The TPP and the effect on Australia's economy
With 12 nations and 40 per cent of the global economy involved, the Trans-Pacific Partnership (TPP) is the world’s largest regional trade agreement. Australia signed the agreement in February this year alongside the U.S, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, with negotiations lasting seven years between 2008 until 2015.
As the two largest countries involved, both U.S and Japan will play a significant role in authorising the deal, setting common standards on issues ranging from workers' rights to intellectual property protection, all of which may take up to two years to finalise.
Although there remains opposition from many U.S. Democrats and some Republicans, a vote for the TTP looks set to be a win for many Australian export industries.
Dramatic reduction in import taxes
The primary outcome from the TPP agreement is the abolition of 98 per cent of tariffs within the region. This could remove import taxes on $9 billion dollars of Australian trade, making trade considerably cheaper within the region. The deal covers some of Australia’s major exports, including beef, dairy, seafood, wine, and resources and energy.
Alongside the elimination of taxes, the TPP also brings with it a single – and much simpler – set of trade and investment rules between participating countries. This is a huge win for Australian businesses, as it means that it has become considerably easier and simpler for Australian companies to trade within the region.
A lot to gain, a little to lose
Australia is, according to Prime Minister Malcolm Turnbull, “an open economy with relatively low tariffs anyway”, meaning there’s a lot to gain and little to lose for the Australian economy.
The TPP should see more Australian jobs, and an increase in the amount of product Australian businesses are allowed to export within the region. It also frees up the financial services industry to provide investment advice and portfolio management services to TPP countries.
However, before businesses can understand the full impact of the TPP agreement, it needs to first be approved by the parliaments of all participating nations. Once it has been approved, the full scope of its impact will become apparent.
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