Oct 13, 2016 - 9:00am

The Case for the TPP: The Small Business Imperative

Senior Vice President for International Policy

What is the Trans-Pacific Partnership (TPP) all about? With debate over this 12-nation trade agreement now underway, the U.S. Chamber is publishing this series of posts making the case for the TPP’s approval. This installment looks at its importance to small business.

America’s small business owners are hailed as heroes of free enterprise, not least because they generate two-thirds all new U.S. jobs. But it’s often overlooked in the trade debate that 98% of the 300,000 American companies that export are small and medium-sized businesses.

Small businesses account for one-third of U.S. merchandise exports.

In other words, trade is the engine that drives many small businesses. These firms account for one-third of U.S. merchandise exports, according to the U.S. Department of Commerce. The number of small and midsized firms that export has risen about threefold over the past two decades.

While some critics argue that trade agreements only benefit large multinationals, the truth could hardly be more different. In fact, given the importance of securing better access to growing Asia-Pacific markets, many U.S. small businesses see the TPP’s approval as a top priority.

The TPP will help small businesses cut costs, save time, and provide certainty. It will:

  • Require foreign governments to make 18,000 tax cuts—that is, eliminate the tariffs that too often shut out American exports ranging from apples to zucchini and airplanes to x-ray equipment.
  • Cut red tape and make customs procedures in foreign ports more efficient and transparent.
  • Require fair and transparent regulatory procedures for the development of product and technical standards, thus ending many of the “nontariff barriers” that too often shut out U.S.-made products.
  • Allow products tested in the United States to be imported into any TPP country, thus saving companies the money they would otherwise be obliged to spend on duplicative testing and certification.
  • Boost the potential of e-commerce to allow thousands of smaller firms to easily reach foreign customers through online portals.
  • Promote paperless trading by allowing electronic authentication and signatures.
  • Make it easier for businesses to search, register, and protect intellectual property.
  • Criminalize bribery and the theft of trade secrets while ensuring transparency in bids for foreign bidding for government contracts.

In fact, the TPP is likely even more important to smaller companies than to multinational corporations. Tariffs, testing costs, licensing fees and other burdens that may be minor irritants to a large firm can be show-stoppers for smaller companies because they add to their fixed cost of doing business.

The TPP also includes a specific chapter on small businesses to provide for enhanced coordination, information-sharing, and capacity-building to help these firms take advantage of the agreement to the fullest extent possible.

In assessing the TPP, Congress should consider how tearing down trade barriers is critical for firms of all sizes—which is why passing the TPP is a top priority for America’s small business exporters.

About the Author

About the Author

Senior Vice President for International Policy

Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy.