• <div class="header-image" style="background-image: url(/live/image/gid/4/2957_V6N10_Header.rev.1542820788.jpg);"/><div class="header-background-color"/>

With TPP, Small and Minority Businesses Boost The Economy

November 14, 2016
The Trans-Pacific Partnership (TPP) is a dynamic trade deal involving the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The deal empowers U.S. small businesses (less than 500 employees) like never before by dedicating a chapter containing language to eliminate barriers to international trade.

By Rashan Prailow

Small businesses are the foundation of the U.S. economy, providing 55% of jobs and 66% of all net new jobs since 1970; more than 7 million of the 11 million jobs created during the Great Recession recovery have been generated by small businesses and startups [1]. Additionally, in 2014 over 3 million jobs were supported by goods exported to TPP member countries. These statistics are an indicator of the greater impact small businesses can have if the TPP is passed in Congress.

Domestic producers will benefit from expanded small business exportation. According to the National Small Business Association, 72% of small businesses use foreign raw materials, components, and parts for their products less than 10% of the time.This will benefit the U.S. economy in two ways. First, small businesses will realize increased revenues. Small business manufacturers that export earn more than twice as much revenue compared to those that do not export. Second, domestic producers’ revenues and bottom line will be positively impacted by small business purchases. Furthermore, exportation has a direct positive impact on U.S. wage increases. Businesses that export pay on average about 15 percent more than the average wage [2].

The growth of U.S. minority-owned small businesses will be a key component of international trade. In 2012, the Obama Administration’s NEI/Next Initiative to expand exports partnered with the minority business development agency. As a result, the minority business development agency has substantially increased access to contracts and capital for minority-owned small businesses. These businesses are twice as likely to export their products and services and they are three times more likely to generate 100% of their revenue from exporting [3].

U.S. businesses export less than other developed countries, as only 1% of businesses engage in the exportation of goods and services. Small businesses are vital to exportation, making up approximately 98 percent of U.S. exporters. However, small businesses represent less than 33% of the known export value of U.S. exports. The current trade barriers in place make it difficult for small businesses to realize substantial profits from exports. As of June 2016, the U.S. had a trade in goods deficit with four of the Asia-Pacific member countries.

The U.S. had imported more goods than exported from Japan, Malaysia, New Zealand, and Vietnam. The major exports for the countries are as follow:

  • Japan – medical equipment, aircraft, machines
  • Malaysia – machinery, aircraft, medical equipment
  • New Zealand – aircraft, machinery, vehicles
  • Vietnam – machinery, soybeans, cotton

Aircraft and machinery are the goods most exported to Asia-Pacific member countries. Prior to May 2012, the Export-Import Bank (EXIM) did not grant financing to small businesses for exporting goods and services in aftermarket use on foreign-manufactured large aircrafts. In addition, EXIM did not grant financing to small businesses for exporting goods and services directly to large aircraft manufacturers. The recent law change combined with the TPP will grant small businesses greater access to the exportation of aircraft.

US Trade in Goods in USD Millions

The TPP will slash nearly 18,000 tariffs on made in America products and eliminate non-tariff measures.Small businesses are more likely than large firms to identify high tariffs as an obstacle to trade. High tariffs on U.S. exports and imports increase the cost of small businesses’ products limiting their market access options.Non-tariff measures cover a wide range of obstacles to trade. Non-tariff measures include import licensing requirements, rules for customs valuations, discriminatory standards, pre-shipment inspections, rules of origin to qualify for lower tariffs, investment measures, and local sourcing for government procurement [4].

Small business owners claimed that the second key obstacle to exporting was due to lack of information, according to a 2013 survey conducted by the National Small Business Association. Article 24.1 of the TPP contains language aimed at eliminating non-tariff measures by creating transparency between small businesses and foreign governments through information sharing [5].

Proponents of the TPP do not ignore the fact that rising income inequality and job loss are a result of globalization. The North American Free Trade Agreement (NAFTA), a free trade agreement passed by Bill Clinton in 1994, has been credited with causing this misfortune. Since 1990, large corporations have downsized, cutting about 4 million jobs. However, during the same time span, small businesses have added about 8 million jobs, creating a net job gain of 4 million jobs [1]. The TPP aims to correct mistakes made in NAFTA negotiations while creating a more dynamic trade deal for the 21st century.

Critics of the TPP are concerned with intellectual property rights, environmental protections, Investor-State Dispute Settlement, affordable medicines, and labor protections as problems the deal will exacerbate. The critique of labor protections for U.S. workers is most salient among the public, because working families have not realized paybacks from the economic recovery. For example, critics worry domestic jobs will move to TPP member countries such as Vietnam, where minimum wage is 56 cents per hour.

U.S. participation in the TPP significantly upgraded the labor agenda compared to past free trade agreements [6]. Article 19.2 of the TPP addresses U.S. labor protections by requiring each party to affirm their obligation as members of the International Labour Organization [TPP]. The affirmation ensures:

  • The formation of labor unions
  • Recognition against labor standards used for protectionist trade purposes
  • Elimination of all forms of forced labor
  • The effective abolition of child labor 

These affirmations are important for leveling the playing field for U.S. workers against disadvantageous labor practices from member countries such as Vietnam. In addition, a standing committee composed of senior U.S. and Vietnamese officials will monitor and ensure rapid response to compliance concerns [7].

The telecommunication revolution of the last few decades have given small businesses greater access to overseas consumers. However, many barriers to trade exist that suppress small businesses’ access to reach 95% of the world’s consumers outside of U.S. borders.

Politicians from both sides of the aisle have opposed the TPP. Not ratifying the TPP will be a lost opportunity for the U.S. to boost its economy through small business exportation.


  [1] Small Business Administration, [Online]. Available: https://www.sba.gov/managing-business/running-business/energy-efficiency/sustainable-business-practices/small-business-trends. [Accessed: June 22, 2016]

  [2] “Exporting Is Good For Your Bottom Line,” International Trade Administration, June, 2016. [Online]. Available: http://www.trade.gov/cs/factsheet.asp. [Accessed: June 29, 2016]  

  [3] “AMERICA: Built to Last,” U.S. Department of Commerce, July 2016. [Online]. Available: Minority Business Development Agency, http://www.mbda.gov/sites/default/files/APR2011.pdf. [Accessed: July 2, 2016]

  [4] “TOPICAL ISSUE: Potential Macroeconomic Implications of the Trans-Pacific Partnership,” World Bank, Jan. 2016. [Online]. Available: https://www.worldbank.org/content/dam/Worldbank/GEP/GEP2016a/Global-Economic-Prospects-January-2016-Implications-Trans-Pacific-Partnership-Agreement.pdf. [Accessed: June 27, 2016]

  [5] “The Trans-Pacific Partnership: Chapter 24 Small and Medium-Sized Enterprises,” Office of the United States Trade Representative, June 2016. [Online]. Available: https://ustr.gov/sites/default/files/TPP-Final-Text-Small-and-Medium-Sized-Enterprises.pdf. [Accessed: June 17, 2016] 

  [6] Cathleen Cinimo-Isaacs, “Labor Standards in the TPP, Trans-Pacific Partnership: An Assessment, p. 261+, July 2016. [Online]. Available: Peterson Institute for International Economics,  https://piie.com/publications/chapters_preview/7137/15iie7137.pdf. [Accessed: July 8, 2016].

  [7] “The Trans-Pacific Partnership: Chapter 19 Labour,” Office of the United States Trade Representative, June 2016. [Online]. Available: https://ustr.gov/sites/default/files/TPP-Final-Text-Labour.pdf. [Accessed: June 17, 2016]

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.


  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>