TPP: What’s in it for Australia?

In this article we will discuss the impact of TPP on Australia.

Over the long term, Australia would probably benefit from increased productivity and access for Australian industry to parts of Asia that are currently closed to it. However, the advantages for Australian consumers are not that obvious.

SUGAR– One of the most lucrative markets that Australia wants access to is America’s sugar consumers but this may be a struggle as the US sugar lobby is very powerful.

DAIRY- The US and New Zealand all want more access to Canada’s milk market, which the government has traditionally restricted supply to thereby keeping prices high.

MEDICINE- Currently, the government sets the highest price and also subsidizes the cost of these medicines. But the US wants the market to be less regulated to benefit new medicine manufacturers.

REGIONAL COOPERATION- Members of the TPP account for nearly 40 per cent of the global GDP and Australia would benefit from being part of the regional supply chain.

Current Situation

Many of the sweeteners that Australia are hoping for, including access to America’s sugar consumers and to Canada’s dairy market, are probably unlikely to happen. This has some National MPs starting a “no sugar, no deal” campaign, which demands Australia abandon negotiations if access to new sugar markets is not included. Also, there is speculation that the US could be using the agreement as a way of limiting China’s expansion. This has triggered a rival Chinese deal, the RCEP, which excludes the US and which Australia is also involved with.

Source- http://www.news.com.au/finance/economy/the-transpacific-partnership-agreement-whats-in-it-for-australia/news-story/418aaf44c026a90a6febfc908481c838

Peru and the TPP

With the global market as prominent as it is, any major global trading agreement is something to research and understand. The TPP, or Trans-Pacific Partnership, is one of the bigger agreements made in recent history, and one of the major players in this agreement is Peru. What part does Peru play and what are some of the benefits they will get from being a member of this agreement? The article “The TPP will give Peru direct access to markets such as Australia and New Zealand” (http://www.amcham.org.pe/publicaciones/articulos.php?art=3) touches on these questions and dives into their respective answers. Three of the main takeaways with respect to Peru are shown below:

  1. “Peru will see its exports increase by $3.2 billion by 2025, once the TPP is finalized.
  2. Peru will now have access to Australia, New Zealand, Malaysia, and Vietnam and their corresponding markets.
  3. “Many of the benefits will be seen in non-traditional sectors, such as agricultural exports”

With the TPP being such a talking point, especially now during the Presidential debates, it will be interesting to monitor the progress of this agreement, and how Peru actually benefits from being part of this free trade agreement. Will the benefits be the same as this article predicts? Only time will tell.

Scott Morrison vetoes ‘rear view’ analysis of Trans-Pacific Partnership

According to an article published on February 17th, 2016 in The Guardian, http://www.theguardian.com/business/2016/feb/17/scott-morrison-vetoes-rear-view-analysis-of-trans-pacific-partnership, the Treasurer of Australia, Scott Morrison, has ruled out conducting a “rear view” analysis of the Trans Pacific Partnership, stating that the Australian government is already satisfied with its projected benefits. The only official analysis of the trade deal was conducted by the Australian Department of Foreign Affairs and Trade, but multiple consumer groups had asked for an independent review of the trade deal. According to Morrison, “The work has been done … in securing these agreements and the sceptics will always doubt the trade benefits of these sorts of deals,” and “They’re welcome to their skepticism. The government is convinced of it.” Earlier this month trade minister Andrew Robb rejected calls for a cost-benefit analysis of the trade deal after it emerged that Australia’s economy would only grow by 0.7% as a result of the agreement. An analysis done by the World Bank showed that Australia fared worse than all other countries besides the US in the trade deal. Even with this analysis, it appears that the Australian government is still very confident that the TPP will have a positive economic impact for Australia and they continue to back it.

Should Australia make a “rear view” analysis of the TPP? Do you think the TPP will benefit Australia more than projected?

Push to stop Parliament ratifying the Trans-Pacific Partnership

A recent article published in The Sydney Morning Herald, http://www.smh.com.au/federal-politics/political-news/push-to-stop-parliament-ratifying-the-transpacific-partnership-20160202-gmjiay.html, states that almost 60 community organizations have called for an independent assessment of the Trans Pacific Partnership before the Australian Parliament votes to ratify the agreement. Multiple groups, from the Public Health Association, to Greenpeace, to Catholic Religious Australia, and to the Australian Fair Trade and Investment Network, have signed a letter warning that the trade deal poses “grave risks to the public interest” if it is not independently assessed. The alliance of groups want an organization like the Productivity Commission to evaluate the TPP’s economic costs and benefits before their Parliament agrees to ratify it. The letter states, “We the undersigned 59 community organizations representing millions of Australians are gravely concerned about the Trans-Pacific Partnership text agreed by the US, Australia and 10 other Pacific Rim countries,” and “In the absence of such independent assessments, we consider that the TPP poses grave risks to the public interest and ask you to oppose the implementing legislation.” Australian Prime Minister Malcolm Turnbull and Australian Trade Minister Andrew Robb believe that the TPP is “a gigantic foundation stone” for Australia and that the deal will deliver “substantial benefits for Australia,” respectively. The TPP should be formally signed by Australia’s neighbor New Zealand this Thursday, and it is likely to be tabled in Australia’s parliament later this month.

Will an independent assessment change the Australian Government’s view on the TPP? What do you think an independent assessment would reveal?

Turnbull shifts tone of US alliance to economics

An article published on January 19th, 2016 in The Australian Financial Review, http://www.afr.com/news/politics/malcolm-turnbull-backs-us-leadership-in-asia-as-essential-to-china-20160118-gm8nwu, discusses several economic issues between Australia and the United States. It states that Australian Prime Minister Malcolm Turnbull is urging the US Congress to pass the 12 country Trans Pacific Partnership deal. According to Mr. Turnbull, “Free trade is not just good for jobs. It is good for security. The more we trade, the more we rely on each other; the more our supply chains stretch across countries and borders the more there is to lose by a disturbance in the security and order on which our prosperity is founded.” Mr. Turnbull not only stressed the economic importance of signing the trade deal, but also how the international norms and institutions that the US has promoted over the last 75 years has helped provide stability and security in prior free trade deals. Turnbull states, “So central is the Asia-Pacific to the world economy, to global stability, that the preservation of the international order and the peace that it brings has been a consistent and absolutely central objective of both the United States and Australia.” It is very apparent that both the TPP and the Asia-Pacific economy are vital to the continued success of many nations, including both the US and Australia.

What could hold back Congress from approving the TPP? Will the presidential elections have any effect on the US ruling for the TPP?

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?

 

Australia PM says Indonesia welcome in TPP as frictions ease

An article published Thursday November 12th, 2015 in Reuters, http://www.reuters.com/article/2015/11/12/us-indonesia-australia-idUSKCN0T110N20151112#pa74ddjuCpYDSgwG.97, states that according to Australian Prime Minister Malcom Turnbell, Australia would welcome Indonesia into the Trans Pacific Partnership trade deal. As of late the two countries have been trying to set aside their past friction and focus on building closer economic ties. Turnbell met Indonesian President Joko Widodo in Indonesia’s capital of Jakarta as part of an effort to restore economic and diplomatic relations between the two countries. Turnbell said Australia would support any effort by Indonesia to join the TPP. According to Turnbell, “If Indonesia chooses to apply to the Trans-Pacific Partnership, we would support the application, absolutely.” Australia plans on sending its largest delegation to Indonesia next week, with over 300 companies planning to be represented.

What impact would Indonesia joining the TPP have on the deal? Do you think it is a good idea to add another country to the TPP?