Mr Speaker it gives me great pleasure today to table the historic Trans Pacific Partnership Agreement, or TPP, and accompanying National Interest Analysis for consideration by the Parliament.
Last Thursday (4 February), together with my Ministerial colleagues from Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, The United States and Vietnam, I had the privilege of officially signing the Agreement in Auckland, New Zealand on behalf of Australia.
The TPP is the fourth trade agreement concluded by this Government. It comes on top of the trifecta of bilateral agreements concluded with Korea, Japan and China. These agreements form part of a very deliberate and ambitious strategy to support the diversification of our economy in this challenging, post-mining boom period.
Make no mistake the TPP is a very big deal and undoubtedly the most significant global trade and investment agreement concluded since the landmark Uruguay Round over two decades ago.
As it stands, the 12 foundation members of TPP represent around 40 per cent of the world’s GDP. Importantly it is open for other countries to join in the future which will further amplify its benefits.
Already, other major and emerging economies such as Indonesia, South Korea, Thailand, Taiwan and the Philippines have expressed interest in also coming on board.
The TPP is also commonly referred to as a 21st century agreement, because it addresses both traditional trade and investment issues, as well as those new issues extremely relevant to the contemporary global economy. These include e-commerce and increasingly important global and regional value chains and services which are so critically important to the health of the Australian economy.
As well, it sets in place common rules for labour, the environment; new rules to combat bribery and corruption and State Owned Enterprises.
It – along with the Regional Comprehensive Economic Partnership or RCEP which is currently under negotiation and which includes the likes of China and India – provides a prospective pathway to the ultimate objective of creating what would be a transformative Free Trade Area across the entire Asia Pacific region.
Mr Speaker, in my assessment, given this deal’s reach and future potential, Australia simply cannot afford not to be a part of it.
It will assist our further integration in the Asia Pacific – a region that will be a critical driver of global economic growth in the years and decades ahead on account of an exploding middle class, which the OECD itself estimates will go from 600 million to more than three billion over the next three decades.
The opportunities this will present for an innovative, knowledge and services-based, trading nation such as ours, Mr Speaker, are limited only by the imagination.
The Chief Executive of the Business Council of Australia Jennifer Westacott said and I quote:
“Seen in the context of the cumulative impact of three ambitious bilateral free trade agreements, these deals open the door for Australia to the geographical epicentre of global growth.”
“TPP levels the playing field for business, workers and farmers, which means more jobs, higher wages, stronger growth, a higher standard of living and new economic opportunities for Australia.”
Australia’s exports of goods and services to TPP countries were last year worth $109 billion, around a third of our total goods and services exports; and our investment in these economies amounted to 45 per cent of all our outward investment reaching $868 billion in 2014, a 16 per cent increase from 2013 and a doubling since 2004.
Conversely, TPP countries invested $1,109 billion (or $1.1 trillion) in Australia in 2014 – an amount which has more than doubled in the last decade.
And experience shows that when you deepen trading relations new investment inevitably follows.
For example, in the decade since we concluded our bilateral free trade agreement with the United States our two way investment relationship has more than doubled to over $1.3 trillion.
Under the TPP, more than 98 per cent of tariffs will be eliminated. For Australia that means tariffs will be eliminated on approximately $13 billion of our dutiable exports, including $4.3 billion worth of agricultural goods with new levels of access for key industries such as beef, dairy, sugar, rice, grains, seafood, horticulture and wine.
National Farmers Federation President Brent Finlay said and I quote:
“The signing of the TPP is a game changing move for Australian agriculture and a comprehensive and liberalising agreement for the Australian community.”
A further $2.1 billion of Australia’s dutiable exports will receive significant preferential access through new quotas and tariff reductions.
For our exports of manufactured goods, worth an estimated $27 billion in 2014, the TPP will afford new levels of market access for iron and steel products, ships, pharmaceuticals, machinery, paper and auto parts to name but a few.
And Australia’s energy and resources sector will see significant new opportunities in oil and gas exploration.
The tariff cuts will deliver material gains for our exporters across the board and place downward pressure on the cost of imported goods for households and businesses, but the benefits that will flow from provisions that will create a more seamless trading environment are perhaps not well understood.
The embrace of paperless trading, streamlined customs procedures and trading rules, assistance for SMEs, more seamless data flows and greater flexibility with data storage, are all features of the TPP.
It also promotes high levels of environmental protection, enhanced compliance with internationally-recognised labour rights and encourages TPP Parties to address bribery and corruption. It will ensure that our private companies and businesses are able to effectively compete against State Owned Enterprises (SOEs) in TPP countries.
Australia of course has a most sophisticated and diverse services sector – it accounts for around 83 per cent of our GDP but less than 20 per cent of our exports.
Collectively, TPP countries accounted for almost a quarter of the world’s total trade in services and our exports to TPP countries were worth over $20 billion last year – over a third of our total services exports.
Significantly, this agreement will promote the expansion and diversification of our world-class services by removing key barriers, providing more transparent and predictable operating conditions, and it will also capture future services sector reforms.
Some of the services areas that will benefit include our world-class, $90 billion Mining Equipment Technologies and Services or METS sector; professional services such as legal, architectural, engineering and surveying services; financial services, education, telecommunications, IT, transport, health, hospitality and tourism.
The TPP and our new North Asian FTAs provide a strong platform to significantly grow our services exports which are in increasing demand across the region.
Australian companies will also have new opportunities to deliver government procurement services as a result of the TPP.
The OECD estimates that 8 - 20 per cent of a country’s GDP comprises government procurement. The opening of procurement markets in TPP countries, underpinned by fair and transparent procurement rules, will allow Australian suppliers to discover new market opportunities for foreign government contracts and compete for them on a level playing field.
The ability for professionals to work overseas is an integral feature of modern business. The TPP will provide Australian skilled business persons preferential temporary entry arrangements into key TPP markets.
Australia’s ability to continue attracting more than our fair share of foreign investment remains absolutely fundamental to our future growth and prosperity. And with a relatively small domestic market our economy also benefits from Australian companies investing abroad.
The TPP investment obligations reflect the importance the 12 parties have placed on providing transparent, stable and predictable investment environments. But a careful balance has been struck between the genuine interests of investors and preserving the rights of governments to pursue legitimate policies that are in the public interest in areas such as health and the environment.
The TPP will also promote further growth and diversification of foreign investment in Australia by liberalising the screening threshold at which private foreign investments in non-sensitive sectors are considered by the Foreign Investment Review Board, increasing it from $252 million to $1,094 million for all TPP Parties. This is consistent with the approach taken in other FTAs.
The TPP delivers on this Government’s commitment to tackling red-tape and reducing business costs by including more transparent and efficient customs procedures, regional rules of origin and a single set of documentary procedures for products traded under the TPP.
The Government values innovation and creativity. The TPP establishes balanced intellectual property rules that promote investment in our innovative and creative sectors and supports access to the latest information, goods and services. The Intellectual Property Chapter is consistent with Australia’s intellectual property regime. It will not require any changes to Australia’s legislation.
As has been well publicised, we resisted pressure to increase our five year period of data protection on biologic drugs and maintained the status quo because we have a system that works for Australia. Consequently, shrill claims by anti-trade groups that the TPP will drive up the cost of medicines in Australia have proved unfounded.
I am pleased to advise the National Interest Analysis conducted on the TPP states in part and I quote:
“By setting common international trade and investment standards between member countries, the TPP will make doing business across the region easier, reducing red tape and business costs.
Increased and more efficient trade and investment in the region will benefit the Australian economy. Improved market access for Australian goods and services exports and lower import prices will increase capital accumulation, raise productivities and improve utilisation of resources.”
And despite claims by opponents that the Government’s involvement in the TPP negotiations was shrouded in secrecy, the National Interest Analysis shows that since 2008, when negotiations commenced, almost 500 groups were consulted including individuals, NGOs, companies, academics, peak industry groups, consumer groups and trade unions.
In total there were more than 2,000 consultations and almost 100 formal written submissions were received. These proved invaluable in guiding our approach to the negotiations and keeping us in step with community expectations. Our position on biologics is testament to this.
To assist Australian businesses take advantage of the TPP
we will continue our stakeholder engagement and provide detailed briefings to all interested stakeholders.
Once we have finalised our treaty processes, we will add the TPP to our interactive online trade portal which already features comprehensive information to help exporters take advantage of our FTAs with China, Korea and Japan.
In finishing I would like to take this opportunity to pay tribute to all those who have a stake in this success. This includes all the negotiators and support staff from DFAT who have worked so diligently over a long period to secure outcomes beneficial to Australia. Most recently they have been ably led by our lead negotiator Elizabeth Ward and also Jan Adams, our Ambassador designate to China.
I also pay special tribute to Chris DeCure, who was Elizabeth’s predecessor. Sadly Chris passed away before the negotiations were concluded; a wonderful man who made an invaluable contribution. I would also like to thank my own staff for their professionalism and support.
And I acknowledge my immediate predecessors in Simon Crean, Craig Emerson and Richard Marles for their work in advancing negotiations under the previous government and also the Shadow Minister Penny Wong for her constructive engagement.
Australia’s strong tradition of bipartisan support for freer trade is grounded in an innate understanding of the importance of more efficient global trade and investment to the economic health of our nation. Long may this continue.
Mr Speaker, I hereby table the Trans-Pacific Partnership Agreement, with its National Interest Analysis, and commend them to the House.
- Trade Minister's Office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555