By Amrietha Nellan
One “bright spot” in the U.S. economy since the Great Recession, is the growth in women-owned enterprises — totalling over 9 million businesses today. Despite this, women-owned businesses still lag behind in their share of revenue, making up 30% of all enterprises but only 4% of revenues. One of the reasons women-owned business do not make up a proportional share in revenue is because they are mostly small businesses that have not tapped into their export potential. The Trans-Pacific Partnership (TPP) will change that by breaking down key barriers to entering the export trade, opening up fertile new market opportunity for women-owned businesses to thrive.
Only 12% of export businesses are owned by women, but those that do earn 20 times more than their non-exporting counterpart. And with 95% of the world’s consumers living outside the U.S., engaging in the export trade is a clear way to grow their bottom line. However, these non-exporting businesses face multiple barriers that prevent them from expanding to the global market. A study by the National Small Business Association (NSBA) discovered the top reasons businesses do not export: they lack the know how, are worried about international payment, is too time consuming to obtain visas and work permits, and is costly. The TPP addresses each one of these issues, opening up export opportunity for American products in the fastest-growing markets in Asia and Latin America.
The most cited reason businesses do not export is because they do not know how to. This is not surprising since customs processes and certification requirements to export products to foreign countries can be complicated and inaccessible to interested businesses. The TPP addresses this problem by streamlining customs rules, requiring those rules to be available in English online, and encouraging the creation of an electronic application system. The TPP also sets up better electronic payment systems. It secures the free flow of data including personal information across borders and minimizes fees that will facilitate digital trade and payment alternatives for exporters. Additionally, the agreement has a specific chapter on temporary visas and entry permits for business people, minimizing the barriers U.S. persons face when travelling for business abroad.
But the TPP most significantly benefits small, non-exporting businesses by addressing key issues inflating the cost of exporting. Unexpected costs from detained or delayed shipment are particularly burdensome for small businesses, because they cannot absorb the cost as easily as large multinational companies and do not have dedicated staff to deal with these problems. The TPP aims to solve this by easing customs procedures and setting up rules for expedited release of small and time-sensitive shipments. The TPP also minimizes costs by prohibiting data localization as a condition for doing business in TPP countries and banning customs duties on digital products. Together these provisions drive down the cost of transitioning from a local to global business, opening the door to greater profitability from exports.
It is clear that the TPP will be a powerful tool in helping women-owned businesses succeed as exporters. This is fundamentally important for the long term health of our economy, because women business owners who export hire five times more employees and pay one and half times more than those who do not. And where greater economic influence furthers gender equality, the TPP will progress the movement forward. Therefore, the TPP presents an opportunity — an opportunity to accelerate job creation, higher wages, and female representation in our future economy so that the “bright spot” of women-owned businesses can shine even brighter… like a diamond perhaps.