By Dan North, Chief Economist at Euler Hermes North America
Risk 1: Little economic benefit to the U.S. Of the 11 other countries in the TPP, the U.S. already has free trade agreements with six of them. Of the remaining five, Brunei, Japan, Malaysia, New Zealand and Vietnam, only Japan represents a significant market at 7% of global GDP, and the remainder represent only about 1% of global GDP combined. Therefore the size of the potential new markets for the U.S. is rather small, as will likely be the economic benefit. That’s why the TPP is actually meant to be a strategic agreement which will cement U.S. trade ties to Asian countries, thus keeping China from dominating trade in the region.
Risk 2: Increased competition in some industries. Under the TPP, some industries may come under pressure. For example, autos parts makers in the U.S. and Canada may face tougher competition. Under NAFTA rules, auto parts had to have at least 60% North American content to qualify as duty free, but under TPP that threshold has been reduced to a range of 35%-45%, opening new markets to lower-cost manufacturers.
Risk 3: Currency manipulation. The TPP could subject U.S. trade to countries that manipulate their currencies to gain competitive advantage. In theory a country could artificially hold down the value of its currency to make its exports more competitive and imports from the U.S. less competitive, just the opposite of the level playing field a trade agreement should promote. The TPP does not include any sanctions for currency manipulation, although the U.S. may try to argue for a side deal to create protections against it.
Risk 4: A host of smaller risks. Many specific measures in the TPP carry risks. Some of these measures include: longer pharmaceutical patents which will quell generics, keeping prices high; intellectual property rights that could lead to Internet restrictions; lowering of standards on imported food; an investor-state resolution system which would allow foreign corporations to sue the U.S. government; downward pressure on U.S. wages; and many more unknowns risks—the TPP is thousands of pages long.
Risk 5: Passage. The TPP is unloved by large swaths of the public, the U.S. Congress, and about half of the presidential candidates. Among many other criticisms, opponents blame prior free trade agreements such as NAFTA for destroying millions of American jobs. The bill seems unlikely to come up for a vote until at least after the 2016 elections. Depending on the outcome of the elections, the TPP may never be passed.
Dan North is Chief Economist at Euler Hermes North America
Chief Executive Group exists to improve the performance of U.S. CEOs, senior executives and public-company directors, helping you grow your companies, build your communities and strengthen society. Learn more at chiefexecutivegroup.com.
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
