Australian exporters in the education, legal, financial, agricultural, and electronic commerce industries could be big winners if the elusive Trans-Pacific Partnership (TPP) gets the green light, according to leading audit, tax and advisory firm BDO.
Negotiations for the landmark agreement are entering the final stages and would see a deal struck between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam, to allow the enhancement of trade and investment among participating nations.
While the intensely private negotiations have made it hard to gauge what the exact benefits for those industries could be, BDO’s Executive Director of International Business Cameron MacMillan said the TPP would certainly promote transparency in trade and set new engagement rules.
“With the ink now drying on the free-trade agreement with China, both Australian business and Government are turning their attention to the TPP,” Mr MacMillan said.
“The TPP has the aim of reducing costs and red tape for Australian exporters and on balance, it holds significant opportunities for the Australian economy and export community.
Australian exporters have every reason to get excited
“At a high level, Australia could secure notable benefits from the TPP with a region that represents more than $220 billion of two-way trade, more than $925 billion of inward investment and a region where Australia has invested more than $710 billion of its stock of outward FDI.”
“With the Federal Government facing little opposition to the deal — compared to other nations — Australian exporters have every reason to get excited as details of the agreement slowly emerge from behind closed doors.”
Mr Macmillan said the agreement complimented the already completed free-trade agreements with the United States, Japan, South Korea and China.
“At a business level, the deal is significant and goes someway to realising the dream of an Asia Pacific free-trade area and this enhanced integration will offer Australian companies access to fast growing regional supply chains,” Mr Macmillan said.
‘Seize the moment’
Meanwhile, the Australian Chamber of Commerce and Industry (ACCI) is urging Pacific Partnership negotiators to “seize the moment” and advance efforts to clinch the 12-nation trade deal.
This follows the US Congress’ recent decision to grant President Obama trade promotion authority.
“The decision of Congress represents a great boost to TPP negotiations, giving President Obama enhanced negotiating powers, said Ms Kate Carnell, CEO of ACCI.
“Negotiators now have an opportunity to finalise a deal so the process does not lag and momentum does not ebb.
“Obviously it is important that Australian negotiators seek a deal in the best interests of Australians, including Australian businesses, before they commit to it.”
Ms Carnell said while global trade deals are most preferable, the TPP recognises that regional deals can balance meaningful change with a greater likelihood of consensus.
Regional agreements offer the greatest potential
The recent Trade and Assistance Review from the Productivity Commission is a timely reminder of the damage done by tariffs, Ms Carnell said.
The review found tariffs cost every Australian about $150 each year.
“Trade protection is a negative-sum game – that is, the benefits to assisted sectors are outweighed by the costs imposed on everyone else, Ms Carnell said.
“Preferential trade deals are now in place with most of our major trading partners so the case for maintaining tariff barriers for products imported from the remaining nations is being eroded.
“Regional agreements such as the TPP and Regional Comprehensive Economic Partnership (RCEP) offer the greatest potential as stepping stones to global agreements.”
ACCI submissions cited in the Productivity Commission Review highlight concerns over complexity arising from overlapping trade agreements and their interaction with global supply chains.
“The Review found that multilateral trade reform is the most effective way to improve national and global welfare and that there is a compelling case for the final text of an agreement to be rigorously analysed before signing,” said Ms Carnell.
*BDO Australia offers a wide range of business and corporate advisory services to large corporate organisations, Government and Public Sector entities, private businesses, entrepreneurs, and individual clients across a wide range of industry sectors. www.bdo.com.au