The historic Trans Pacific Partnership Agreement (TPP) – which will see the elimination of 98% of tariffs among 12 countries – was formally signed in New Zealand by the Minister for Trade and Investment Andrew Robb.
According to the federal government, Australian businesses are set to benefit, with Australia’s exports of goods and services to the countries that are part of the agreement worth $109 billion last year – a third of Australia’s total exports.
What is the TPP?
The Trans Pacific Partnership Agreement (TPP), seven years in the making, is a free trade agreement between 12 countries that abolishes a range of tariffs that have acted as barriers to free trade. Additionally the agreement covers rules for labour, the environment and rules to combat bribery and corruption.
The signatories to the TPP are:
- New Zealand
- United States
Will Australians benefit from the TPP?
Recent analysis by the World Bank suggested that the TPP would result in an increase of just 0.7 of a per cent in terms of our GDP by 2030, a result the government has refuted.
“There are so many parts of this agreement that are hard to model and it is hard to make an assessment of the value – the very significant value – of one set of trading rules across 40 per cent of the world’s GDP,” said Minister Robb.
Mr Robb said this agreement brings enormous promise across both traditional areas of trade and investment and so-called 21st century areas like e-commerce and increasingly important global value chains.
“The tariff cuts will deliver material gains for our exporters across the board and place downward pressure on the cost of imported goods for households and businesses, but the benefits that will flow from the creation of a more seamless trading environment are not well understood,” he said.
“The embrace of paperless trading, streamlined customs procedures and trading rules, assistance for SMEs, more seamless data flows and greater flexibility with data storage, are all features of the TPP. The agreement also contains provisions to help stimulate new investment and as experience shows, when you deepen trading relations increased investment inevitably follows.”
Business response to the TPP
The Business Council of Australia was quick to offer congratulations to the minister, calling the agreement the first concrete step towards realising the long-term vision of a Free Trade Area of the Asia-Pacific.
“As an ambitious, deep and comprehensive trade agreement, the TPP addresses a wide range of complex trade policy issues that go beyond the scope of bilateral free trade agreements,” said Business Council of Australia Chief Executive Jennifer Westacott .
“The agreement will reduce tariffs and restrictiveness of non-tariff measures as well as harmonize a range of regulations to encourage the integration of supply chains and cross-border investment.
“Against the background of slowing trade growth, rising non-tariff impediments to trade, and insufficient progress in global negotiations, the ratification of the TPP represents an important milestone for Australia and the Asia-Pacific region.”