“Most significantly, the TPP does not address a massive cost to U.S. goods and services that has a chokehold on our export levels: foreign Value-Added Tax (VAT) schemes. The United States is one of only a handful of nations worldwide that does not charge a VAT on incoming manufactures and services. But 10 of the 11 TPP member states do, which means that, even with tariff-free access, high barriers remain [The Hill, “Whoops! We forgot to include the VAT in the TPP”]. “Every time a trade agreement reduced tariffs it was undercut by our trading partners’ raising their VATs to compensate for tariff cuts.” (United States, U.S. Business & Industry Council)

Note to the US Business & Industry Council: VAT applies to everything, domestic and foreign, not just American imports and is charged according to the rate paid in the customer’s country. If you raise the rate you affect sales for domestic firms as well as foreign ones. No evidence is provided that VAT has been changed to compensate for tariff cuts. It might have been, but in any case I have had personal experience of American protectionism in the past (viz. counter-vailing duties on steel and electrical goods, to name but two), so the US itself has a history of protectionism that no on wants to talk about. I suspect that since VAT already stands at between 17 and 27% in Europe (Hungary 27%, UK 20%) there is little scope for raising the rate without damaging economic health. This is probably a non-issue, but it does point up the insularity of some US business groups and their ignorance of the rational tax called VAT.