MANY of you would be aware of the tradition from Papal elections where white smoke from the Vatican indicates the election of a new Pope. In the trade context, we have white smoke from the World Economic Forum at Davos, with reports on agreement on the terms of the Comprehensive Progressive Agreement for Trans-Pacific Partnership (CPTPP), formerly known as the Trans-Pacific Partnership (TPP).
The CPTPP has survived two near-death experiences. First, when the US withdrew from the TPP following the Trump administration taking office. Secondly, when Canada stalled on agreement to the deal at the recent APEC Ministers meeting, even though the deal seemed to have been completed. However, there has subsequently been frantic work from all parties led by Australia and Japan (who have just celebrated the third anniversary of their own deal in the JAEPA) and all reports are that final agreement has been reached with signing reported to take place on 8 March, which just happens to be International Women’s Day as well as my birthday.
I have reported and presented on the TPP on a number of occasions and will be doing so on the CPTPP when its details are released. However, based on the terms of the TPP and media reports some of the highlights appear to be as follows:
- It will lock in greater trade access for Australia to markets estimated to be worth almost $14 trillion (yes – that’s a lot).
- It will improve our existing FTAs with countries who are also parties to the CPTPP.
- Australia’s exports of goods and services to the CPTPP countries were worth nearly $88 billion in 2016-2017 representing almost a quarter of our total exports.
- It will constitute new trade deals for Australia with Canada and Mexico.
- It will eliminate more than 98% of tariffs in the trade zone.
- Tariffs will be eliminated on trade in sheep, meat, cotton, wool, seafood, horticulture, wine and industrial products. The beef industry will benefit from accelerated reductions in Japan’s tariffs.
- New quotas for wheat, rice and sugar to Japan, Canada and Mexico will be granted.
- There will be improved conditions for Australia’s services exports such as the provision of mining and agricultural services in Mexico.
Importantly the deal will open new trade and investment opportunities, integrate economies and promote and facilitate supply chains in the region. This will be a welcome counterpoint to the current protectionist ‘me first’ attitude. Just as importantly, it demonstrates that even when countries are in disputes at the WTO and elsewhere they can still collaborate on deals for the greater good. The conclusion of the CPTPP will also place more focus on other regional deals such as the proposed Regional Comprehensive Economic Partnership.
More details will follow when the text of the CPTPP is released and signed – including whether the Investor-state dispute settlement provision remains what has changed from the TPP – and how the deal will provide for other countries to join in the near future, which could include South Korea and the US after the Trump administration passes.
As always, if pain persists call your friendly trade lawyer!
Andrew Hudson is a trade lawyer at Rigby Cooke Lawyers