The Trans-Pacific Partnership (TPP) could be the largest and most consequential trade agreement since the creation of the World Trade Organization (WTO).

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 Australian economy.

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 expected it will not come at a huge cost to Australia’s Pharmaceutical Benefits Scheme.

There are over 150 signatory countries to the UN Convention on International Trade Law (UNICTRAL) establishing ISDS. Currently, there are 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 has reportedly 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 in the increasingly important world global supply chains and value chains the TPP swill be invaluable. In this world where components are increasingly produced, designed and supported in whichever country is most competitive in making and developing each ‘bit’. The various components are designed wherever most appropriate 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 manufacturing chain.

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 merrier.