Last week, Prime Minister Malcolm Turnbull and Trade Minister Steve Ciobo issued a media release hailing that the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), dubbed by MB as TPP 2.0, had been signed by eleven Pacific member nations:
This a landmark deal for trade in our region. Australian businesses and farmers will now have more opportunities to export their food, fibre and services to more customers, more easily.
More trade means more export opportunities for local businesses, and more Australian jobs.
Overnight, 11 countries – Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – reached agreement on the final Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP) at an officials-level meeting in Tokyo, Japan.
It is expected the agreement will be signed in March in Chile.
This is a multi-billion-dollar win for Australian jobs. Australian workers, businesses, farmers and consumers will benefit.
The Government took a leadership role and worked hard to deliver the TPP because it will generate more Australian exports and create new Australian jobs.
The TPP will eliminate more than 98 per cent of tariffs in a trade zone with a combined GDP of $13.7 trillion. The agreement will deliver 18 new free trade agreements between the TPP parties. For Australia that means new trade agreements with Canada and Mexico and greater market access to Japan, Chile, Singapore, Malaysia, Vietnam and Brunei.
In 2016-17, nearly one quarter of Australia’s total exports, worth nearly $88 billion, went to TPP countries. This will continue to grow thanks to the significant increase in market access the TPP gives Australian exporters.
Significant wins for Australian exporters under the TPP include:
- Accelerated reductions in Japan’s import tariffs on beef, where Australian exports were worth $2 billion in 2015-16 – under TPP-11 even better access.
- Elimination of a range of cheese tariffs into Japan covering more than $100 million of trade that was not covered by the Japan-Australia Economic Partnership Agreement.
- New quotas for wheat and rice to Japan, and for sugar into Japan, Canada and Mexico.
- Elimination of all tariffs on sheep meat, cotton, wool, seafood, horticulture, wine and industrial products (manufactured goods).
- Eleven separate deals – legally enforceable market access to all these countries.
- Investment sets up strong legally enforceable commitments on the way countries regulate foreign investment.
Labor and Bill Shorten declared this trade agreement dead – they urged the Government to walk away. If Labor got their way, Bill Shorten would have shut Australia out of this historic agreement and denied our farmers, manufacturers, services providers and consumers the big wins the TPP delivers.
Unlike Labor, the Government will never give up on measures that create jobs for Australians.
The text of the agreement is now undergoing a legal review and translation and will be made public on a date to be agreed by all parties.
Spin aside, TPP 2.0 does appear to be far better than the original agreement, which was scuttled by the Trump Administration.
While details are scant, The Conversation reports that the Investor-State Dispute Settlement (ISDS) provision, which would have opened the door to multinational companies suing the Australian Government for implementing rules against their interests (e.g. on environmental, health and safety grounds), has been significantly watered-down:
The deal reduces the scope for controversial investor-state dispute settlements, where foreign investors can bypass national courts and sue governments for compensation for harming their investments. It introduces stronger safeguards to protect governments’ right to regulate in the public interest and prevent unwarranted claims…
The broader safeguards in the agreement make sure that the Australian government cannot be sued for measures related to public education, health and other social services.
Earlier reports warning that TPP 2.0 would allow employers unfettered access to ‘skilled’ migrant workers from member nations has proven unfounded, with only “minor changes to domestic labour rights and practices” contained in the new pact.
Patent and copyright extensions signed into the original TPP pact at the US’ behest have also not been mentioned, which hopefully means they have been left out of the new deal.
Instead, TPP 2.0 seems to be more of a pure ‘trade’ agreement, containing the original tariff schedules that will see custom duties on 95% of trade in goods slashed but excluding the more controversial and risky components.
Still, Labor, the Greens and the Nick Xenophon Team remain weary, all calling for independent modelling by the Productivity Commission (PC) before Parliament considers ratifying TPP 2.0. However, Treasurer Scott Morrison is resisting sending the deal to the PC for assessment:
“This is economic common sense. I mean you don’t need modelling to prove economic common sense,” he told Sky News. “I mean our instincts on these issues I think are very clear. Labor’s instincts are all over the shop. They don’t have economic instincts.
“Labor would think you’d need economic modelling to decide whether to put your pants on one leg at a time, and that’s because they just hate having instincts on this. They just don’t get it.
“Every time they look for an excuse and a waffle and they carry on. I mean it’s a no-brainer. We’ve been doing it for 200 years. It’s what’s made our country prosperous and will continue to. If they haven’t got it after 200 years, when will the Labor Party ever learn? You’ve got to have strong economic instincts to manage the Australian economy.”
Mr Morrison said Labor would see details of the deal in due course.
“By all means have a look at the deal, and they’ll do that, but honestly, on every occasion, they were the same on the China free trade agreement, they’ve actively resisted us on lowering the tax burden for Australian businesses,” he said.
This is a ridiculous argument from Morrison. If TPP 2.0 is going to be so great, then why not get the PC to assess the agreement? After all, the PC recently lamented that Australia’s trade negotiations have been “characterised by a lack of transparent and robust analysis, a vacuum consequently filled at times by misleading claims”, and called on the “final text of an agreement to be rigorously analysed before signing”.
In order to ensure that trade deals deliver net benefits to Australians (rather than only to certain narrow sectors, like wine makers), the Government needs to implement proper processes around negotiations, including engaging the PC to analyse trade deals for their broad equity and efficiency impacts.
Forging ahead with trade deals in an ad hoc, evidence free, manner for political rather than economic reasons, and without due regard for longer-term consequences, is a recipe for poor outcomes.
