What’s the future of the TPP?
03 February 2017
With the new US President Donald Trump taking office, the future of the Trans-Pacific Partnership (TPP) Agreement has received widespread attention. In this Q&A, MLA’s International Markets General Manager, Michael Finucan, takes a look at the future of the Agreement and the potential implications for the Australian red meat industry.
What is the TPP?
The TPP is a multi-lateral free trade agreement between Australia and 11 other countries (Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the United States and Vietnam).
It is a regional free trade agreement of unprecedented scope and ambition with great potential to drive job-creating growth across the Australian economy. TPP outcomes include new market access opportunities for Australian exporters, including the red meat industry, as well as investors, that are additional to Australia’s existing free trade agreements.
The TPP is designed to establish a more seamless trade and investment environment across 12 countries by setting commonly agreed rules and promoting transparency of laws and regulations. It will also provide greater certainty for businesses, reduce costs and red tape and facilitate participation in regional supply chains.
The TPP is designed to address contemporary trade challenges in ways that have not previously been addressed in Australian FTAs, such as commitments on state-owned enterprises, which will promote competition, trade and investment and enable Australian exporters to compete on a more level playing field.
What are the potential benefits identified for the red meat industry from such a deal?
The TPP market access outcomes build on existing access Australia has with its FTA partners of Japan, the US, Chile, New Zealand, Malaysia, Singapore, Brunei and Vietnam.
The TPP also creates valuable new market access opportunities for Australian exporters in the three TPP parties which Australia does not have an FTA, namely, Canada, Mexico and Peru. Australia supports the expansion of the TPP over time to include other economies in the Asia-Pacific.
Given our industry exports the majority of our product to international markets, any agreement would have improved market access, lowered import costs and reduced red tape. There are some specific benefits identified under the current negotiations for both the beef and sheepmeat sectors under the TPP, including:
- significant reductions and elimination of tariffs on beef and beef products into Japan, building on the Japan-Australia Economic Partnership Agreement (JAEPA)
- elimination of tariffs on beef and beef products into Mexico and Canada over 10 years
- elimination of all Peruvian beef tariffs (currently 17%) within 10 years of entry into force of the TPP
- tariffs on exports to Mexico will be eliminated within eight years of. Australian sheep meat exports to Mexico were valued at $20 million in 2015-16
- tariffs on sheepmeat exports to all other TPP countries will be eliminated upon entry into force of the TPP.
What is the current situation?
The agreement has been reviewed by the Joint Standing Committee on Treaties (JSCOT), with its report tabled in Parliament on 30 November 2016 that included a number of recommendations, including that Australia take binding treaty action to ratify the TPP. This followed negotiations on the deal formally concluding between the parties on 15 October 2015.
However, since his inauguration, US President Donald Trump has withdrawn the US from the TPP. This has led to questions about the future of the TPP, given the significance of the US in any deal.
In response, the Australian Government has signalled that it is still keen to pursue a possible deal covering 11 remaining countries, with the option of the US returning in the future.
Given the official announcement by the US President what are the implications for the TPP and what are the implications for the Australian red meat industry?
The Australian Government has signalled that it is committed to pursuing the deal without the involvement of the US.
How any new deal would look or be structured is unknown, but the Government has signalled that it will attempt to pursue an agreement between the remaining 11 countries.
The current TPP allows for other members to join in the future, with the Australian Government saying that they would keep their options open to the involvement of other countries in the region.
There are also a number of bilateral trade agreements and regional agreements on the table at the moment. For the Australian red meat industry, priorities for trade negotiations include:
- Regional Comprehensive Economic Partnership (RCEP)
- Australia-Indonesia Closer Economic Partnership Agreement
- Australia-GCC Free Trade Agreement
- Australia-India Comprehensive Economic Cooperation Agreement
- Australia-European Union Free Trade Agreement
- Brexit /UK FTA.
The TPP and other international trade and market access developments for the Australian red meat industry will be central to discussions at MLA’s Global Markets Forum in March in Melbourne and Brisbane. For information or to register visit https://www.mla.com.au/news-and-events/industry-news/red-meat-outlook-on-2017-global-markets-forum-agenda/.
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