Trans-Pacific Partnership will barely benefit Australia, says World Bank report

An article posted on January 12th, 2016 in The Sidney Morning Herald, http://www.smh.com.au/federal-politics/political-news/transpacific-partnership-will-barely-benefit-australia-says-world-bank-report-20160111-gm3g9w.html, states that the first comprehensive economic analysis of the Trans Pacific Partnership shows that Australia stands to gain almost nothing from the trade deal. The study, prepared by staff from the World Bank, says that the TPP would boost Australia’s economy by just 0.7 percent by the year 2030. The study also shows that the annual boost to their growth would be less than one half of one tenth of 1 percent. According to the analysis other members of the TPP are going to benefit much more. Vietnam’s economy will be 10 percent larger by 2030, Malaysia’s 8 percent larger, and both New Zealand and Singapore’s economies will be 3 percent larger. The United States and Australia stand to benefit the least from the TPP. The study shows that the US economy will be grow by 0.4 percent by 2030, even lower than Australia’s at 0.7 percent. The study explains that highly developed countries, such as Australia and the United States, are either fairly free of trade restrictions or that they are relatively reliant on things other than trade for economic growth. The TPP opens up trade between the trade deal members, but it also makes trade more difficult with non-members because of a process known as “cumulative rules of origin,” where member lose privileges if they source inputs from other countries. Even though Australia and the US will not benefit as much as other countries, all 12 of the member countries (who represent 40% of the global GDP) will experience an increase in exports and economic growth from the TPP.

Do you think that the World Bank study is underestimating the growth for Australia? Do you think that Australia’s small percentage of growth is because they are such a large country?

 

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