The Trans-Pacific Partnership (TPP) could be the largest
and most consequential trade agreement since the creation of the
World Trade Organization.
But what does it mean for us down under? At the moment most of
the focus is on the tariff reductions achieved or not achieved.
But, over time the true significance of the TPP will be found in
its attention to the liberalisation of
services trade and investment. And as we know the Australian
economy is dominated by the services sector. Any incremental gains
for this sector will have exponential potential effects for the
The two elements of the TPP that have been most discussed are
the pharmaceutical intellectual property (IP) and the investor
state dispute settlement (ISDS) provisions. Much has been said
about these elements but the points made by Remy Davison of Monash
University in The
Conversation on these matters say it all:
Although the precise language of the IP deal remains unknown,
it seems that TPP member countries will have the option of
providing either a minimum of five years data exclusivity, or eight
years of biologic exclusivity. The business of negotiation means
there will be losers but if the language is as expected it will not
come at a huge cost to Australia's Pharmaceutical Benefits
There are over 150 signatory countries to the UN Convention on
International Trade Law (UNICTRAL) establishing ISDS. Currently,
more than 2,700 international agreements that include ISDS
provisions. For TPP members, such as Australia, Japan and the US,
such provisions are entirely manageable.
Perhaps the more interesting angle for Australia will be how
best to manage the perception of the TPP being an 'anyone but
China' club. David Pilling writing in the Financial Times suggests that Beijing
should alter its current strategy and "call everyone's
bluff by starting negotiations" to join the TPP now that the
framework has been agreed. A position that Trade Minister Robb
would surely embrace.
Why does China's inclusion matter? After all Australia has
or will soon have
the China Free Trade Agreement. It is because a lot of the
value from an agreement like the TPP comes from the improvement in
the regulatory frameworks. The TPP consolidates existing
international trade law. The TPP reportedly has chapters that cover
everything from tariffs to the handling of international investment
disputes. By establishing rules and promoting transparency, the
agreement will provide certainty and reduce costs.
Better laws mean that corporate investors will be able to make
better investment decisions. This should mean that companies are
likely to invest more now in the TPP member countries because they
will start to be even more comfortable that the necessary behind
the border reforms to enable and protect investment will be
required by the TPP.
And given the increasing importance of
global supply chains and value chains, the TPP will be
invaluable. The various components of products are increasingly
produced, designed and supported in whichever country is most
competitive in making and developing each 'bit' and then
shipped to a third country to be assembled into the end product,
which is then sold world-wide. This means that the ability to move
intermediate and finished goods at low cost within the TPP region
should provide a significant advantage for the countries that are
part of the deal including Australia. But that relies on Australian
companies finding a competitive role in the design and
In 2014, Chinese Premier Li Keqiang said at the Boao Forum for
Asia: "China is open to TPP. So long as it is beneficial to
the development of world trade and to the maintenance of a fair and
open environment for trade, China is happy to see it succeed."
It would seem what the TPP negotiators have achieved is a trade
pact that is beneficial to the development of world trade and to
the maintenance of a fair and open environment for trade - the more
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.
Most awarded firm and Australian deal of
Australasian Legal Business Awards
Employer of Choice for
Equal Opportunity for Women
in the Workplace (EOWA)
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Following the announcement by the International Atomic Energy Association that Iran has met its commitments under the Joint Comprehensive Plan of Action nuclear deal, Australia has suspended all nuclear-related sanctions against Iran.
PNG has domestic arbitration legislation, but does not provide for the enforcement of foreign arbitral awards.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).