Australia agrees new Trans-Pacific trade deal

| January 26, 2018

Australia has agreed to join a new multi-lateral Pacific trade deal after the original Trans-Pacific Partnership collapsed following the withdrawal of the USA after Donald Trump’s election.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP 11) trade agreement includes the 11 remaining nations and will be formerly signed in Chile in March.

Announcing the deal, Prime Minister Malcolm Turnbull expressed pride that Australia “stuck with the TPP” despite the “hills and hollows and some twists and turns along the way since the APEC meeting in Lima in 2016, after it was known that President Trump would pull out.”

“A quarter of our exports go to the countries of the TPP 11, including Japan, Canada, Mexico, Malaysia, Singapore, and others. It is a big deal. A big trade deal at a time when many people said it couldn’t be done, after the United States pulled out. So it’s a great outcome. It will mean billions of additional exports and thousands of additional jobs.”

New deal will ‘boost Australian jobs’

Details of the trade agreement are yet to be released as it is “undergoing a legal review and translation”, but in a joint statement the Prime Minister and Trade Minister Steven Ciobo pledged it will improve export opportunities for local companies and boost Australian jobs.

“The TPP will eliminate more than 98 percent 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,” Turnbull and Ciobo said. “For Australia, that means new trade agreements with Canada and Mexico and greater market access to Japan, Chile, Singapore, Malaysia, Vietnam, and Brunei.”

Turnbull noted that while he would encourage the USA to rejoin the TPP, there is no prospect of that happening under the current administration.  “It’s important to recognise that President Trump made a very straightforward, a very committed election promise not to proceed with the TPP,” he argued. “The way the agreement is structured is so that the Americans can effectively dock back in, which is obviously what everyone would hope for at some point in the future.”

With South Korea, Thailand, and Indonesia also having shown “strong interest” in the TPP, Turnbull hopes that other nations in the region will join the trade pact in time.

“We are firmly of the view that a free and open Indo-Pacific, open markets, free trade, the rule of law, encouraging investment and trade through our region is manifestly in our national interest and in the interests of all of the countries in the region. So we hope the TPP 11 becomes bigger over time,” he told media when announcing the deal.

Grant King of the Australian Business Council hailed the announcement as a ‘win for Australian workers and businesses.’ He congratulated the Prime Minister and Trade Minister for their persistence in sealing the ambitious pact and noted it came at a critical time to keep the momentum for trade liberalisation alive when support for open global markets is under increasing pressure.

Mr King underlined that the agreement, even without the US, will cover about one quarter of the total value of Australia’s exports and improve market access for a range of goods and services in key markets including Japan and Canada. The agreement will also help harmonise trading rules across its member countries, making it simpler for Australian businesses to pursue new opportunities in multiple markets and he called on Australia to take full advantage of international investment and trade to improve the nation’s living standards.

However several Australian sectors will want to see the trade deal’s provisions in detail. An Australian Department of Foreign Affairs and Trade committee expressed concerns last year that the TPP’s “troubling” provisions would lock in Australia’s intellectual property regime after objections were raised by Australia’s copyright lobby.

Background Briefing

The original TPP was signed in February 2016 by the United States, Australia, Canada, New Zealand, Singapore, Vietnam, Malaysia, Japan, Mexico, Peru, Brunei, and Chile. Donald Trump made withdrawal a major plank of his election campaign and pulled the USA out a year ago, in his first week in office, in favour of bilateral deals which promote Trump’s “America first” protectionist policy.

Despite the withdrawal of the USA prompting fears the agreement would collapse altogether, Australia, Japan and Mexico pushed for continued efforts to sign a new deal, with Turnbull reiterating his commitment to salvaging parts of the TPP after preliminary talks with New Zealand, Mexico, Japan, Singapore, and Malaysia in February 2017.

The remaining nations agreed to examine moving forward with the trade deal without the USA in May and the TPP 11 reached a basic agreement in November.

The USA pulled out despite warnings that this risked “abdicating” trade leadership in the Asia-Pacific region to China, and while Turnbull has previously suggested the TPP could be opened up to China, the Chinese government has preferred to lead its own Regional Comprehensive Economic Partnership (RCEP) deal.

The Chinese deal is currently being negotiated between China and other nations in the region including Australia, India, Japan, South Korea, New Zealand, Singapore, Malaysia, Vietnam, Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, and Thailand.