It’s the deal everyone is talking about. Comprising 40 per cent of the world’s economic output it was to be the biggest regional trade deal ever seen. However, it’s set to be no more following newly sworn in President Donald Trump’s decision to withdraw the US from the deal. It’s easy to get lost in all the talk surrounding the fallout, so here’s 10 things we think you should know about the Trans-Pacific Partnership.
- After 10 years of negotiation the Trans-Pacific Partnership, also known as the TPP, was a trade agreement between 12 countries that border the Pacific Ocean: Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United Stated, Vietnam and Australia.
- The agreement originally came about after talks to expand the Trans-Pacific Strategic Economic Partnership agreement (TPSEP or also known as P4) created in 2005 between Brunei, Chile, New Zealand and Singapore.
- For the TPP to come into effect at least six out of the 12 countries, representing 85 per cent of the overall economic output would have had to ratify the agreement by February 2018. Since the United States made up 62 per cent of the economic output its removal from the deal means the TPP can no longer go ahead.
- A communal ratification by all 12 countries would have eliminated numerous barriers to overseas investment and international expansion for Australian companies by removing more than 98 per cent of tariffs (taxes on imports) in the Pacific region.
- The TPP aimed to address modern investment and trade by evening the score between private businesses and government entities in issues such as competition, anti-corruption and e-commerce. However, no changes would have been made to Australia’s IP laws or policies.
- Some of the exports to be covered in the TPP included beef, sugar, seafood, wine, grains and resources, to name a few.
- Last year alone one third of Australia’s total goods and services exports, encompassing roughly $9 billion, were sent to the 12 TPP countries.
- Following President Trump’s withdrawal, Japanese Prime Minister Shinzo Abe – whose country was the only one to ratify the agreement – stated that without the US the TPP would be meaningless.
- Even if President Trump had lost his campaign it’s highly likely the deal would’ve collapsed regardless as Hillary Clinton had also pledged to withdraw from the TPP if elected US President.
- The TPP is not to be confused with the TTIP; a deal to eliminate regulatory barriers to trade and tariffs between the US and member states of the European Union.
There’s been talk by Australian Trade Minister Steve Ciobo of re-hashing the TPP into plan B with the remaining countries, as well as current speculation that China may take the US’s place going forward. Regardless, as trading for the Pacific region remains unclear going forward we’ll have to wait for the government’s next move.