With a number of historic free trade agreements under its belt, Australia is now turning its attention to the Trans-Pacific Partnership.
In recent months, Australia's new free trade agreements with key trading partners have captured significant attention - and for good reason. The trading terms present opportunities for businesses in agriculture and other industries to benefit from these hungry markets and build partnerships abroad.
With the ink now drying on these deals, the Government and Australian companies are turning their gaze to another arrangement, The Trans-Pacific Partnership (TPP). What exactly is the TPP, and how will it affect Australia's international business activities?
Trans-Pacific Partnership: A regional treaty
In 2005, a group of countries began discussing a proposed trading agreement to enhance transnational trade in the Asia-Pacific region. As of now, there are 12 nations involved in the negotiations: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
Although some of these countries already have trade agreements, the TTP would:
- Establish regional regulatory and investment terms;
- Promote cooperation and development by lowering barriers; and
- Eliminate tariffs.
The purpose of the plan is to foster growth, innovation and job creation through trade and investment among the partner states.
Strong prospects for Australia
The full details of the agreement are under wraps as the negotiations near their end, but there are a few obvious benefits for Australian exporters. For that reason, the government and Trade Minister Andrew Robb have faced relatively little opposition on the project.
Australia will benefit from trade agreements throughout a region that represents over $220 billion of trade and more than $925 billion of inward investment.
A few of the key advantages include:
- Better integration with prime trading partners, providing access to regional supply chains that are growing at a rapid pace
- Greater transparency and clear rules of engagement, reducing costs and red tape for exporters.
Education, legal, financial services, agribusiness and electronic commerce are poised to be some of the biggest winners.
The TPP will further open the door to advantageous business opportunities, providing companies with the support they need to boost or begin their export operations or other international engagements. This complements Australia's existing historic FTAs.
Looking to the future of the TPP
After 10 years of negotiations, we might be on the cusp of a finalised agreement. Trade Minister Robb has suggested that it could be a matter of weeks, rather than months, before we receive details on a final deal.
President Obama has been spending considerable amounts of political capital to get the TPP approved by the US Congress. This means the door is now open for negotiators to meet in late July and bring this agreement to a conclusion.
However, the fate of the TPP rests largely on the United States at this point, where the looming presidential election only adds to the intrigue and uncertainty. President Obama is a strong advocate for the TPP, but the agreement has faced fierce criticism as it makes its way through the US Congress. Republicans and some Democrats have been expressing concerns the TPP could threaten US jobs while primarily benefiting big business.
Therefore, the next few weeks in US politics will reveal much about the future of the TPP.
Australian companies need to be proactive and start thinking about how they could leverage the opportunities the latest round of international trade agreements offer. Many companies have a desire to do business globally.
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For more information, please contact:
Name: Cameron Macmillan
Tel: +61 73237 5794