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RIP, TPP

Trump pulls out of the TPP


As of today, the TPP is officially dead, but as we reported in Day 3 of OR Daily, the fight isn’t over for those seeking to ease trade and spare the environment.

Trump moves forward with DAPL, Keystone XL pipelines.
President Trump officially withdrew from the TPP today. // Photo: Wikipedia Commons

The Trans-Pacific Partnership held the Outdoor Industry Association’s hopes for long-lasting relief from the tariffs that hit gear when it moves around the world.

President Obama’s tried to sell it as a job-growth measure for the U.S., and retailers, including Walmart, JCPenney, Gap, Michael Kors, and Dick’s Sporting Goods, sent letters to Congress urging their support and pointing to the $2.8 billion in duties on U.S. imports. However, the deal was on life support even before the election, and has been declared unfixable by the president-elect.

“I think it’s dead,” says Amy Roberts, executive director of the Outdoor Industry Association. “I do think there will be an attempt to have some form of that in the future, but we’re probably one or two years off, at least.”

In their vocal support for the TPP, a trade deal involving 11 Pacific Rim nations—Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—that would loosen the tariffs brands pay on products manufactured abroad, OIA characterized it as an opportunity to export the industry’s social and environmental values. But the deal has long been subject to criticism, even from within the industry, over the broad but unenforceable promises it makes in that realm.

“We believe that the TPP is not coming back and that is not thanks to Donald Trump, but it’s thanks to the years of internationally coordinated campaigning,” says Ilana Solomon, director of the Sierra Club’s Responsible Trade Program. “[Those campaigns] have been working for more than five years to expose the threat of this pact to workers, communities, and environments.”

While OIA’s team in D.C. ramps up the emphasis of the industry’s interest in domestic manufacturing as they introduce themselves to the incoming trade team, the work continues to ease the industry’s “unnaturally high tariffs,” which can run as high as 40 percent on footwear and apparel.

“With TPP on ice, we have an opportunity to focus on outdoor-specific interests,” says Rich Harper, manager of international trade for OIA.

Those efforts will center around “miscellaneous trade bills” that Congress routinely passes to temporarily suspend or reduce import tariffs. OIA has used those in the past to save outdoor companies and customers more than $30 million; the last round cut footwear tariffs from 40 percent to zero. The Obama administration is reviewing one that would alleviate the 17 percent tariff on bags and backpacks and is expected to make a decision prio to the Jan. 20 inauguration.

Twenty proposals covering other outdoor gear, including footwear, are also working their way through review and Congressional approval. These miscellaneous tariff bills apply when there’s no domestic manufacturing and the loss to the U.S. treasury won’t exceed $500,000. That money could instead go into innovations, producing better products and, potentially, even lowering prices for consumers.

They’re also looking to the renewal due this year of the Generalized System of Preferences (GSP), a program adopted by the U.S. and 26 industrialized nations to boost economic growth in developing countries by lowering their tariffs to increase their export markets. That program holds promise for brands interested in diversifying their manufacturing footprint in other nations. Like other trade agreements, the GSP threatens nations with lost trade privileges for failing to meet environmental or social standards—and it has been enforced in the past.

“There are obviously huge benefits in big, multilateral trade agreements and TPP would have provided that,” Harper says. “That being said, we don’t want to simply wait for TPP to be revived and we clearly have had success in the past in pursuing outdoor-specific initiatives. In some ways, it may be easier to get our members to rally behind those initiatives because they’re clearly targeted at their priorities—but TPP had that as well.”

Opponents of the TPP have long argued that its environmental components allow the continued trade of goods including shark fins, palm oil, and elephant ivory, and including generally weak language that does not require corrective action and is unlikely to be enforced. Sierra Club charges that TPP’s environmental chapter “lacks ambition” by calling for environmental protections weaker than those already in place: “This sets the bar so low for compliance that the TPP could not be used to compel meaningful action,” says Sierra Club’s Solomon.

“It had an environmental chapter wide in issues it covered, but in enforcement, shallow,” Solomon says.

OIA maintains that the trade deal is the best we’ve seen in terms of its environmental measures, but Roberts says perhaps scrapping that deal presents a chance to press the issue.

While policy languishes, power still lies with the people. Even without trade deals calling for environmental and social progress, consumer demand does, and market pressure has and may continue to move that issue forward even when trade deals disappear.

This article was originally published on page 10 of the day 3 issue of OR Daily.