What Changes Lie Ahead From the Trans-Pacific Partnership Pact
By lowering trade barriers among the United States and 11 nations scattered around the Pacific Rim from Japan to Chile, the pact is intended to help countries specialize in producing and exporting whatever goods and services they can make most efficiently, while importing the rest. In the long run, that could help decrease some of the prices consumers see in stores.
.. In the auto industry, for example, 45 percent of the value of each car or light truck will need to be produced in a Trans-Pacific Partnership member country for the vehicle to be charged little or no duty by customs officials. By comparison, the North American Free Trade Agreement used a different methodology that effectively required 53 percent to 55 percent of the components by net cost to be produced in North America. So the new agreement has the effect of allowing slightly more components to come from outside the trade region, most likely from China.
.. The Obama administration has promoted it as a way to strengthen trade relationships with American allies as tensions have increased with China. At the same time, American trade officials have also suggested that it could be a model for an eventual free-trade pact with China itself.