Trans-Pacific Partnership Round 13: A Boost for Small Exporters
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As we discussed last month, the United States has pledged to leverage the Trans-Pacific Partnership (TPP) trade agreement to boost sales by small and medium-sized enterprises (SME). While in San Diego this week for the 13th round of TPP negotiations, we spoke to one smaller firm in the tech sector that sees the agreement as a tool to address “behind-the-border” barriers to trade such as confusing regulatory hurdles and the theft of intellectual property (IP).
Continental Controls Corporation, a 21-year-old firm which employs 40 workers, makes high-tech precision fuel control valves for natural gas engines, turbines and other similar applications. In the growing Asia-Pacific market, the company has already exported its products to Australia, Indonesia and Japan. For Continental, tariffs have not presented as much of a barrier to trade as the challenge of understanding what procedures it needs to follow to export its products and concerns over whether their products will be copied illegally.
“Today trade agreements need to do far more than just remove tariffs. They need to aid in the creation of a predictable environment for doing business in foreign markets,” said Rick Fisher Vice-President of Sales and Marketing at Continental Controls Corporation. “For many SMEs, especially manufacturers of high-tech products like ours, the greatest value the TPP represents is in its potential to create a clearer understanding of what it will take to enter a new market and a stronger sense of security for our products.”
“Having one consistent approach to trade would be great,” Fisher adds. “Every time we go into a new market, understanding that country’s regulations is an issue. With Australia, there hasn’t been much problem, but in other Asian markets, dealing directly with end-users, sometimes the lack of familiarity with regulations and how to get us through them causes issues.”
Continental is reaping the benefits, in part, of the 2005 U.S.-Australia Free Trade Agreement’s provisions on customs and standards, which require publication of procedures and regulations and the creation of points of inquiry, making it easier for Continental or its customers to cut through the red-tape. The TPP would build on these kinds of commitments and give Continental, and other smaller firms like it, a consistent regulatory environment and a much higher degree of certainty about what sort of procedures would have to be followed to enter into a given market.
Another top concern for Continental is the protection of its intellectual property, the company’s most valuable asset. IP theft can be a common occurrence in some countries, and because of that, U.S. exporters can be forced to turn down business opportunities. “We have chosen to stay out of some markets because of our fears that our products will be copied with impunity,” said Fisher. The TPP will help protect companies like Continental by requiring members to provide high standard protections for intellectual property rights. These protections are essential not just to the seven million jobs in California that rely on IP, but also to incentivizing investment, innovation in jobs for all TPP parties.
The TPP is a free trade agreement between the United States and eight other Asia-Pacific economies: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. Canada and Mexico are expected to join the negotiations in the months ahead.