The Trans-Pacific Partnership (TPP) negotiations were finalised on 5 October 2015. If the negotiations are ratified, the TPP agreement should provide substantial benefits for Australian food and agriculture businesses. With a combined population of about 800 million and a combined gross domestic product of over $US28 trillion, the 12 TPP countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam) represent around 40% of the global economy and the agreement would create the world’s largest free trade area.
However, the deal will face real challenges in being ratified, especially in the US and Japan. For example, US presidential candidate Hillary Clinton has announced her opposition to the deal as currently comprised. In any event, the TPP deal is unlikely to finish ratification until 2018.
This article summarises the benefits that the TPP agreement would provide for Australian food and agriculture businesses.
Australia exported close to $15 billion worth of agricultural goods to TPP countries in 2014, representing close to 33% of Australia’s total agricultural exports. The TPP agreement will eliminate tariffs on more than $4.3 billion of Australia’s dutiable exports of agricultural goods to TPP countries upon entry into force. A further $2.1 billion of Australia’s dutiable exports will receive significant preferential access through new quotas and tariff reductions. Importantly, the TPP agreement will offer gains beyond Australia’s existing Free Trade Agreements with Japan (JAEPA) and the US (AUSFTA).
Some highlights include:
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Other key features
On foreign investment, all proposed investments by foreign governments will continue to be examined and lower screening thresholds will apply to investment in agricultural land ($15 million) and agribusiness ($55 million).
Similar to the recent FTAs, the TPP agreement will also include mechanisms to enhance transparency, cooperation and promote good practice with regard to the establishment and maintenance of technical non-tariff trade barriers and provide mechanisms to address those which are impeding fair trade.
The TPP may be expanded beyond the current 12 countries as the agreement will contain provisions for additional nations to become signatories to the agreement after it has been concluded and ratified.
Reaction across the agricultural sector
The deal is being hailed as a success for Australian agriculture, with exporters of beef, wine, wool and cotton all expected to benefit significantly under the deal. The Australian Food & Grocery Council has welcomed the announcement, recognising that the TPP agreement ‘will further open up some of Australia’s key export markets, particularly in the food, beverage and grocery sectors.’ The NFF has welcomed the improved market access the agreement will provide across a range of agricultural sectors including dairy, beef, horticulture, grains and rice; and stated that ‘[r]educed tariffs and greater certainty on rules means more market opportunities and more investment and this means more jobs and growth in regional centres.’ The Australian Sugar Industry Alliance, while acknowledging that the deal overall is positive for Australian sugar, is disappointed with the protectionist stance that the US maintained on market access for Australian sugar, and says it would have ideally liked more.
Two National Party MPs from Queensland have threatened to cross the floor in protest against the treatment of Australian sugar. However, the Nationals’ Deputy Leader and Minister for Agriculture Barnaby Joyce has affirmed the deal. “There are major gains for Australian farmers in the signing of the world’s largest regional trade agreement,” he said. “While the agreement does not deliver on the aspirations of all industries, the overall gains for the agricultural sector are real.”