The Panama Canal is one of the great achievements in contemporary engineering history. Built in 1914 it is also a feat in which U.S business benefited considerably from; cutting significantly the travel time required prior from the East coast to West for shipping. Previously, getting goods from New York out to Los Angeles via the seas would require a trip not just down the Eastern seaboard and beyond the Florida Keys – but all the way down throughout South America. Rounding Cape Horn before then making the journey all the way up to California saw American industry delayed and denied the chance to progress as rapidly as the American people were capable of delivering. The Panama Canal changed all that. Yet, this is not a written work focusing on the past – but instead the future. What if we told you today another crossing like the Panama Canal was on the cards in the Americas? What’s more, what if we said it was not a work of engineering but rather nature that would deliver this new design? You may say it sounds fanciful but it is indeed true such a avenue is arising, and with the North-West Passage things are literally looking up for American industry and trade. Let us provide an overview then of the looming new thoroughfare opening up in amidst the icy straits of Northern Canada.
The Northwest Passage
Traveling from Vancouver, Canada to Finland is surely a sizable trip by any measure.
By plane, you would be seated for around 15 hours as you cruise over the American continent, Atlantic Ocean and into Europe before arriving in the Nordic nation. Yet, if traveling by ship the distance is even more immense, requiring navigation through the artic and ensuring – when you undertaking this route as part of a commercial shipping operation – that your journey shall be a long (and chilly) one. Yet, the opening of the North West Passage (NWP) promises the chance for vessels to cut this length of this journey by up to 1000 miles. While the NWP has long existed, until 2009 pack ice made it largely unusable for most of the year. Yet, recent years has seen the pack ice problem largely erode, and indicators that it shall continue to remain a viable passage in years to come. This is literally one of the most important and notable developments for American business in the 21st century. While to some degree it may change little the passage of goods between two U.S cities located closer to the Canal – say a vessels journey from Miami to San Diego – for a ship traveling from Maine to Seattle; such an option for another passage could prove altogether trans-formative.
At present, the greater use of the NWP remains a possibility still unfolding. This is because it is still being month-by-month and throughout the seasons to what extent the ice shall continue to melt in a consistent fashion each year. What this means is that many shipping companies are currently viewing this as a ‘watch and wait’ until it is certain the ice shall continue to melt to a sufficient amount annually each year to allow navigation of the Passage consistently in the summer months. Furthermore, there remain ongoing negotiations between the Canadian government and the wider international community as to how best to consider transit through the waters – for while other nations regard the passage as international waters Canada contends it is part of their territory and so is reserving right to issue a fee or toll (like Panama does) for passing through this area. However it resolves though, the prospect of a new shipping lane in the northernmost reaches of the world has immense and outstanding potential to offer for U.S business and international trade. Yet, it is also true there is another big item on the agenda for U.S business at present, and this also warrants an overview: the Trans Pacific Partnership.
The Trans Pacific Partnership
Signing the TPP would herald a new era of economic opportunity in numerous areas for the United States and other participatory nations. There are 13 others involved in discussions surrounding the partnership, and they are as follows: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Further, while not yet official members of the negations, other nations such as South Korea, Taiwan, Indonesia, Thailand and more have expressed interested in future membership in such a plan. This to say; the TPP has the potential to be trans-formative in the way the U.S and the wider world via Asia does business. With the phrase ‘the Asian Century’ now increasingly entering the national dialogue, it is worth an overview of how we arrived at where we are today in the economic and international arena.
The Trans Pacific Partnership (TPP) can be regarded as one wing of the Obama Administrations policy in Asia. Since coming to office in 2009 President Barack Obama has looked to Asia with a view both towards using American influence to establish greater security in the region; as well as growing the trade links and economic strength of the United States with regional allies and partners. The first aspect of Obama’s Asia policy is known as the Pivot/Re-balance to Asia that has seen considerable U.S diplomatic, military and other government resources shift from other regions to Asia. Yet, while an interesting topic in and of itself, it is the economic wing that is most compelling to U.S business. Should Obama find success in this agreement it could confirm a marked shift and change in the region that has been on the cards for many years.
Since the end of the Cold War the United States has been aware both economically and strategically the focus would shift from Europe as a core economic landscape further afield to ‘the new world’. Accordingly, throughout the 1990’s Asia saw numerous nations – so called the ‘Asian tigers’ achieve immense economic growth. Hong Kong, Singapore, South Korea and Taiwan were achieving rapid growth and considerable modernization across all elements of their respective nations. What’s more, this can alongside the continued economic power of Japan – notwithstanding the bursting of their economic bubble in the early 1990’s – as well as growth in Indonesia, Thailand, Australia, New Zealand and elsewhere. Yet, for all the promise and profits of these nations, one loomed largest in the calculation of the United States, both in the economic view and wider strategic considerations: China.
Beginning with the Deng Reforms – so named after Chinese premier Deng Xiaoping – of the late 1970’s and carrying on throughout the 1980’s, China began to see its economy grow at an immense rate. In turn, the end of the Cold War in the early 1990’s saw the U.S and China pursue a relationship free of the prior rivalry that existed due to the USSR and East V West divide.
What this means for US business
Yet, just what would this TPP mean for American business exactly? Well, right now the results are uncertain as negotiations surrounding the deal are ongoing. Yet, by contrast, there are numerous outlines of the TPP and how it would support business.
Firstly, is the great exposure to the Asian market – and particularly to the growing middle class demographic. Indeed, the sheer size of Asia’s population is staggering in this regard. Counting just China and India would leave a statistician with a population of approximately 2.5 billion. This means exposure to the wider Asian market – which also includes Japan with 127 million people, Indonesia with 250 million people and South Korea with 50 million people amongst other nations – could offer a tremendous shot in the arm for an American business.
Second, it could see costs decrease of goods like sugar, beef, technology and more across the TPP nations. This would see a considerable incentive for increase in global trade. Furthermore, given the favorable tariffs and removal of many customs fees between the TPP countries, the incentive for buying more things – which means more shipping and postage would be required – will be an attractive lure in the era of Amazon and eBay.
Lastly, the favorable logistics of such a trade deal could have the potential to stimulate the American economy in new way. With California facing the Asian seaboard via the Pacific Ocean, an increased trade and flow of goods between the U.S and TPP partners would do much to aid in the growth of shipping and logistics as an industry and supply chain.
Conclusion
The Northwest Passage and the TPP are matters that remain unfolding. In turn, indicating exactly how they still develop – and in what way – is not yet totally clear. Regardless though, just like the prospect of a journey to Mars by NASA it is undoubted the opening of the NWP to the wider world mean a huge transformation in the way the transport and movement would occur. Furthermore, with the TPP would come confirmation American business shall continue to grow and benefit in the US and wider world due to the benefits of global exchange and trade. This has the potential to provide an immense benefit to U.S business and shipping from the East to West of the United States; and East to West of the whole world.
In, sum the NWP and TPP remain two issues that are indeed developing; but amongst the most exciting of the 21st century; and one’s to watch keenly in the second half of 2015.
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