As the US and EU continue to battle it out over the Transatlantic Trade Agreement, there is another trade agreement about to take affect which could greatly affect British fashion businesses. The Trans-Pacific Partnership, or TTP, is an agreement between 12 countries, the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru, and will foster trade between these nations to boost growth.
Most goods and services will see tariffs removed, although some will take longer than others. In total some 18,000 tariffs are affected. On textiles and clothing, they will be removing all tariffs, but while the US Trade Representative says most tariffs will be removed immediately after the deal is ratified, "tariffs on some sensitive products will be eliminated over longer timeframes as agreed by the TPP Parties", noted the BBC.
This means clothing made in any of these countries, be it Vietnam or the USA, can be exported without any duties. It will be almost like the EU's single market, where companies are free to export products to other European nations, without having to be taxed on duties or imports.
TTP trading nations are double the size of the EU
In terms of size, the TTP dwarfs the single European market, as the 12 countries have a collective population of about 800 million, almost double that of the European Union's single market. Already these countries are responsible for 40 percent of world trade.
If we look at how it will affect brands, a good example is Nike, who manufactures the majority of its shoes in Vietnam, yet pays a tariff of 30 percent on every pair imported from the country. The savings would be astronomical, but also reduce the cost of its footwear at consumer level.
The backlash, of course, is that companies exporting to the US and these regions outside of the agreement will have a less competitively priced product. If Nike were to brings its prices down 10 percent, British footwear company New Balance would struggle to compete as its product is more expensive in the US due to tariffs.
Photo credit dynamic business.com.au