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NRF Analysis Points to TPP Potential for Retailers

The National Retail Federation (NRF) is doing its own bidding to get the Trans-Pacific Partnership (TPP) passed before America changes hands.

In a new report looking at how TPP stands to affect retailers, NRF said in short: it will get rid of unnecessary and sometimes over-high costs of doing business with and in TPP countries, ensure that foreign suppliers produce up to U.S. standards, and help grow the American economy as a whole.

“U.S. retailers are the primary direct link between American families, workers and producers in the TPP countries,” according to the report. “But the TPP can only deliver these benefits to U.S. retailers and consumers if Congress approves legislation implementing it.”

The 12-nation TPP trade deal was signed on Feb. 3 and now awaits approval from Congress.

More than drastically reducing, or altogether eliminating, import taxes on things like apparel and footwear and travel goods, TPP is also expected to ease trade between the nations.

“Opaque or onerous customs procedures, red tape and delays in processing goods through customs are just some of the ‘sand in the gears’ of trade that raise the cost of exporting and importing,” NRF said. “Those costs get embedded into the price of affected goods as they make their ways to retail store shelves.”

Language in the TPP agreement mandates that member nations publish all customs laws, regulations and procedures on the Internet in English, and the deal also promotes paperless trading—two things expected to reduce processing time and cut trade transaction costs by anywhere from 2 to 15 percent of the value of the good.

With e-commerce ramping up in retail, the TPP provision that says member countries won’t incur customs duties on goods or services transmitted electronically could benefit a slew of new companies, or existing ones looking to increase their e-commerce offerings.

TPP will also protect retailers’ investments in other member countries.

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The agreement requires that countries treat investments from other members no less favorably that investments from their own domestic sources.

“This means, for example, that U.S. retailers will finally be able to open stores more easily abroad, benefiting foreign consumers who want to purchase U.S. brands,” NRF said.

Last year, American retailers spent $1.33 billion on import taxes for knit apparel coming from TPP countries, $758.5 million on woven apparel and $576.4 million on footwear tariffs, according to NRF. The total estimated spend for taxes on consumer goods in 2015 was $4.18 billion.

TPP promises to eliminate many of those duties, some on the day the deal takes effect, others over a phase-out period, and the NRF said those duty savings could trickle right down to the consumer.

“The U.S. retail industry is highly competitive—too competitive to afford retailers the luxury of padding their profit margins with the duty savings,” the report noted. “While some may use the savings to upgrade their product offerings, others will lower prices.”

With TPP, American workers are also expected to see a boost in the size of their paychecks.

Skilled workers, who make up 60 percent of the labor force, are expected to earn an additional $350 each year, and unskilled workers, who make up the remaining 40 percent will earn roughly $120 more a year.

“Overall, lower prices and higher wages will contribute to greater household spending power,” NRF said. “The TPP could boost annual spending power for the United States as a whole by $131 billion, or more than $1,000 per household per year.”