After being kept secret for years, the wording of the
Trans Pacific Partnership (TPP) has now finally been released. The
wording contains practical guidance for traders on how to use the
The TPP is a Free Trade Agreement (FTA) that if implemented will
cover 40% of global GDP. The member countries are Australia, the
US, Japan, Canada, Mexico, Vietnam, Singapore, Brunei, Malaysia,
New Zealand, Chile and Peru. The TPP covers traditional FTA areas
such as trade in goods, investment and services but also contains
commitments regarding labour, competition and environment laws.
Some interesting points for those who trade in goods are set out
To claim the reduced duty rates offered under the TPP an
importer will need to present a certificate of origin. However,
this certificate of origin can be prepared by the manufacturer,
exporter or importer and does not need to follow any particular
form. This will make use of the TPP much easier than other FTAs
Australia has entered into.
The one certificate of origin can be used for multiple
shipments over a 12 month period. Where you are trading in the same
good over a continuous period this provision will greatly cut down
on the red tape associated with FTA use. This may be a reason why a
party will seek to use the TPP over an alternative agreement such
as the Japan Australia FTA.
As expected, origin will be assessed by reference to content
from all TPP countries. This will be particularly useful for goods
exported from the US where currently uncertainty about Mexican
content can deter importers from using the US FTA. Under the TPP it
will not matter if the US good contains content from Mexico, Canada
or any other TPP member.
Not all imports into Australia will be immediately reduced to
zero. However, generally it can be said that Australia's tariff
reductions under the TPP are quicker and wider than under other
FTAs. Examples of goods where the duty is phased out are:
Footwear – reduced over 4 years;
Herbicides - 5% for the first 3 years than reduced to
Many clothing and textiles items – 5% for the first 3
years than reduced to zero;
Motor vehicle components – reduced over 3 years;
Certain irons and steels - reduced over 3 years
WHY USE THE TPP WHEN AUSTRALIA ALREADY HAS FTAS WITH MOST TPP
If implemented the TPP will constitute the second or third FTA
Australia has with all but three TPP members. Despite this, there
will be reasons why using the TPP will be desirable.
The first will be more relaxed certificate of origin
requirements. Self-certification (including by the importer) will
make claiming an FTA preference under the TPP much easier than some
Also, the ability to use the one certificate of origin over
multiple consignments will provide enormous benefit.
For many, the main benefit will be that it will be easier to
establish that a good is covered by the TPP than one of
Australia's bilateral FTAs due to origin being based on content
from all TPP members.
Now that the wording has been released each TPP member country
will need to obtain domestic approval of the agreement. The biggest
stumbling block could be the US where there are many critics of the
TPP. For instance, Hillary Clinton has opposed the TPP.
Given the TPP will be debated in a US election year the
ratification and domestic implementation of the TPP is far from
Despite its uncertainty, the TPP should still be taken into
account when making long term supply chain decisions or negotiating
long term supply countries. However, in the medium term traders are
encouraged to focus on Australia's existing trade agreements
with TPP members and ensure that these are fully utilised.
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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