will not assess customs duties on electronic transmissions, including content transmitted electronically. TPP parties agree to protect personal information of those using e-commerce.”
In the area of counterfeiting, which is estimated to cost retailers between $300 million and $400 million annually, according to one study, TPP contains strong provisions to combat the illegal practice.
“The TPP contains strong provisions for closing loopholes used by counterfeiters and for civil and administrative procedures and remedie4s for violations of intellectual property rights, including criminal prosecution for such violations,” the report said.
TPP also provides strong investment protections for retailers, many of whom have stores in TPP countries.
The report also touted the trade deal’s strong labor and environmental protections, more transparent customs procedures between the countries and food safety measures.
“TPP will make it much easier for retailers to ensure that factories in TPP countries adhere to labor and environment conditions in their codes of conduct,” the report said, citing prohibitions against child and forced labor and protections for endangered species.
The report found that international trade is a major supporter of U.S. employment, accounting for 6.9 million U.S. jobs in the retail industry.
“The TPP will have a significant positive impact on American families, workers and the retailers who seek to provide them with a wide range of goods at affordable prices,” according to the report. “It will lower costs across global supply chains in the TPP region, and those lower costs will be reflected in U.S. price tags….Families will benefit from greater spending power both from lower prices and higher wages.”