structure and impacts of the tpp agreementglobalepasresearchconsortium/wp... · 2017. 2. 28. ·...

Structure and tariff impact of the

TPP agreement

KNIAHIN D., MIMOUNI M., NGAVOZAFY A., PICHOT X., RINDERKNECHT L.

January 2017, International Trade Centre

Part 1. ITC’s contribution to the analysis of

the TPP

2

TPP is the biggest FTA ever concluded

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)

Intra-TPP trade flows$2 trillion (2015)

Exports Imports

Most of intra-TPP trade is between NAFTA countries.

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.

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

Part 2. Tariff liberalization under TPP

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Status of existing FTAs among TPP countries are

different:

10

In US market, phasing out is

almost complete

In Vietnam’s market, phasing out

is ongoing

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

Most of tariff reduction occurs upon entry into forceSensitive sectors will be liberalized mostly by 2031

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

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

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%)

Some members apply partner-specific tariff cutsU.S., Japan, Chile, Mexico

Example: U.S. tariff elimination in auto sector

Tariffs on some sensitive products to remain

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Examples: Japan & Mexico

Japan (FTA+) Mexico (FTA+)

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?

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)

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*

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*

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*

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*

Remaining FTAs by regionCountry detail

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

FTA tool for exporters

Application 1

Example: Vietnamese shoemaker investigates Korean market

2 trade agreements between

Korea and Viet Nam

Same tariff preference

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

Thank you

for your attention!Mr. Mondher Mimouni

International Trade Centre

mimouni@intracen.org