Since starting negotiations with oceanic trade members in 2008, Australia has come a long way in terms of promoting free trade. The Trans-Pacific Partnership Agreement (TPPA) is a US driven union to connect the Oceania-pacific region as a trading hub.
Through the creation of Free Trade Agreements between all members, the TPPA will aim at contractually removing all taxes, duties and tariffs on foreign country and Australian imports and exports.
Read on to find out how this new multi-national free trade agreement will eliminate international trade barriers and open foreign markets.
Stimulating economic growth and opening markets for Australian imports and exports
The TPPA’s main goal is to drive economic stimulation in this region which accounts for 37.5% of world GDP and 70% of Australia’s total trade. There are currently 12 members negotiating with each other although the Trans-Pacific Partnership Agreement is open to other countries participating.
Australian imports and exports have already felt the impact of TPPA negotiations, with attractive foreign markets becoming open for business. Of the current 13 members of the trans-pacific region, five are already Australia’s top trading partners. Among others, Japan, USA, Singapore, NZ and Malaysia all currently have Free Trade Agreements (FTA) with Australia and make up the base of our national two-way trade, but this TPPA will strengthen economic relationships by creating common rules of trade for the region. Reducing barriers and creating a trading system will open opportunities for Australian imports and exports, service providers and freight forwarders Australia.
How Free Trade Agreements can impact imports, exports and freight forwarders Australia wide
Currently US president Barak Obama is doing the oceanic rounds bringing FTA discussions to Japan, Malaysia and the Philippines. Although Australia has had a Free Trade Agreement with the US since 2005, the TPPA will further lower barriers of trade within the oceanic region. The United States is Australia’s 3rd biggest trading partner with two-way trade accounting for $53.9 billion during the 2012-2013 period. Implementing a trading scheme brought key interests and benefits to Australian industries doing business with the US, specifically complete and near-complete reductions of export tariffs. This particularly impacted many Aussie agriculture producers and service providers, including:
Goods: Significant increase in our annual beef quota, complete reductions on import seafood and wine taxes, and access to a previously banned US market for specific Australian products including avocados and peanuts.
Services: Reciprocated and legally enforced recognition for professional qualifications of both state-citizens. Market access for educational, financial and telecommunications providers immediately gained legal rights in the US including guaranteed market access and non-discriminatory treatment.
Another Free Trade Agreement that will affect Australia and the most recent oceanic state wanting to join the TPPA is Korea. From our past blogs we’ve discussed what Australia’s trade and investment with Korea means to Australian imports and exports industries. Reduced duties and taxes will impact our coal and iron ore exports (valued at $10.02 billion collectively), as well as Korea’s automobile and petroleum imports (valued at $4.97 billion). Korea’s interests have been welcomed by other TPPA countries and they are now undertaking the bilateral process to become a member.
Visions for the future: TPPA, Australia and expansion
With a scope of now 13 members agreeing to the TPPA negotiations, the association is always looking for more. One chief potential is China, who has not approached to join the agreement. Although Australia currently has some defined Free Trade Agreements with China, there are still significant barriers to trade concerning tariffs, quotas, service restrictions and foreign investment.
Even so, Australia is dependent on China who is our largest trading partner, with two-way trade totalling $125.2 billion in 2012. If the Chinese mega-state were to join the TPPA, it would create some rewarding possibilities for Australian imports and exports industries.
Planning for the future: economy stimulation
These agreements are only some examples of Trading Agreements that have created profitable opportunities for two-way investment, reduced trade barriers and created entry to a lucrative and previously locked-out market. If the Trans-Pacific Partnership Agreement has buy-in from all current countries participating in negotiations it will account for 25.6% of global trade, meaning Australia will have unrestricted trade with over a quarter of the world.
BCR is one of the most experienced freight forwarders Australia-wide and understands how to assist you and your business transport your international goods. If you would like to know more about the TPPA and it’s effects on local or foreign industries, speak to one of our freight forwarding specialists today.
[To see the original post, please click here]