Trade ministers from 11 Pacific Rim countries today signed the Trans-Pacific Partnership agreement (TPP) – a sweeping free trade agreement to streamline trade and slash tariffs.
This comes on the same day US President Donald Trump has slapped new tariffs on aluminium and steel to protect US producers.
The US pulled out from the Trans-Pacific Partnership last year, creating concern the deal would not be effective without its most influential country. But the remaining 11 members pressed ahead, saying they were showing resolve against protectionism.
The renegotiated pact signed today in Chile's capital Santiago was renamed the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP or TPP-11).
The pact includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The Agreement is one of the most comprehensive trade deals ever concluded and will eliminate more than 98 per cent of tariffs in a trade zone with a combined GDP worth $13.7 trillion.
Trade Minister Steven Ciobo says Australian farmers, manufacturers, service providers, small businesses and all exporters are the big winners as they will be able to sell more of their goods and services in a free trade area that spans the Americas and Asia.
“The TPP-11 creates Australia’s first free trade agreements with Canada and Mexico, giving Australian exporters preferential access to two of the world’s top 20 economies for the first time,” he said.
In 2016-17, nearly one quarter of Australia’s total exports, worth nearly $88 billion, went to TPP-11 countries. This will continue to grow as tariffs tumble under the TPP-11.
Highlights of the TPP-11 include:
- New reductions in Japan’s tariffs on fresh, chilled and frozen beef, (Australian exports worth $2.1 billion in 2016-17)
- New access for dairy products into Japan, Canada and Mexico, including the elimination of a range of cheese tariffs into Japan covering over $100 million of trade
- New sugar access into the Japanese, Canadian and Mexican markets
- Tariff reductions, and new access for our cereals and grains exporters into Japan, including, for the first time in 20 years, new access for rice products into Japan
- Elimination of all tariffs on sheepmeat, cotton and wool
- Elimination of tariffs on seafood, horticulture and wine
- Elimination of all tariffs on industrial products (manufactured goods)
- Guaranteed levels of access for services and
- Liberalised and improved regulatory regimes for investment, notably in mining/resources, telecommunications and financial services
“As a modern trade agreement, the TPP-11 will help grow digital trade with rules that cover the movement and storage of data, privacy, consumer rights, and combat ‘spam’,” said Mr Ciobo.
“The signing is a significant moment for open markets, free trade and the rules-based international system. It sends an important message to the world that prosperity is achieved through breaking down trade barriers, not building them.”
Mr Ciobo also announced “extra outcomes” for Australian exporters following the new deal.
Australian beef will be a big winner with further tariff cuts negotiated with Canada.
Under this side agreement, Canada will eliminate its 26.5 per cent tariff on Australian beef imports over five years, instead of the 10 years agreed under the original TPP deal.
“This will help sell more Australian beef to Canada, already our eighth largest beef export destination in 2017,” Mr Ciobo said.
“Today’s additional outcome adds to the already strong beef export opportunities created under TPP-11.
“This includes Mexico’s agreement to eliminate all beef tariffs (over ten years), and Japan’s agreement to accelerate the reduction of its 38.5 per cent tariff on our beef exports to 9 per cent (within 15 years), building upon our existing access to the Japanese market under the Japan- Australia Economic Partnership Agreement (JAEPA).”
Another key “side” outcome for Australia is Japan’s tendering process for rice.
Japan will now offer tenders six times a year, including an additional tender in May, in line with Australia’s growing season. This bilateral agreement will provide improved trading conditions, helping grow Australian rice exports to Japan.
And Australia’s education services providers will have increased access to the booming Vietnamese market through a pilot program that will enable Australian universities to provide online courses to Vietnamese students.
“These additional outcomes build upon the export opportunities created by the TPP-11,” Mr Ciobo said.
Chilean Foreign Minister Heraldo Munoz said today’s signing is "a strong sign against the protectionist pressures, and in favour of a world open to free trade, without unilateral sanctions and the threat of trade wars."
It follows the decision by US President Donald Trump to approve levies of 25 per cent on imported steel and 10 per cent on imported aluminium, despite warnings of a global trade war.
The European Union warned this week it is ready to retaliate against Trump's tariffs with counter-measures against iconic US products like Harley Davidson motorcycles, Levi's jeans and bourbon – escalating the risk of a trade war.
The US was one of the TPP’s strongest supporters before President Trump took office.
Mr Trump has said he prefers country-to-country deals and is seeking to renegotiate several major trade agreements, including the North American Free Trade Agreement that includes the US, Mexico and Canada.
Each signatory is now working towards securing the entry into force of the Agreement as soon as practicable.
The Turnbull Government will table the TPP-11 text, released by the Department of Foreign Affairs and Trade (DFAT) on February 21, and National Interest Analysis in the Parliament later this month.
The TPP-11 will then undergo a review by the Joint Standing Committee on Treaties to which all interested parties can make submissions.
Further information on the TPP and additional bilateral arrangements secured for Australia is available at: http://dfat.gov.au/trade/agreements/tpp/news/Pages/a-new-trans-pacific-partnership-agreement.aspx