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TPP trade pact: What it means for Australian exporters

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TPP trade pact: What it means for Australian exporters  article image

It’s finally a done deal. 

After eight years of painstaking negotiations the historic Trans-Pacific Partnership (TPP) Agreement has been successfully concluded.

And Australian exporters will be the big winners with new trade and investment opportunities between the 12 countries involved in the new deal.

At the conclusion of negotiations in the US earlier this week Trade Minister Andrew Robb said the TPP will enhance our competitiveness, promote growth, job creation and higher living standards.

Mr Robb described the TPP as “the biggest global trade deal in 20 years.”

“The TPP will establish a more seamless trade and investment environment across 12 countries which represent around 40 per cent of global GDP,” he said.

Last year, one third of Australia’s total goods and services exports – worth $109 billion – went to TPP countries. They include Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the United States and Vietnam.

And TPP countries account for 24 per cent of the world’s trade in services.

Australia’s services exports to TPP countries were worth $20 billion in 2014 – almost 35 per cent of our total services exports.

The TPP comes just months after landmark trade deals with Korea, Japan and China.

Each country involved will need to pass and ratify associated legislation for the partnership to begin. This process is expected to take several months.

What it means for exporters

By setting common international trade and investment standards between member countries, the TPP will make doing business across the region easier. It will help to reduce red tape and business costs.

It will also slash barriers to Australian goods exports, services and investment and eliminate 98 per cent of all tariffs across everything from beef, dairy, wine, sugar, rice, horticulture and seafood through to manufactured goods, resources and energy.

The TPP includes rules to make country-of-origin labelling for products clearer, and document the supply chain if key steps are conducted in other countries.

Australian cane growers will be huge beneficiaries.

The TPP will increase market access for Australian sugar into the United States for the first time in 20 years – effectively doubling Australia’s entitlements. 

Australia will have an additional quota of 65,000 tonnes base allocation, as well as a 23 per cent share of additional allocations into the US market – triple the previous amount.  

Beef exports set to sizzle

The agreement significantly liberalizes beef exports to Japan, and eliminates tariffs for beef into Mexico, Canada and Peru. 

Australian services will also be given a big boost under the new agreement.

This includes education, professional services, transport and financial services.

Australia’s world-class Mining Equipment, Technology and Services (METS) and oilfield services sectors in countries like Vietnam, Malaysia, Mexico, Chile and Peru will also gain strong benefits.

The TPP’s new rules on state-owned enterprises (SOEs) will help Australian businesses to compete on a more equal footing with government-owned commercial enterprises in TPP markets and ensure that SOEs do not unjustifiably discriminate against Australian suppliers of goods and services. 

In regard to Intellectual Property, the TPP will not require any changes to Australia’s patent system and copyright regime – including biologic medicines – which had been a major sticking point. 

The government has delivered on its promise not to change Australia’s existing five years of data protection for biologic medicines or other key health issues, including the Pharmaceutical Benefits Scheme (PBS). 

Mr Robb said this issue had been a “deal-breaker” for Australia. It is understood a compromise was found shortly before the final agreement was sealed.

E-commerce provisions 

Under the TPP, state-of-the-art e-commerce provisions will pave the way for a more liberal cross border environment for the flow and storage of data. It will include appropriate consumer protections, while retaining the right of governments to regulate in the public interest. 

And access will be improved for small and medium-sized enterprises (SMEs) to vital global value chains.

Also, the TPP encourages paperless trading, making customs and export delivery more effective and efficient. TPP_Andrew Robb2

For investment, the TPP will create new opportunities and provide a more predictable and transparent regulatory environment.

Australian investment in TPP countries has more than doubled in the last decade to reach $868 billion in 2014, a rise of 16 per cent over the previous year.  This represents 45 per cent of all outward investment. 

Investment in Australia from TPP countries more than doubled in the last decade to reach $1.1 billion in 2014, a rise of 10 per cent over the previous year.  Investment from TPP countries is 40 per cent of all foreign investment in Australia.  

While one of the Australia's largest trading partners, China, is not involved in the deal, several other countries have indicated they are hoping to be covered in the new system of trade rules. This includes South Korea, the Philippines, Taiwan and Colombia. 

The agreement’s open architecture allows for other members to join in the future.

For more information visit: http://dfat.gov.au/trade/agreements/tpp/

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