Trans- Pacific Partnership agreement: Its effect on money movement.

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Trans- Pacific Partnership agreement

The Trans- Pacific Partnership or TPP as it is most commonly referred to, is a trade agreement between countries in the Pacific Rim. The pact was drafted in 2015, in order to bring about benefits associated with trading blocs to its signatories. The agreement brought with it elimination of tariff barriers to trade and establishment of an investor – state dispute settlement mechanism. Since its formulation, signatory states have benefited from increased job opportunities, enhanced economic growth, reduced poverty levels and better labor and environmental protection laws. The successful outlook portrayed by the blocs has attracted more signatories bringing the number to twelve.

The United States being one of the signatories to this pact means great benefits to the other member countries considering America generates and earns more than 20% of the world’s income. The adoption of this trade treaty ensures better prospects for all signatories. Manufacturing industries in America for instance, that are fighting to remain competitive have found cheaper countries to produce from, that are still a part of the TPP i.e. Vietnam and Malaysia. This in effect means there will be a massive transfer of money across these countries to pay up for the services offered. The world’s largest retail chain –WalMart, for example, has for long contracted companies in Asia to produce garments for sale in various outlets largely due to the low cost of labor there.

The service industry is a huge income generator for most countries including the United States. The industry accounts for almost 68% of the united state’s GDP. Being a global leader in this industry, the US offers service on a number of fronts including financial services, retail distribution and so much more. Establishment of the TPP eliminates barriers to services including nationality restrictions and other impediments. This allows countries within the agreement to export their services or better still physically relocate into a foreign country with better prospects. Such an agreement, therefore, boosts movement of money across the two countries either by way of remitting taxes to the host nation or disbursing money back home for subsistence use. American and Japanese airlines, for example, have continued to offer services to American and Japanese nationals with Delta, Japan airlines, and All Nippon at the top of the list in terms of flight numbers, passenger capacity and income generated. Such agreements boost currency flows between countries.

The TPP agreement greatly boosts currency movement due to the scrapping of taxes and duties imposed on exports and imports between the partner states. Barriers to trade that have long existed between nations like Australia, Mexico, and Vietnam have been eased with the coming into effect of this deal. Forecasts already indicate that business travel between the countries that are signatories to the pact will grow due to reduced bureaucracies that are common with governments.

In conclusion.
Trade agreements are an essential pillar for our economic development in any country. Personal connections are fostered through such pacts. Business contacts established in the process greatly boost currency movements between nations.

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