Australia’s long-standing support for a new multilateral free trade agreement in the Asia-Pacific region has finally come to a fruition on 24 January 2018, when eleven countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) reached agreement on the final Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP). Sadly, the United States, which originally participated in negotiation, withdrew from the project under President Donald Trump.
Even without the world’s largest economy, the TTP is still a great victory for free trade and economic growth. As Australia’s Trade Minister, Steven Ciobo, explains:
“The TPP will eliminate more than 98 per cent of tariffs in a trade zone with a combined GDP of $13.7 trillion. The agreement will deliver 18 new free trade agreements between the TPP parties. For Australia, that means new trade agreements with Canada and Mexico and greater market access to Japan, Chile, Singapore, Malaysia, Vietnam and Brunei.
“In 2016-17, nearly one quarter of Australia’s total exports, worth nearly $88 billion, went to TPP countries. This will continue to grow thanks to the significant increase in market access the TPP gives Australian exporters.”
The agreement represents a big win for Australia’s primary producers, including exporters of cotton and wool, horticulturalists and wine makers. But manufacturers will also benefit, with Australians now having legally enforceable market access to ten Asia-Pacific countries, including mature economic powerhouses like Japan, Canada and Singapore, as well as the region’s rising stars like Mexico, Malaysia and Vietnam, as all industrial tariffs face elimination under the agreement.
Other potential benefit for Australian businesses include:
- The ability to bid for government procurement service contracts in many of the TPP member-countries;
- Simpler customs procedures for providers of transport and logistics;
- Preferential temporary entry arrangement for businesspeople and their spouses; and
- Simplified investment rules for Australian investors.
The final TTP agreement, currently undergoing a legal review, is expected to be signed in March in Chile.