TPP Opens Doors for the U.S. Services Sector

by Natalie Hatour

The Trans-Pacific Partnership (TPP) agreement was signed between the United States and 11 other countries on October 5, 2015. As the agreement undergoes approval by each member country, the TPP presents opportunities for the U.S. services sector, which contributes greatly to U.S. economic growth and competitiveness in the global economy.

The TPP still awaits approval by the U.S. Congress. In his 2016 State of the Union address, President Obama prompted Congress to quickly approve the TPP, as it would “…open markets, protect workers and the environment, and advance American leadership in Asia…[supporting] more good jobs here….”

According to a World Bank report, the TPP is projected to generate an annual increase of $100 billion for the U.S. economy. Looking at trade flows, while the United States holds an overall trade deficit, it has a trade surplus in services trade alone. In 2013, the U.S. held the world’s largest trade surplus of $230.5 billion, made up largely by travel, licenses services, financial services and professional services. That surplus, which reflects a greater number of U.S. cross-border services exports than imports, has supported 4.2 million U.S. jobs.

The TPP consists of provisions pertaining to the services sector, specifically in cross-border trade in services, financial services, and intellectual property (IP).

Cross-border Trade in Services

The cross-border trade in services chapter outlines the elimination of barriers to services trade (such as controls on the number of suppliers or transactions), and the encouragement of cooperation in professional, licensing and delivery services. While the United States is the largest services trading nation, services only account for 30% of U.S. exports. By removing restrictions and bans that hurt small U.S. businesses, such as the required establishment of an overseas office before it can supply a service, the TPP could create opportunities for U.S. businesses.

Financial Services

Financial services will benefit from increased investment and market access. For instance, financial service providers can sell or provide new financial services (based on certain conditions outlined in the agreement) across borders without requiring the supplier to first establish operations in the other country. This agreement will not, however, override a member country’s ability to regulate its financial markets and institutions.

In 2013, TPP member countries accounted for one quarter of U.S. services trade and $16 billion in U.S. financial services exports. Mixed in with Asia-Pacific’s standing as one of the main drivers of the world economy, the TPP’s guidelines for financial services trade can help expand market access and growth on both sides.

Intellectual Property

Small businesses benefit from the TPP rules regarding intellectual property. It will be easier for businesses, especially small businesses, “to search, register, and protect IP rights in new markets.” By addressing common threats (like piracy and counterfeiting) and promoting transparent IP regulations (just a few of the challenges addressed in its IP chapter), the TPP may give U.S. innovators a less-risky platform and opportunity to provide their goods and services to new markets in the large and fast growing, but still developing, Asia-Pacific region.

With the removal of non-tariff barriers, the protection of cross-border IP and data flows and the overall increase in regulatory cooperation expected to come out of the TPP, more market access opportunities can open up in the Asia-Pacific region for American firms, leading to a rise in U.S. services exports.


Natalie Hatour is a member of the project support team at the Global Research Institute of International Trade. She earned her Bachelor of Arts at UCLA and a Master of International Business at Hult International Business, San Francisco. She has worked with the U.S. Department of State in Los Angeles, as well as with the U.S. Commercial Service in San Francisco and San Jose. Integrating her professional experiences with her graduate studies, Natalie is passionate about promoting public-private partnerships to expand international business and development opportunities. To learn more about Ms. Hatour, please click here.

About Dr. Sarita D. Jackson

is the President and CEO of the Global Research Institute of International Trade, a think-tank/consulting firm that examines trade policies and their impact on domestic businesses. Prior to heading GRIIT, Dr. Jackson was a tenured associate professor of political science in North Carolina and worked as a trade policy consultant for an Arlington-based consulting firm. She has participated in trade policy projects and conducted research on free trade negotiations in Botswana, Antigua and Barbuda, Dominica, Dominican Republic, Mexico and Panama. Dr. Jackson has also traveled to Chile and Argentina to study their political systems and economic integration policies.
This entry was posted in Asia, Cross-regional Free Trade Agreements, Free Trade Agreements, Guest Posts, International Trade, Latin America and the Caribbean, North America, Services, Trans Pacific Partnership (TPP) Agreement and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge