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Structure and tariff impact of the
TPP agreement
KNIAHIN D., MIMOUNI M., NGAVOZAFY A., PICHOT X., RINDERKNECHT L.
January 2017, International Trade Centre
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Part 1. ITC’s contribution to the analysis of
the TPP
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TPP is the biggest FTA ever concluded
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The TPP aims:
To promote comprehensive market access, by reducing tariffs
and NTBs;
To facilitate the development of supply chains among its
members.
Intra-TPP Trade in
2015: $2 trillion
(11% world trade)
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Intra-TPP trade flows$2 trillion (2015)
Exports Imports
Most of intra-TPP trade is between NAFTA countries.
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Trade among TPP members is already covered by
37 trade agreements
• 28 bilateral, 5 regional trade
agreements and 4 GSP
schemes were in force as
of conclusion date.
• Tariffs are already low in
international comparison.
• The TPP agreement will
further lower them,
including tariff peaks.
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Combination of 2 Tariff databases
from 2014-2031 & from 2017 to 2046
- Development of a Tariff-line level database with dismantling schedules of
existing FTAs between TPP countries from 2014 to 2031
- Inclusion of tariff dismantling schedules of the new TPP agreement from 2017
(EIF) to 2046
- Conversion of specific duties and TRQs into AVEs based on MAcMap
methodology
- Aggregations were provided on HS6-digit level for international comparisons.
Additional sector aggregations were made at the GTAP sector level.
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Transparency and dissemination
- New module on
MacMap: “TPP tariffs”
- GTAP database format
- Customizable
visualizations of tariff
dismantling: FTA and
FTA+
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Visit now!
Go to MacMap create an account and then go to
Advanced Analysis TPP tariffs
http://www.macmap.org/countryanalysis/countrystatistics/GlobalAnalysis.aspx?s=2
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Part 2. Tariff liberalization under TPP
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Status of existing FTAs among TPP countries are
different:
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In US market, phasing out is
almost complete
In Vietnam’s market, phasing out
is ongoing
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Most of tariff liberalization occurs on EIF of TPP
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Without TPP: tariff cut implementation under current FTAsVietnam continues to reduce tariffs under FTAs
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Most of tariff reduction occurs upon entry into forceSensitive sectors will be liberalized mostly by 2031
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Upon EIF of TPP, 96% of intra-TPP trade will become duty-free and 99.7% will
become duty-free by the end of implementation.
92% of intra-TPP trade is already duty-free
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Scope of liberalization
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MFN FTA FTA+ FTA FTA+
INTRA-TPP 58.2% 91.9% 95.9% 92.3% 99.70% 2046
AUSTRALIA 56.4% 91.8% 98.5% 93.1% 99.96% 2020
BRUNEI DARUSSALAM 67.2% 94.0% 96.7% 94.1% 100.00% 2023
CANADA 64.1% 97.4% 98.5% 97.4% 99.72% 2028
CHILE 0.7% 99.3% 99.4% 100.0% 100.00% 2024
JAPAN 79.5% 86.2% 93.0% 87.0% 97.69% 2032
MALAYSIA 80.3% 96.0% 98.2% 96.0% 100.00% 2032
MEXICO 68.2% 99.3% 99.5% 99.3% 99.97% 2032
NEW ZEALAND 70.8% 87.6% 97.3% 88.1% 100.00% 2023
PERU 77.4% 95.9% 98.1% 98.8% 100.00% 2032
SINGAPORE 99.9% 100.0% 100.0% 100.0% 100.00% 2017
UNITED STATES 42.6% 88.5% 94.2% 88.6% 99.98% 2046
VIETNAM 53.7% 74.9% 83.9% 85.8% 100.00% 2037
Source: International Trade Centre (ITC), Market Analysis and Research section calculation
Table 1. Share of imports liberalized, by TPP market
CountryShare liberalized 2017 Share liberalized 2046 End of TPP
implementation
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TPP will drive down average intra-TPP tariff from
0.91% (FTA) to 0.22% (FTA+) by 2046
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Share of tariff line with tariffs (>5%)
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Share of tariff line with tariffs (>15%)
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Some members apply partner-specific tariff cutsU.S., Japan, Chile, Mexico
Example: U.S. tariff elimination in auto sector
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Tariffs on some sensitive products to remain
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Examples: Japan & Mexico
Japan (FTA+) Mexico (FTA+)
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Part 3. Potential Trade impact of the TPP
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Motivation
- Studies find TPP agreement to be beneficial for its members, but what about its
impact on non-signatories, particularly on developing nations and LDCs?
- Is it possible to capture all risks faced by third countries with aggregated analysis?
- Which sectors and specific products exposed to trade diversion in each affected
country?
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Related results of a CGE model
MIRAGE model; assessing the impact of TPP on third countries (Decreux &
Fontagné 2017, forthcoming):
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- Bangladesh to be impacted the most (1% decline in exports)
- Similar results with other studies such as Petri and Plummer (2016)
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Exemple of the Applied tariffs by USA on top products
exported by Lesotho under AGOA (clothing to USA represent
300M$ out of national total export of 932 M$)
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4. Ongoing work : Expanding FTA coverage
to APEC + RCEP
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Phase 2: Intra-APEC/RCEP37 Intra-TPP FTAs* + 1 TPP
Note: the figure shows only reciprocal trade agreements (not GSP)* including GSP
43 Intra-APEC/RCEP FTAs*
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Phase 2: Intra-APEC/RCEP/EU37 Intra-TPP FTAs* + 1 TPP
Note: the figure shows only reciprocal trade agreements (not GSP)* including GSP
43 Intra-APEC/RCEP FTAs*
8 EU FTAs*
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Phase 2: Intra-APEC/RCEP/EU + Extra-TPP37 Intra-TPP FTAs* + 1 TPP
Note: the figure shows only reciprocal trade agreements (not GSP)* including GSP
43 Intra-APEC/RCEP FTAs*
8 EU FTAs*
74 Extra-TPP FTAs*
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Phase 3, Option 3: All remaining FTAs
37 Intra-TPP FTAs* + 1 TPP
Note: the figure shows only reciprocal trade agreements (not
GSP)* including GSP
43 Intra-APEC/RCEP FTAs*
8 EU FTAs*
74 Extra-TPP FTAs*
34 Extra-APEC/RCEP
FTAs*
31 Extra-EU FTAs*
174 rest of FTAs*
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Remaining FTAs by regionCountry detail
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Exp: Japanese carmakers benefit from TPP ROO
37
Japan-Mexico FTA TPP
65% 45%minimum regional content minimum regional content
ROOs affect FTA utilization rates: for every tariff
cut there is a specific ROO Liberal vs. stringent ROOs
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FTA tool for exporters
Application 1
Example: Vietnamese shoemaker investigates Korean market
2 trade agreements between
Korea and Viet Nam
Same tariff preference
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FTA tool for exportersApplication 1
Example: Vietnamese shoemaker targets Korean market
Same product-specific
ROODifferent cumulation
area
Outward
processing in
Kaesong
Industrial
Complex, NK
allowedCOO not needed
for <$600
COO not needed
for <$200
Longer validity for
bilateral FTA
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Thank you
for your attention!Mr. Mondher Mimouni
International Trade Centre