The recently signed Trans Pacific Partnership Agreement (TPP) has the potential to transform Australian industry’s engagement across the Pacific, says the Australian Industry Group.
AiGroup Chief Executive, Innes Willox, said the new agreement opens up new opportunities for Australian investment and exports.
“It gives easier access into markets that have been particularly tough nuts to crack,” he said.
Negotiations on the global trade deal began more than five years ago and were successfully concluded in Atlanta earlier this week.
The historic Trans-Pacific Partnership Agreement (TPP) delivers enormous benefits to Australia, including unprecedented new opportunities in the rapidly growing Asia Pacific region.
The TPP will establish a more seamless trade and investment environment across 12 countries which represent around 40 per cent of global GDP.
Last year, one third of Australia’s total goods and services exports – worth $109 billion – went to TPP countries, which also include Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the United States and Vietnam.
“A significant amount of global trade now consists of goods that are inputs into global value chains, which is why multi-lateral agreements such as the TPP are highly valued among manufacturers with an international focus, said Mr Willox.
“While many Australian companies are already well entrenched in major global value chains, they will appreciate the competitive advantage that the elimination of industrial tariffs will give them over competitors. When Australian companies are able to compete on the back of quality and innovation, they invariably succeed.”
Mr Willox said in some Free Trade Agreements non-tariff barriers have increased, negating the benefits of tariff reductions.
“We are pleased to see that negotiators have included mechanisms to address non-tariff barriers within the (TPP) agreement, ensuring that it is a dynamic and practical tool for ongoing trade access,” Mr Willox said.
“The TPP covers a region that is rich in mineral resources. Australian mining, engineering, technology and services companies have long used their comparative advantages in this sector to invest, export and form strategic partnerships across the TPP membership.
“Australian Industry had been promised a modern agreement in the TPP and the guaranteed commitments for e-commerce and cloud computing ensure that this is an agreement for the 21st century.”
Trade Minister Andrew Robb who signed the new deal on behalf of the federal government said the TPP will enhance Australia’s competitiveness, promote growth, job creation and higher living standards.
Australia’s exports of manufactured goods to TPP countries were worth an estimated $27 billion in 2014.
New market access outcomes include:
· Immediate elimination of tariffs on iron and steel products exported to Canada, and to Vietnam within 10 years
· Elimination of ship tariffs in Canada over 6 to 11 years
· Elimination of tariffs on pharmaceutical, machinery, mechanical and electrical appliances, and automotive parts to Mexico within 10 years
· Elimination of tariffs on pharmaceuticals to Peru over 11 years
· Elimination of duties on paper and paperboard to Peru over 11 years
· Elimination of tariffs on automotive parts to Vietnam over 10 years.
Australian businesses will now be able to bid for tenders to supply goods (such as drugs and pharmaceutical products, electronic components and supplies) used for government purposes in Brunei Darussalam, Canada, Malaysia, Mexico, Peru and Vietnam.