TPP intends to spark a boom in trade in services, but it will take time

TPP is about opening up trade for services industries so that one day they may be as efficient and as globally integrated as manufacturing is today. TPP is a step toward that ideal, but just one of many that are needed. This process was slow for manufacturing as many pieces had to fall in place. For most of industrial history, countries traded raw materials or finished goods, with the process of turning the one into the other located entirely within a single country, and often within a single factory. From the 1980s, however, a large and rapidly growing share of trade consisted of “intermediate goods”. Rather than produce a computer from scratch in one country, for example, a tech firm would source components from several different countries, bring them together in yet another country for assembly, and then ship the completed good to consumers around the world. The great supply-chain revolution was slow in coming, however. Tariff rates fell precipitously from the 1940s to the 1980s, by which time the duties imposed on most goods traded between rich economies had fallen to negligible levels. The shift to container shipping, which made transit by sea much faster and more reliable, was largely over by the early 1980s. From 1950 to 1985 the cost of a long-distance phone call dropped dramatically. Yet it was not until the 1990s that the supply-chain boom really got going, abetted in part by China’s economic opening.

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