Recent discussions on Australia's Free Trade Agenda have
come to include reference to the conclusion of the
"Trans-Pacifc Partnership Agreement"
The origins of the TPP can be found in the earlier Trans-Pacifc
Strategic Economic Partnership Agreement (described as the
"P4") between Brunei Darussalam, Chile, New Zealand and
Singapore which entered into force in 2006.
Subsequently, the original "P4" parties together with
Australia, Peru, the US, Vietnam and Malaysia have joined to
consider the establishment of the TPP. The Australian Federal
Government has publicly described the TPP as the Federal
Government's highest regional trade negotiating priority.
Wider international interest in the TPP has increased at the
same time as an increase in interest from the United States which
now perceives the TPP as a means to support and expand the US
economy as well as the regional economy. Broader US support for
trade liberalisation can be seen from the very recent Congressional
approval for other US Free Trade Agreements which, while negotiated
and completed some years ago, have only recently been passed by the
US Congress with approval for implementation.
From an Australian perspective, it is hoped that the TPP would
build on existing liberalisation through bilateral Free Trade
Agreements ("FTA") with New Zealand, Singapore, Thailand
and Chile as well as the regional FTA with the ASEAN nations. There
is also a wider hope that the TPP could be a precursor to a broader
APEC free trade zone.
The parties to the TPP have been engaged in extensive
negotiation and prior to the current meeting of APEC leaders, the
parties negotiating the TPP released a statement to the effect that
they had agreed, in principle, to the content of the TPP.
The release identifed a number of areas where agreement in
principle had been reached to allow completion of the TPP. These
included the following (in general):
Comprehensive market access (ie. reductions in tariffs and
other non-tariff barriers).
"Cross-cutting" trade issues (including regulatory
coherence, competitiveness and business facilitation, SME
assistance, customs clearance and economic development).
To assist new trade challenges.
That the TPP should be a "living" agreement.
These are all largely consistent to the outcomes of any FTA
(whether bilateral or regional). This reference to SME assistance
is welcome as small and medium sized businesses can often
"miss out" on FTA benefts through lack of resources or
complexity in implementation of the FTA.
It is also reported that Mexico, Japan and South Korea are being
approached to join the TPP. However, at this stage, the PRC does
not appear to be engaged and it has expressed concerns as to its
apparent specifc exclusion from negotiations. Clearly, there is
signifcant merit in expanding the TPP to additional countries.
However, there is always the fear that the broader the base for an
agreement, the more diffcult it would be to secure signifcant
concessions from that broader group of countries.
While the spread of regional trade liberalisation is to be
supported, the merits of any agreement would depend upon the
precise terms of the TPP, any specifc exceptions and the degree to
which it represents an improvement on existing FTA. It also needs
to be remembered that any agreement such as the TPP must frst be
fnalised and agreed between negotiating countries and it then needs
to be approved by and implemented in each of those negotiating
countries. That can all take time and may lead to further
compromises. Given the proposed timeframes (which suggests the TPP
could be completed by the end of 2012), the TPP would also need to
secure bilateral political support in all negotiating countries as
future changes to the Governments of negotiating countries could
have adverse outcomes for the completion and comprehensive adoption
of the TPP.
To date, we have also yet to see any developments on the
announcement of completion of an Australian FTA with Korea. Recent
comments from the Federal Government suggested that an announcement
of completion of an FTA with Korea would be made during the course
As always, we will keep you informed of developments and assist
with the implementation of the TPP or any other FTA.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The TPP could have a significant positive impact on the investment and financial services of Australia and Singapore.
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