Worldwide: What Does The TPP Mean For Latin America?

Last Updated: 18 July 2018
Article by TMF Group

The Trans-Pacific Partnership is one of the largest free trade agreements in the world with many benefits for members. In Latin America, Chile, Peru and Mexico are part of the TPP.

Three of the 11 countries in the Trans-Pacific Partnership are in Latin America and a fourth – Colombia – is hoping to join next year.

Chile, Peru, and Mexico are part of what is seen as the most significant trade agreement in recent years – despite the US backtracking on its original support and declining to join. Together, the Trans- Pacific Partnership county's economies account for 13% of global gross domestic product (GDP).

Negotiations for the new trade deal had taken several years before the pact was signed in Chile on March 8th. The 11 nations in what is now known as the Comprehensive and Progressive Transpacific Partnership (CPTPP), shortened to 'TPP 11', together account for about 15% of global trade and represent approximately 500 million people. The agreement is the world's third largest trade bloc after the European Union (EU) and the North American Free Trade Agreement (NAFTA).

Current members, besides the LatAm three, are Australia, Brunei, Canada, Japan, Malaysia, New Zealand, Singapore, and Vietnam. With a GDP of 4.9 trillion USD in 2016, Japan alone has the largest economy of the 11 TPP member countries and is the fourth largest exporter in world trade and the fifth largest importer.  Once the CPTPP enters into force, likely to be later this year, it will be one of the largest free trade agreements in the world and will give enhanced market access to key Asian markets. 

The thinking behind the deal is a commitment to free and open markets, designed to integrate Asia Pacific markets by reducing barriers to goods and services trade, protecting investments and intellectual property rights, establishing rules for e-commerce, and promoting fair competition.

Fully enforceable, the CPTPP is a legally binding agreement, supported by a system of dispute settlement, to bring rule of law and greater transparency and predictability to the regional trading regime.

Trade tariffs between the TPP 11 countries will be slashed considerably, eliminating customs duties on 95% of trade in goods and opening access to a combined marketplace worth around $13.7 trillion. The overall aim, according to the agreement, is "maintaining open markets, increasing world trade, and creating new economic opportunities for people of all incomes and economic backgrounds."

TMF Group, one of the world's leading providers of business support services, has a TPP-wide perspective with local offices backed by a global network. In Latin America, the collective view on the importance of TPP is highly positive.

Whilst many of the countries involved already have several trade agreements in place, the TPP represents a significant regional bloc of like-minded countries.

Peru

Esteban Hilgert, TMF Peru's Managing Director, said: "Whilst we already had free trade agreements, where tariffs on certain commodities weren't high to begin with, the TPP allows countries such as Peru, Chile, and Mexico to compete on a world stage with similar rules.  It will potentially give exporters access to more markets."

Some Peruvians demonstrated against the TPP signing, taking to the streets of the country's capital Lima in protest, claiming the agreement opened the market for international companies at the expense of domestic firms in the nations that signed the agreement.

Human rights groups there also condemned the TPP, claiming it would limit the power of the state in many sectors including health, environmental safety, and labour rights at the expense of the most vulnerable sectors of society.

But the Peruvian government stood firm, in the belief that the TPP was good for the country overall, creating more opportunities for business.

"It is good for Peru to have this trading agreement with very important countries, such as Canada, Australia and Japan," said Esteban. "These countries will want to consider Peru for investment – which is where TMF can help as an important services provider with knowledge of local regulations. Also, we can help Peruvian businesses expand in other TPP countries. As we have offices in these countries, it gives the investor the same service provider in other countries – the same service level agreement, same procedures etc."

Chile

Federico Liutvinas, TMF Chile's Managing Director, said: "Chile already had trade agreements with all TPP countries, to different extents – so the impact is less than on other LA countries. Nevertheless, it's good for Chile because in all cases, the agreement offers a better deal. Ten per cent of all Chilean exports to Japan had no preferential treatment, and now they will.

"For example, in Japan, Chilean oranges exported to Japan were subject to a 12% tariff. Once TPP comes into effect, this will be reduced to zero within 8 years. TPP is good for small and medium sized businesses as well as large organisations because the trade agreement simplifies the paperwork needed to export. Also, services are included in the agreement and they weren't before in the bilateral agreements that Chile had with certain Asian countries, such as Malaysia and Vietnam. So, a software company starting up in Chile can export its services to TPP countries with no tariffs."

The TPP agreement is called 'Progressive' because it goes far beyond reducing costs for businesses. It includes overarching issues previously not considered in trade agreements, such as how to make compatible the regulatory systems of the TPP nations to support innovation and job creation, principally in small and medium-sized companies.

Federico said that the TPP would increase the appetite for investment and expansion. "TPP is complemented by the Chilean government being strong and stable, so business conditions are good. The government is focused on taking advantage of the TPP."

Mexico

TMF Mexico Managing Director Fernando Garrido said: "Mexico estimates that being part of TPP will grow its economy by 1%. That might not sound a lot, but when you consider the Mexican economy is 15th largest in the world, the 11th in terms of purchasing power and the second largest economy in Latin America, the growth from TPP is significant. It's particularly good for our country because it opens key countries in the Asia Pacific area".

"The Mexican geography is very attractive to trade; we're close to the U.S. and we have lots of natural resources. We have 128 million inhabitants with an average income of 9,300 USD.  I expect levels of investment to increase, as Mexico is seen as a solid investment opportunity, due to its 1.16 trillion USD annual size of the economy GDP."

According to latest figures, Mexico is the world's 13th largest exporter in world trade with a 2.34% share of the global market, and the world's 12th largest importer, with a 2.45% global share. Of its TPP partners, Canada is a key export market, and Japan is both key for exports and a significant source of imports.

"Mexico and other Latin American countries are relatively undeveloped, so this represents an opportunity for developed countries in the TPP to invest in us," said Fernando.

Colombia

Colombia, not currently part of the TPP, has signalled its desire to join. TMF Colombia's Managing Director Daniela Diaz Quijano, said that Colombia was one of the agreement's early supporters, but opposition from the agricultural sector – worried about the impact of cheaper foreign food imports – led to the country pulling out.

"But it is important to belong, even without the US involved. The TPP represents 15% of world GDP and a significant proportion of the global population. Colombia is hoping to become part of the trade agreement next year."

But a successful application to join the TPP still draws concern. Lack of infrastructure in Colombia means it is costly to transport finished goods to export.

"TMF can help Colombian companies look at becoming more efficient to get their costs down. The country has to become more competitive if it is to make the most of belonging to the TPP agreement."

How can TMF Group help?

To help you fulfil your business potential under the new trade agreement, TMF Group has a CPTPP-wide perspective supported by local knowledge, with local offices in each CPTPP member country, except for Brunei. Understanding the changing tariffs per commodity between CPTPP member countries is essential to maximise new trading opportunities.

TMF Group provides global reach with export local support and knowledge, thanks to its network of offices in 84 countries around the world. Comprehensive expertise is available on new and existing importing and exporting regulations per country, plus support for companies wishing to set up new business entities. Specialists in tax, accounting, law, corporate secretariat, HR, and other business support services are on hand to provide you with support for business expansion, new trading arrangements and business entries. Our professionals have an enviable breadth of experience and local contacts to help you maximise new business opportunities. Contact us for further information.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions