Vitamin Manufacturers Affected by the Trans-Pacific Partnership

by Cassandra R. February 05, 2016

The Trans-Pacific Partnership involves thirteen countries, the majority in the Asia-Pacific region, where nutritional supplements have had one of the highest revenue.The upcoming Trans-Pacific Partnership will have a significant effect on a number of industrial sectors for the United States and other participating countries, centering mainly in the Asia-Pacific region. By reducing the cost of exporting, and promoting the exchange of U.S. merchandise with other agreed countries, TPP has been presented as a free trade agreement that will help advance U.S. economic interests, create jobs, and emphasize transparency in all international transactions.

Currently, the nutritional supplement industry boasts a high global market value, reaching up to USD $50 billion, according to Euromonitor National. Both tariff trade costs, international health regulations, as well as new trade restrictions for each country has an effect on the total value. Enacting these free trade agreements (FTAs) will help lessen the regulations by reducing trade costs for both exporters and importers, which will also employ more stable and transparent trading transactions. The United States has agreements with 20 FTA partners, and exports merchandise from several sectors, including information and communication technologies, automotive parts and machinery, and health products. According to the Department of Commerce, 47% of U.S. goods exports went to FTA partner countries in 2014—totaling up to $765 billion. With the Trans-Pacific Partnership in place, revenue is projected to increase while discriminatory actions against goods and services exported from the U.S. will be minimized. For industry leaders within the health product sector, this trade agreement will influence how they do business in the future.

The Globally-Beneficial Trans-Pacific Partnership (TPP)

The upcoming TPP agreement aims to increase new market opportunities within the Asia-Pacific region, aiding U.S. exporters in a wide variety of industries. This giant free trade deal is between the United States, Canada, and 10 other countries within the region. Expected results will be the elimination of tariffs, non-tariff barriers, and the unification of all regulations for more streamlined product exportation and registration process. The partnered countries include Australia, Brunei, Chile, Malaysia, Mexico, New Zealand, Canada, Peru, Singapore, Vietnam, Japan, and South Korea. It is also viable that more countries will join in the future. The TPP will help facilitate a vast increase in economic growth for all countries involved, particularly in the Asia-Pacific region. There will also be an increase in demand for U.S. food and agricultural products due to the 500 million consumers in the participating countries.

Before the agreement, the United States had exported around $24.5 billion of processed products to TPP regions and $41.9 billion to the rest of the world. Currently however, exporting processed products to these countries have their difficulties, ranging from high export taxes to competitive disadvantages. For example, Japan gives preferential market access to Australia, Chile, Mexico and Vietnam due to trade specific agreements. The European Union also has trade negotiations with Japan, Malaysia, and Vietnam in place that allows for lower trade tariffs in their exports compared to those with the United States. The TPP agreement is necessary for the United States to stay competitive within the global market. Estimates from the Peterson Institute for International Economics state that the U.S. will generate $78 billion more per year than before the trade agreement, which will increase to $267 billion annually if this free trade agreement is expanded to the rest of the Asia-Pacific region. From producers to processors, the TPP agreement will give all participating countries a major competitive advantage. This will be particularly helpful for small businesses by minimizing the trade barriers currently in place. It will also help promote new technologies to help American businesses succeed internationally.

Delving into the Details

With the draft of the new agreement, interpersonal business relations with companies in the Asia-Pacific region will be beneficial, as trade barriers and regulations are harmonized between each country.To fully grasp the influence of the Trans-Pacific Partnership, it’s important to note certain highlights within the agreement, and how they will impact the current global marketplace. The agreement includes 30 chapters that cover an assortment of trade and trade-related issues, including: trade in goods, customs and trade facilitation, trade remedies, government procurement, labor, environment, electronic commerce, intellectual property, and more. These chapters are intended to update current trade policies from previous FTA’s. They also include solutions for new trade issues such as the digital economy as well as internet goods and services. With the TPP will come comprehensive market access along with a reduction of tariffs and non-tariff barriers for all participating countries. These updates and changes will create new opportunities and benefits for businesses, workers and consumers across all sectors. Both goods and services will benefit due to more simplified regulations with less expenses. The development of production, supply chains, and seamless trading will also bring improvements for the U.S. economy by creating and retaining jobs, raising living standards, opening up domestic markets, as well as ensuring cross-border integration.

In addition, the TPP will be mindful of inclusive trade by ensuring that economies and businesses of all sizes can benefit. With previous exporting hurdles minimized, small and medium-sized businesses will have an easier time exporting American products and services rendered throughout the Asia-Pacific region. At its core, the TPP is intended to be a platform for regional integration, improving the economies all across the Asia-Pacific region.

The TPP and the Global Nutritional Supplements Industry

All American-made products will have access to several of the fastest-growing markets in the world. Over 18,000 taxes from various countries will be eliminated, allowing goods and services to be rendered without as many hindrances, including those in the health product category. In 2014, exports of health products reached sales of $91.8 billion worldwide. Over $8.9 billion of this share were exported specifically to new TPP markets, accounting for 26% of U.S. healthcare products. Manufacturing for healthcare products make up 5% of U.S. production.

For health products such as nutritional supplements, pharmaceuticals, and medical devices, there is a current maximum tariff, or import tax of up to 30% for all qualifying products in the sector. Other varying trade issues which impede the flow of these U.S. exports further include red tape, border delays, and customs inefficiencies, all of which can increase expenses. According to, once the TPP is enacted, 99.9% of U.S. goods exports from this sector will be duty-free immediately.

This is extremely beneficial when dealing with countries that impose high import barriers for such products. The key markets within the TPP region for health products, such as nutritional supplements, include Japan ($8.3 billion in U.S. exports), Malaysia ($308 million), New Zealand ($185 million), Vietnam ($165 million), and Brunei ($10 million). Malaysia currently imposes the maximum tariff percentage, but with the enactment of TPP, this tariff will be fully eliminated immediately, along with Japan’s tariffs. Vietnam will eliminate 99.8% of import taxes, New Zealand will eliminate 99.5%, and Brunei with 72%. According to, there is expected to be a full percentage of duty-free goods in 11 years or less. In exchange, the United States will eliminate tariffs, currently as high as 131% for any processed products within the next 20 years.

Nutritional Supplement Demand in the Asia-Pacific Region

With the Trans-Pacific Partnership, new opportunities for marketing nutritional supplements will arise in the Asia-Pacific region. Malaysia in particular is one of the key markets for health supplement products in Southeast Asia. Regulated the same as pharmaceuticals, the reduction of import taxes for supplements in Malaysia will also be nullified, allowing for ease of access for producers. Currently, vitamins and supplements are heavily promoted in the Malaysian marketplace through aggressive marketing campaigns. Consumer education and a shift towards healthier diets and active exercise have increased market revenue. Dietary supplements showed strong performance in the region in 2014, rising at a 3% value CAGR.

Japan is third in global dietary supplement market value. The United States has exported over $13.89 billion worth of agricultural and related products to the region, including vitamins and supplements. The country’s biggest drivers of growths in the industry include nutricosmetics ($1.7 billion) and sports nutrition ($190 million). Products positioned for anti-aging continue to attract the strongest support among consumers, driven particularly by the rising elderly demographic. Skin care, weight loss, multivitamins, and products designed to fortify nutrition are currently some of the most popular supplements in Japan’s market. The complete reduction of import taxes will allow for more product registration, giving businesses a chance to take a share of this region’s burgeoning market. To make things easier, Japan is also in the process of aligning their regulatory system for supplements to match the DSHEA system of the United States. Easy market access can provide numerous amounts of opportunities for industry leaders.

In Vietnam, the dietary supplement market value was measured at $526 million in 2012. International manufacturers dominated the playing field while imported products accounted for 40% of the market share. The market is expected to register a CAGR value of 5% during 2015, which is a healthy average rate of growth, according to Euromonitor International. Economic troubles in the region have hindered some of the market value, but with the passing of the TPP, economic recovery and higher standards of living are expected to rise. Main areas of interest for consumers include eye health, digestive support, heart health, and women’s health. Self-medication in Vietnam is also prevalent due to increasing costs of healthcare and a complicated hospital system.

In 2012, the New Zealand dietary supplement market was valued at $188 million, with a CAGR growth of 6%, a big jump from its previous $80 million back in 2009. Consumers in the region are placing greater emphasis on preventative health measures, resulting in a steady growth of vitamins and minerals. Coupled with consumer education and a confidence in self-medication, consumers have already relied on ordering U.S. manufactured products online. With the enactment of the TPP, the easing of regulatory and tariff barriers will allow for more supplement products to hit local shelves at reasonable prices.

A New Regulatory World

Previous regulations regarding nutritional supplements will be minimized for easier trade. This will also make it simpler for companies to import ingredients for their supplement manufacturing.Though the Trans-Pacific Partnership was finalized back in October 2015, each participating country will need to ratify the agreement in their own region through the local democratic processes. With the agreement comes sustainable growth, trade innovation, and the creation of jobs for a majority of the trade sectors. New markets will be more open to American-made products, helping to set a higher standard in manufacturing quality and integrity. American supplement manufacturers with international connections can foster stronger business relations due to easier market access. This allows cGMP-certified products to move freely across borders, satisfying the demand of both distributors and consumers. The state of California is one of the top-producing states for health products, including nutritional supplements, with estimates reaching up to $1.8 billion in exports to TPP countries in 2014. With the TPP, the market can only increase in value, product innovation, and marketing opportunities.

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