Australia’s key industry players are reserving comment on the Trans Pacific Partnership (TPP) trade deal clinched overnight in Atlanta, Georgia, until details are released.
However, a last-minute sweetener opening the doors to Australian sugar exports, along with concessions on pharmaceuticals, was welcomed.
It is hoped that the tariff reductions on beef, dairy, and agriculture will tip Australia’s trade imbalance.
Data from the Bureau of Infrastructure, Transport and Research Economics (BITRE), reveals that Australia’s main non-bulk export for the period of July to December 2014 was empty containers, mostly from Port Botany in Sydney. There were 1,027,000 exports of empty containers, or 800 more than the number of full containers exported. This represents a figure far greater than the 138,600 empty containers being imported into the country.
According to an Australian government release on 6 October, the TPP deal will beef up the country’s exports to Canada, Japan, Mexico, and the United States by further reducing tariffs.
Beef, fruit, and vegetables are expected to fill a few empty containers being shipped out. It would also help diversify Australian trade away from iron ore, coal, and china.
Australia will be able to export more rice to Japan. Dairy exports will also benefit, with tariffs cut on cereals, wine, seafood, and automotive parts.
Some bulk commodities, including iron ore, copper, nickel, LNG, refined petroleum, and steel will also benefit. Coal, however, does not get a mention.
The timing of the deal is crucial. Key figures released on 6 October by the Australian Bureau of Statistics show that the balance of goods and services seasonally adjusted fell 11% in the month of August. The nation still grapples with the collapse of the commodity boom.
The 12-country TPP deal, the largest free trade agreement in history, is eight years in the making and accounts for about 40% of global GDP. One third of Australia’s total goods and services exports – worth AUD109 billion (USD77.1 billion) – goes to TPP countries. Last year around 40%, or AUD14 billion, of Australia’s agricultural goods were exported to the TPP region.
Member nations are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the United States, and Vietnam, with China notably absent. Colombia, the Philippines, South Korea, and Taiwan have expressed interest in joining.
“The TPP writes regional trade rules that will drive Australia’s integration in the region and underpin our prosperity,” the government release said. “The TPP will eliminate more than 98% of tariffs in the TPP region, removing import taxes on around AUD9 billion of Australian trade.”
Whether the TPP, like the China Australia Free Trade Agreement (Chafta), will meet the same resistance from opposition groups, notably labour, is yet to be seen, as the text of the 30-chapter deal will remain secret for weeks to come.
“It’s really good news about the TPP but at this stage we don’t know what the impact will be,” Shipping Australia CEO Rod Nairn told IHS Maritime.