Australia: Australia, Singapore and the Trans-Pacific Partnership – an investment in the future of financial services

Australia and Singapore share a rich history, with both nations being a party to the Singapore-Australia Free Trade Agreement since it came into force on 28 July 2003. However, this long-standing relationship experienced another significant development with the signing of the Trans-Pacific Partnership agreement (TPP) on 4 February 2016, after more than five years of negotiations. It is expected that the TPP will, amongst other things, have a significant positive impact on the investment and financial services industries of Australia and Singapore.

What is the TPP?

The TPP is a regional free trade agreement between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam (Participating Countries).

Some of the main aims of the TPP include:

  • establishing a comprehensive regional agreement that promotes economic integration to liberalise trade and investment;
  • establishing a predictable legal and commercial framework for trade and investment;
  • promoting transparency, good governance and the rule of law; and
  • creating the foundation of a Free Trade Area within the Asia Pacific.

The TPP consists of thirty chapters that cover a range of industries including investments, financial services, telecommunications, agriculture and e-commerce.

Australia and Singapore – Investment

Australia and Singapore already share a rich investment history, with Singapore's investment in Australia amounting to AU$80.2 billion, and Australia's investment in Singapore totalling AU$50.7 billion, in 20141. Singapore is Australia's biggest trade and investment partner in the Association of Southeast Asian Nations - ASEAN 2.

However, as a result of the TPP, there is significant potential for this bilateral investment to increase, as chapter nine of the TPP (concerning investment) includes a series of basic protections that are likely to increase investor confidence amongst Australian and Singaporean investors. Some of these basic protections include the following:

  • National Treatment principle – which essentially requires each Participating Country to treat investors of another Participating Country and covered investments 3 no less favourably than it treats its own investors and the investments of its own investors, in "like circumstances", with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments;
  • Most-Favoured-Nation Treatment principle in essence, this requires each Participating Country to treat investors of another Participating Country and covered investments no less favourably than it treats investments and investors of any other country (including those which are not a party to the TPP), in "like circumstances" with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments;
  • Transfer provisions – these provisions require each Participating Country to allow payments (for example, contributions to capital and distributions) relating to covered investments to be made freely and without delay into and out of its territory. However, a Participating Country may choose to prevent or delay a transfer through the equitable, non-discriminatory and good-faith application of its own laws, which may relate to such things as bankruptcy or criminal offences; and
  • Investor-State Dispute Settlement provisions – which create an avenue for resolving disputes between investors and the Participating Countries.

Australia and Singapore – Financial Services

The Australian financial services industry includes banking, insurance and funds management, and generated a total of $3.3 billion in cross-border exports for Australia in 2014 4. Similarly, Singapore's financial services sector includes banking, capital markets, wealth management and insurance, and has more than 200 banks who call Singapore home with total assets of approximately US$2 trillion 5.

Chapter eleven of the TPP houses the financial services provisions and, similar to the investment chapter, it contains sections concerning the National Treatment and Most-Favoured-Nation Treatment principles in relation to financial institutions, financial service suppliers and investments in financial institutions. However, in addition to these basic protections, chapter eleven includes:

  • Market access provisions – which introduce an obligation on Participating Countries not to impose limitations or restrictions on (amongst other things) the number of financial institutions, the total value of financial service transactions or assets, or the types of legal entities or joint ventures that a financial institution may supply a service through, subject to certain exclusions;
  • New financial services – under this provision each Participating Country is obliged to permit a financial institution of another Participating Country to supply a new financial service in its territory, provided it would allow its own financial institutions to do so in like circumstances, without adopting a law or modifying an existing law, subject to certain exclusions;
  • Mutual recognition of prudential measures – where a Participating Country recognises the prudential measures of another Participating Country or any other country (which is not a party to the TPP), that Participating Country shall provide other Participating Countries with the opportunity to demonstrate that they have equivalent regulation (including the implementation of such regulation) and oversight; and
  • Portfolio management provisions – which states that a Participating Country shall allow a financial institution from another Participating Country to provide investment advice and portfolio management services (excluding trustee services and certain custodial and execution services) to collective investment schemes 6 located in its territory.

In light of the above developments, and chapter 11 of the TPP generally, there are additional opportunities for Australian and Singaporean financial services providers to increase their participation in each other's financial services markets through reduced regulatory restrictions, and the ability to provide certain financial services on a cross-border basis.

What next?

While the TPP has been signed by the Participating Countries, it still needs to be ratified prior to it coming into effect.

In Australia, the TPP was tabled in Parliament on 9 February 2016. Under the Australian treaty-making process, the Joint Standing Committee on Treaties will need to examine the TPP and report back to Parliament 7. Following which, Parliament must then consider and subsequently pass any legislation or amendments to existing legislation that may be necessary to implement the TPP [8].

However, in Singapore, ratification of the TPP will occur when it is approved by the Cabinet, and any necessary legislative changes are approved by Parliament 9.

The TPP will come into effect sixty days after all of the Participating Countries have notified the New Zealand government (in its capacity as 'Depository' of the TPP) that they have completed their domestic ratification processes 10. If this has not happened within two years of 4 February 2016 (being the date the TPP was signed), the TPP will come into force sixty days after this period, provided at least six of the Participating Countries (who account for eighty five percent of the collective GDP of the Participating Countries) have ratified the TPP 11.

Footnotes

1 http://dfat.gov.au/geo/singapore/pages/singapore-country-brief.aspx
2Ibid.
3A Participating Country's investments that have been established, acquired, or expanded in a different Participating Country's territory as at (or after) the date the TPP has come into force.
4 http://dfat.gov.au/trade/agreements/tpp/outcomes-documents/Pages/outcomes-financial-services.aspx
5 http://www.austrade.gov.au/Australian/Export/Export-markets/Countries/Singapore/Industries/financial-services
6For Australia, a "managed investment scheme" as defined under section 9 of the Corporations Act 2001 (Cth), subject to certain limitations. For Singapore, a "collective investment scheme" as defined under the Securities and Futures Act (Cap. 289), subject to certain conditions.
7 http://dfat.gov.au/trade/agreements/tpp/outcomes-documents/Pages/background-papers-implementation-timeline.aspx
8Ibid.
9Click  here
10 http://dfat.gov.au/trade/agreements/tpp/outcomes-documents/Pages/background-papers-implementation-timeline.aspx

11Ibid.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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.

Authors
Timothy Whiting
 
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”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
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).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.