For nearly five years, President Barack Obama has been working on putting together the Trans-Pacific Partnership, a massive free trade agreement between the United States and other Asian-Pacific countries. The deal would be one of the largest in history, covering about $1.5 trillion worth of trade in goods and $250 billion worth of services. The treaty includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—many of the countries Pacific Wealth will be investing in.

Although the number of countries could grow if Korea, which asked to join the trade agreement last month, is included, the treaty already covers more than 40% of the world’s gross domestic product and more than a quarter of global trade.

Getting Past Political Headwinds

The President considers the trade agreement one of the crown jewels of his “Asia Pivot” policy and a key part of his strategy to isolate China economically, as it is excluded from the treaty. But he ran into unexpected resistance from Congressional Democrats when he asked for fast-track authority, which would prevent members of Congress from adding amendments to the deal or filibuster the legislation. Democrats tend to be wary of free trade agreements, blaming them for job losses and eroding labor standards.

Although Senate Democrats initially defeated a bill giving Obama fast-track authority, 13 of them were swayed to approve it last week when they cut a deal on separate legislation to punish countries that manipulate their currencies to keep their exports cheap. The legislation’s passage is still far from a fait accompli, but the Senate will soon take up debate, with the House of Representatives following shortly after.

The trade agreement won’t be an immediate boon for the U.S. economy, but it should boost American heavy industry. Our petroleum, steel and motor vehicle industries export a combined $700 billion in goods and $160 billion in services to countries covered under the treaty. Companies that are heavy on intellectual property, such as drug makers and technology firms, also will benefit from stronger patent protections and fewer export restrictions.

The perks will flow both ways, though, and a number of portfolio holdings in Pacific Wealth stand to benefit.

Vietnam’s Bounty

For instance, Market Vectors Vietnam Exchange-Traded Fund covers an economy that grew nearly 8% annually during the 2000s, a result of the government’s push to increase privatization and introduce other economic reforms. The country also has been getting a boost from China’s rising labor costs and its policy of refocusing its economy on domestic consumption rather than exports.

As businesses leave China in search of lower costs, many have relocated to Vietnam, where the population of nearly 90 million has a median age just below 30. The Vietnamese labor force is also quite well educated, with the country ranking 17^th on the Program for International Student Development’s scorecard of countries whose citizens have 10^th grade reading, science and math skills. That puts Vietnam ahead of Australia, Austria and France. However, the typical Vietnamese worker earns just $100 to $150 per month, less than half his Chinese counterpart.

Although Vietnam has grown more slowly the past five years than it did the five years prior, the country’s economy is expected to increase more than 6% this year. If the trade agreement is approved, Vietnamese exports should enjoy an upsurge. For instance, more than a third of all apparel that the United States imports come from Vietnam, amounting to about $7 billion in trade for the country. Because the trade agreement essentially eliminates tariffs, those imports should suddenly become much more competitive.

Holding a basket of about 30 stocks, Market Vectors Vietnam ETF (NYSE: VNM) is an excellent proxy for the Vietnamese economy. Its top holdings include homebuilders, energy companies, financial services firms and, yes, apparel makers. Although the expense ratio is a slightly high 0.70% thanks to Vietnam’s higher trading costs, the fund also yields 2.9%

With the Vietnamese economy likely to get a major uplift from the trade agreement, buy Market Shares Vietnam ETF up to $22.

Perks for Japanese Companies

Another likely beneficiary of the treaty is Japan-based Trend Micro, a provider of security software for consumers, businesses and governments.

Few businesses will benefit more than technology and software companies, whose biggest assets consist of intellectual property. Under the agreement, intellecutual property will receive stronger protections that will enhance royalty streams, which won’t be subject to any tariffs. Trend Micro (OTC: TMICY) will be able to aggressively pursue patent infringement claims in countries where previously it would have had difficulty accessing the court system to protect its interests on foreign shores.

The treaty also should open up new markets for Trend Micro, which has already been averaging better than 6% annual revenue growth over the past decade, when cybersecurity became an increasing concern for businesses and consumers alike.

Business for Japan-based Yaskawa Electric will increase on a couple of fronts, too. The company makes motors and controllers primarily used in industrial automation, as well as robotic welders, painters and handlers. In addition to stronger protections for its array of patents and the elimination of tariffs, the company should see greater demand for its robotic equipment from manufacturers building new facilities in the countries the treaty includes.

Buy Trend Micro and Yaskawa Electric up to $45 and $40, respectively.