How Australia became a winner out of the Trans-Pacific Partnership agreement

IT IS the historic deal that promises “enormous benefits” for all Australians. Here’s why we were big winners from the trade talks.

Why this deal makes us big winners

AUSTRALIAN consumers and businesses may benefit from an impressive effort from Trade Minister Andrew Robb who “dug in” over certain critical measures during negotiations for the world’s largest free trade agreement.

Australia is one of 12 countries, including the United States, to agree on the Trans-Pacific Partnership agreement, which will cover 40 per cent of the global economy and eliminate about 98 per cent of tariffs on Australian agricultural exports.

Trade Minister Andrew Robb has promised enormous benefits for the nation from the agreement, which he said would boost competitiveness and promote growth, job creation and higher living standards.

Farmers will get a major boost with tariffs slashed on beef, dairy, wine, sugar, rice, horticulture and seafood.

“It’s a wide-ranging agreement which not only will have an influence now but well off into the future,” Mr Robb said.

While no details have been released about the agreement, causing some to question whether Mr Robb’s claims will be fully realised, James Brown, director of the Alliance 21 program at the United States Studies Centre at the University of Sydney, said he thought Mr Robb had achieved a very good result from Australia’s perspective.

“From what I understand, negotiations were extended for two days because Mr Robb dug in very hard over a number of issues,” Mr Brown told news.com.au.

He said this had seen a number of concessions, including on sugar and biologic medicines, to accommodate Australia’s position that were not anticipated at the last round of negotiations in Hawaii, “so he’s done a very good job”.

Tobacco companies have also been specifically banned from suing governments over detrimental law changes, another measure that seemed to have been designed specifically to accommodate Australia’s concerns.

The Investor State Dispute Settlement (ISDS) was one of the most controversial aspects of the TPP and there were concerns it would allow companies the power to bring lawsuits against governments if they enacted laws that negatively impacted their businesses, which is what happened after the North American Free Trade Agreement (NAFTA) was signed.

But under the TPP, Mr Robb has said no legal actions would be allowed against government actions that changed public policy, in the areas of health or the environment.

“In addition to that, we were successful in leading an initiative to ensure that no tobacco company ever could challenge a government,” Mr Robb told ABC.

WHAT’S IN IT FOR CONSUMERS?

Overall the agreement will see Australia gain more access to markets in other countries covered by the TPP: US, Japan, New Zealand, Canada, Mexico, Brunei, Chile, Malaysia, Peru, Singapore and Vietnam.

Mr Brown said the agreement would also see consumer goods become cheaper over the long term as red tape would be cut in TPP countries, potentially making it cheaper for Australian companies to get goods produced.

Electronics could become cheaper over time.

“It will mean that some of those hidden costs of doing business in Asia are reduced. Ultimately goods will be able to be produced more quickly and cheaper,” he said.

This could include products such as electronics, textiles and garments.

“Companies will become more productive but it will take quite a while before we see that,” he said.

Another indirect benefit will be the money it will bring into the Australian economy because services such as legal, accounting and engineering firms will find it easier to operate in the region.

“Before, Australian engineers may have been wary about doing business for example, in Vietnam, but now it’s going to be easier because common standards will be put in place,” Mr Brown said.

SUGAR SWEETENS THE DEAL

Australian farmers were very keen to get more access to the US market and the new agreement will almost double the amount of sugar they can sell there.

It comes after National MPs started a “no sugar, no deal” campaign, which demanded Australia abandon negotiations if access to new sugar markets was not included.

The offer from the US is the largest made to any free trade agreement partner since NAFTA was signed into law in 1993. It gives Australia equal access with Brazil, which is the world’s largest sugar producer.

While farmers were hoping for more, Mr Brown said it was a surprising turnaround from the position stated by the US, as recently as August, that there would be no concessions on sugar.

Australia currently exports about 107,000 tonnes of sugar a year but farmers wanted to increase this to 700,000. While the TPP falls well short, delivering just 207,000, Mr Robb has pointed out that Australia will also have an increased share of any extra sugar demand.

At the moment Australia can provide up to 8 per cent of extra demand. This could increase to 23 per cent.

“Given the expectations of probably a million extra tonnes of demand in the next two or three years ... (this) could lead to something over 400,000 tonnes if the forecasts by the USDA (US Department of Agriculture) are accurate,” he said.

Lobby group Canegrowers blamed the US sugar lobby for opposing a bigger increase but said the deal was a start.

“We hope to build upon it, but this is a massive opportunity that has been lost to the industry,” Canegrowers Queensland chairman Paul Schembri told the ABC.

Sugar farmers will be able to export more product to the US.

‘CREATIVE’ APPROACH TO DRUGS?

Under the TPP, developers of innovative drugs will have exclusive rights to produce new medicines for five to eight years as part of a hybrid scheme.

Mr Robb said this meant there would be no change to Australia’s laws (which gives companies exclusivity for five years), and medicines would not become more expensive, as was feared if the US’s 12 year ban was introduced.

Mr Brown described the scheme as a “creative” approach to accomodating Australia’s position.

“It’s not yet clear how it will operate but it has been designed very clearly to accommodate Australia’s view on biologics, which is pretty extraordinary if you think about it,” Mr Brown said.

But Independent senator Nick Xenophon said US pharmaceutical companies appear to have won an “option” to impose an eight-year protection period for biologics medicines.

Biologics are complex drugs that are derived from biological sources and can include vaccines, blood and allergenics, used to treat diseases including cancer and rheumatoid arthritis.

“This opens the way to more expensive medicines in Australia as cheaper generic drugs remain locked out for longer,” Mr Xenophon said in a statement.

Both Mr Robb and Prime Minister Malcolm Turnbull have insisted there will be no change to Australian laws.

“This deal has no impact on the pharmaceutical scheme. It’s not going to make drugs more expensive in Australia whatsoever,” Mr Turnbull said on 3AW this morning.

Mr Robb told ABC that there would be “two roads, two systems leading to the one outcome”.

He said “absolutely nothing in our system will be different once this deal is in place, compared with the period before”.

But Professor of Intellectual Property and Innovation Law, Matthew Rimmer of Queensland University of Technology, said he was sceptical of Mr Robb’s claim that there would not need to be any changes to intellectual property law in Australia.

He said leaked text from earlier negotiations suggested that sections on criminal penalties and procedures for trade secrets were included in the final deal.

Generic versions of drugs are cheaper.

“We don’t have a regime for criminal penalties and procedures for trade secrets in Australia — like the US,” he told news.com.au.

He said such measures were “dangerously overboard” and exceptions were quite narrow and limited.

“They could also affect journalists, whistleblowers, civil society, and organisations like Wikileaks and the Intercept,” he said.

Shadow Trade and Investment Minister Penny Wong said Labor would be holding Mr Robb to his assurances that medicines would not become more expensive, and would be examining the details closely.

“Mr Robb says he’s put in place a range of carve-outs which protect Australia’s health and environmental regulations, and also excluded tobacco companies, so we look forward to seeing how robust those protections are,” she said.

PICKING SIDES?

One of the reasons why it’s hard to judge how positive the TPP will be for Australia is because the text has not been released publicily.

The 12 countries have wrapped up negotiations but the agreement has not been signed yet.

A spokeswoman for Mr Robb’s office said the text would be released “well in advance” of it being signed. It will then be tabled in Parliament with an accompanying National Interest Analysis, and assessed by the Joint Standing Committee on Treaties.

The agreement would also need to be passed through the parliamentary systems of each country, which could be problematic especially for US President Barack Obama who will have to sell the deal to a sceptical Congress, but Mr Robb told ABC he felt confident that it would be accepted.

“I don’t think the United States would have closed this deal if they didn’t think they could sell it in the Congress. I think they feel they have a very good chance of getting it across the line, albeit not without any great majority,” Mr Robb said.

He also dismissed concerns that Australia could be seen to be picking sides by signing a deal with the US and other Pacific Rim countries, which doesn’t include China.

He said Australia was also negotiating a separate agreement with China, the Regional Comprehensive Economic Partnership (RCEP).

“Put those two together and we would have the common ambition between ourselves and the United States, of ultimately getting one free trade area for the Asia Pacific,” he said.

“This agreement will help that ambition because it will in some ways, instruct the conclusion of the one involving China, and it will drive the way forward, not just in our region, but in other trade deals around the world.”

The TPP is a major victory for US President Barack Obama but could create a rift among Democrats. Picture: AP Photo/Andrew Harnik

AGRICULTURE THE BIG WINNER

The TPP could add an extra $3.67 billion to Australia’s agricultural exports.

Farmers stand to get a major boost from the TPP, with tariffs reduced or cut for beef, dairy, wine, sugar, rice, horticulture and seafood.

“The Trans-Pacific Partnership will usher in a new era of trade growth for Australia linked to innovative global value chains, agriculture and high-value services,” HSBC Australia chief executive Tony Cripps said.

One third, or $109 billion, of Australia’s trade last year was with the countries that have signed up to the TPP, including the United States, Canada and Japan.

New measures include:

• Tariffs for beef have been cut to 9 per cent, and those in Mexico and Canada will be eliminated within 10 years; AUSFTA beef safeguard to US cut.

• There will be more rice exports to Japan and tariffs to Mexico will be eliminated.

• Tariffs to Japan will be cut on a range of cheeses, and there will be access for 9000 more tonnes of cheese to the US as well as tariff cuts on milk powders and Swiss cheese. Australian producers will also get new, preferential access to markets in Mexico and Canada.

• Tariffs on wheat and barley exports to Canada will be cut, while Mexico will phase them out over 10 years. There will also be reductions in the mark-ups applied in Japan.

• Tariffs on exported wine to Mexico will be cut in three to 10 years, while Canada will eliminate them once the agreement is in force, Peru will cut tariffs over six years, while Malaysia and Vietnam will allow imports for the first time.

• Canada and Peru will cut on tariffs on seafood once the agreement is in force. Japan will cut tariffs within 16 years, and Mexico within 15 years.

SERVICES WILL GET A BOOST

• Australian business men and women and their spouses will get preferential temporary entry arrangements, including the waiving of work permits and provision of automatic work rights for spouses in Brunei Darussalam, Canada and Mexico.

• Australian universities and vocational education providers will benefit from guaranteed access to a number of existing and growth markets in Brunei Darussalam, Japan, Malaysia, Mexico, Peru and Vietnam, including being able to offer a wider range of courses to Vietnamese students, our third largest export market. Online education services supply.

• Travel agencies and tour operators get guaranteed access in Brunei Darussalam, Canada, Chile, Japan, Mexico and Peru. There will be greater certainty regarding access and operating conditions in Malaysia and Vietnam. Australia could also see an increased demand in tourism and a boost to rural tourism.

• Aussie business will be able to bid for government procurement services contracts, such as accounting and tax in Brunei Darussalam, Canada, Malaysia, Mexico, Peru and Vietnam as well as consulting services in Brunei Darussalam, Malaysia, Mexico and Peru etc.

• There will be new opportunities for Australians to give investment advice and portfolio management services to collective investment schemes.

• Providers of mining equipment and technology will get new commercial opportunities, while transport providers will get strong trade and investment protections in Malaysia and Vietnam. There will also be greater certainty around access and operating conditions of health services in Malaysia, Mexico and Vietnam and benefits from the phasing out of foreign equity limits on Vietnam’s telecommunications sector five years after the TPP comes into force.

RESOURCES, ENERGY AND MANUFACTURING

• There will be an immediate cut of tariffs on iron ore, copper and nickel to Peru.

• Tariff cut on butanes, propane and liquefied natural gas cut to Vietnam within seven years.

• Vietnam’s 20 per cent tariffs on refined petroleum will be cut.

• Tariffs will be cut on iron and steel products exported to Canada, and to Vietnam within 10 years.

• Ship tariffs in Canada will be cut over 6 to 11 years.

• Tariffs on pharmaceutical, machinery, mechanical and electrical appliances and automotive parts to Mexico will be cut within 10 years.

• Elimination of tariffs on pharmaceuticals to Peru over 11 years.

• Elimination of duties on paper and paperboard to Peru over 11 years.

• Elimination of tariffs on automotive parts to Vietnam over 10 years.

• Businesses will be able to bid for tenders to supply goods such as drugs and pharmaceutical products, electronic components and supplies used for government purposes in Brunei Darussalam, Canada, Malaysia, Mexico, Peru and Vietnam.

— With agencies