Manufacturers Take Note: Is Your Real Estate TPP-Ready?
The debate over the Trans Pacific Partnership (TPP) has brought into sharp focus the tension between established industrialized nations like the US seeking to establish cross border standards/protections and emerging economies seeking to protect their growth (China foremost among them). Manufacturing companies in particular will be significantly impacted by these forces going forward.
As you consider where and how to add production or technical capacity, it’s important to keep in mind that the United States is determined to blunt the rising leverage of the emerging economies in general and China in particular. Therefore, it is almost a certainty that TPP (and its European cousin TTIP) will be finalized and implemented within three to four years (well within the time frame of a 5 year strategic capital plan) regardless of the current tumult in Congress.
In addition, you can expect an eventual effort to broaden NAFTA to Central and South America (not including Brazil but almost certainly Chile). These agreements will happen because the US’s trade objectives are motivated by geopolitical forces as much as, or more than, economics. The impact on your business will likely be felt in three ways: 1. Lower tariffs in Asia; 2. Simplified regulations in Europe; and 3. Increased uncertainty and global competition.
Make sure your real estate advisor is not so focused on commissions that it misses the true risks and opportunities presented by the inevitability of these trade agreements.