TPP Setting the Right Rules for Massachusetts Tech Firms

by Amrietha Nellan

When we think about the place to be for hot startups, Silicon Valley is what jumps to mind. But over on the east coast, Beantown is going through a tech renaissance of its own. Hit hard when the tech bubble burst, Boston’s comeback story is one we can all learn a thing or two from. Boston’s new economic playbook focuses on developing diffuse and diverse businesses that will supply the demands of the future. And Boston has come out ahead, taking this year’s top spot as the best U.S. city for startups for its “clear emphasis on next generation tech companies specializing in education, energy and healthcare industries.” Embracing the open source, collaborative culture, the city built public-private-academia partnerships to foster a thriving startup community. But this is only the beginning of what’s needed to secure a healthy long term trajectory. Strategic international partnerships that open up new markets, reduce costs, and reward American innovation will encourage even more growth, and that’s exactly what the Trans-Pacific Partnership (TPP) offers.

TPP establishes formal trade relationships with five new countries and improves trade terms with six more. The deal negotiates better market access for Boston’s startup scene by cutting tariffs on high-tech instruments and digital products. Currently, high-tech instruments like Micro-Leads’ micro-cuff electrodes, which are used for nerve disorder treatment, face tariffs as high as 25% to export to TPP countries, but will drop to zero under the agreement. Additionally, TPP bans customs duties and other discriminatory taxes on foreign digital products. Under TPP, U.S. high tech exports and digital products will be more affordable, meeting demand in the fastest growing consumer market in the world.

TPP will also reduce the cost of doing business abroad by streamlining testing procedures and ending forced localization requirements. Tech exports face additional barriers in the form of unclear and redundant certification processes, so TPP adds transparency to the testing process and standardizes rules to reduce costs for technology exporters. Many countries also require foreign firms set up shop locally before entering their markets. This is expensive for any business, but particularly burdensome for small tech startups without resources to establish a physical location abroad. So TPP specifically prohibits forced localization, removing this barrier to trade altogether and significantly reducing the cost of engaging in global trade for a young, lean tech firm.

For most startups, intellectual property (IP) rights are paramount. If a tech entrepreneur quits her job to launch a startup, she knows that strong IP laws will protect her investment, and she’ll be rewarded for creating a successful new product.  TPP recognizes this core principle and establishes strong IP protections for trade secrets, the IP right on which U.S. tech firms most commonly rely to secure their innovations. Many countries lack adequate domestic protection for theft of trade secrets. Without legal recourse, U.S. companies harmed by trade secret thieves and knockoff competitors abroad cannot recuperate lost profits from perpetrators. In 2013 alone, U.S. companies fell victim to more than $300 billion of trade secret theft. TPP helps combat those losses by requiring partner countries enact regulations criminalizing trade secret theft and holds underperforming countries accountable under the threat of trade sanctions.

Boston’s startup scene is a model for America’s 21st century economy. Encouraging innovation and developing relationships to support that growth are key to a prosperous future. Boston has already built a tech startup infrastructure that’s booming locally. And TPP is the perfect addition to grow it globally. Google, Facebook, and other leading tech firms throughout Silicon Valley see why TPP is important for their growth. Congress should get on board, pass TPP, and pave the way for the smart economy of the future in Boston and across the country.