The Trans-Pacific Partnership (TPP) is one of the greatest economic hallmarks ever formed in history. The partnership was an extension of the Trans-Pacific Strategic Partnership Agreement (TPSEP which was established in 2005 (Petri 2012, pg. 40). TPP was originally constituting of 12 member countries before the withdrawal of the United States of American in January 2017. The partnership was formed as a form of trade agreement that would permit free and amicable economic interactions among the member countries. The benefits to be enjoyed in this partnership was the reduction of tariffs and creation of market bases for multinational companies. Among the listed TPP multinational includes the Starbucks Company based in the United States.
Starbucks Corporation is a multinational company which deals with the production of coffee, sandwiches, and baked products among other food products. It operates both in US and Australia among other nations. It was among the biggest companies who were listed to operate under the TPP agreement. The US withdrawal from the TPP in some way have really affected the economic stability of Starbucks though the company still operated internationally. At the same time there a number of risks that the company has encountered as well as opportunities in its operations as a multinational.
What are some of the opportunities that exist for Starbucks? There is increased market base for the company products. The trade agreement between the United States and Australia has over the years provided an avenue for multinationals to get an opportunity to market their products overseas. Starbucks has established a strong market base both in US and Australia among other nations. This has extremely enabled the corporation to extend its wings beyond national boundaries. Increased market base translates to higher revenues and profit. There is a likelihood for the company to boost up its income if the trade agreement between the US and Australia is not interrupted.
Cutting off tariffs. In the current economic setup, all goods which cross national borders are subjected to stiff tariffs. Elimination of tariff charges was one of the main objectives of the Trans-Pacific Partnership (Lewis, 2012, pg. 42). This was meant to ease the inter export and import goods among the member nations. Low tariffs translate to high sales and profit. Starbucks company products are not subjected to high tariff charges when getting into Australia and this has really helped the company to expand its business operations in Australia. There is a high future possibility that Starbucks Corporation will be the biggest food processing company in the world
The risks faced by Starbucks as a multinational company still hold. The one undisputed risk is the stiff competition that the company faces especially in Australia (Lewis, 2011 pg. 27). The company has a big challenge to take owing to the fact that there are other multinational companies based within and outside of Australia that offer similar products and services as Starbucks. Companies like Bickford and Cascade are one of the leading competitors to Starbucks. Now, based on the fact that US withdrew from the TPP agreement, there is a sense in which the success of Starbucks business operations in Australia will be a challenge unless the corporation works on policy changes.
There is also the issue of currency manipulation, and this is really affecting the US economy. There are countries who have the tendency of pinning down the US currency for an economic advantage, in the sense that getting goods from the US becomes cheaper for the importing country while exporting goods to the US becomes expensive. It is a kind of currency manipulation which is geared to subvert and kill other nation’s sources of income. This is a very high risk that Starbuck as a company is facing. If Starbuck coffee gets in Australia at a cheaper price due to currency manipulation, there is a sense in which the US-based business operations will not thrive.
In an economic angle, the withdrawal of US from the TPP appears to be one of the most economic risk that the country subjected itself to. TPP was formed to ease trade and economic transactions among the member nations. There were a lot of benefits than risks in that agreement. There are more benefits that Starbucks enjoyed when US was still a TPP member, but now some of these benefits have been cut off. The future of the company is now in question. There is a tendency that the company will have to revert to its original operations of high tariffs and non-free economic operating zones.
Conclusion
Generally, TPP is one of the greatest trade partnerships ever formed. Before its establishment is was seen as a rhetoric agreement that will amount to nothing, but as years went by the member nations have witnessed significant trade benefits. The future of TPP is bright, and it might become the biggest trade union in the world now that the continuity agreement has been signed by the remaining 11 countries. The withdrawal of US from TPP was uncalled for. Trade is one of the most economic boosters in the United States and there is a sense in which this withdrawal is going to greatly affect the way in which the US trades with other nations.
References
Lewis, M.K., 2011. The Trans-Pacific Partnership: New Paradigm of Wolf in Sheep's Clothing.
BC Int'l " Comp. L. Rev., 34-50, p.27.
Petri, P.A., Plummer, M.G. and Zhai, F. eds., 2012. The Trans-pacific partnership and Asia-
pacific integration: a quantitative assessment (Vol. 98) pg. 40. Peterson Institute.
