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The Trans-Pacific Partnership Trade Agreement and Its Impact on the Scrap Recycling Industry

The Trans-Pacific Partnership Trade Agreement (TPP) is the culmination of five years of negotiations between 12 countries desiring to improve the amount of trade between them.

The countries that have signed on to the TPP (although most have not yet ratified it) are:

  1. Australia
  2. Brunei
  3. Canada
  4. Chile
  5. Japan
  6. Malaysia
  7. Mexico
  8. New Zealand
  9. Peru
  10. Singapore
  11. United States
  12. Vietnam

The stated goal of the TPP is to make it easier for American entrepreneurs, farmers, and small business owners to sell Made-In-America products abroad by eliminating more than 18,000 taxes and other trade barriers on American products across the 11 other countries in the TPP—barriers that put American products at an unfair disadvantage today. It is estimated that for U.S. businesses alone, the TPP will result in the elimination of hundreds of millions of dollars in annual tariffs paid to foreign governments and significant reductions and elimination of foreign government barriers and market distortions. These goals are highly consistent with ISRI’s longstanding policy on free and fair trade.

Recycled and recyclable materials currently face import duties in some of the TPP countries. However, for the most part, those duties will drop to zero within one year of the effective date of the TPP, removing any disincentives there may be to importing recycled materials.

ISRI recently sent a letter to the Congress in support of passage of the TPP. The letter stated that the TPP will potentially generate tens of millions of dollars in additional sales revenue for U.S. recycling businesses by eliminating tariffs on scrap commodities and recycling equipment exports. ISRI Chair Mark Lewon and ISRI President Robin Wiener wrote, “…[o]pening new markets and expanding access to existing trade partners, the TPP will generate millions of dollars in tax revenue, make a positive contribution to our balance of trade, and create thousands of recycling jobs across America.” They went on to say that “…[t]he U.S. is the world’s largest exporter of recycled commodities. Within the U.S., scrap commodities account for one of the largest exports by value, making up more than a quarter of the industry’s economic activity.”

However, not all is perfect in the TPP as far as the scrap recycling industry is concerned.  Malaysia and Vietnam, both of whom currently impose export duties on recycled materials, were able to negotiate a phase out period that will last as long as 15 years during which those export duties will be dropped to zero. Such a phase out period is not abnormal in the context of the TPP. Indeed, the import and export duties imposed on many goods will be phased out over a period of time, unlike recyclables which will see import duties drop to zero almost immediately.

While President Obama and Ambassador Froman, the United States Trade Representative, are pushing very hard for the TPP there are many who oppose ratification for a variety of reasons.  Perhaps the most important reason is the concern that TPP may result in a loss of U.S. jobs because other countries will be able to freely export their goods to the United States.  However, on the other hand, farmers, manufacturers, the retail and apparel industry, the tech industry and representatives from the service industry as well as most of the nation’s major business associations including the U.S. Chamber of Commerce, the National Small Business Association, the U.S. Council for International Trade, and the National Association of Manufacturers have all gone on record supporting the TPP as an opportunity to expand trade in U.S. goods and services.

At this juncture, with the presidential election less than two months away and with a Congress that is focused on coming to a budget deal as quickly as possible so they can return to their states and districts to campaign for reelection, very few people in Washington expect that TPP will even be brought up before the elections. President Obama has expressed a strong desire to have TPP ratified by the Congress before he leaves office in January, but the odds of that happening remain to be determined.

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