Steve Ciobo is adamant that this is bad news for Australian exporters and that he, on behalf of the Turnbull Government is going to do all it can to salvage the deal with other partners. However, with the withdrawal of America, the deal is all but dead (due to the structure of the deal, America’s involvement is crucial to move forward).
Although there is no question that Australian businesses will lose out on trade with other signatories of the TPP, this may not be all bad news.
A World Bank Report in 2016 predicted that Australia’s economy would receive a boost of only 0.7% by 2030 as a result of signing the TPP. The potential collapse of the TPP means there are now opportunities to dial up the prospects of bilateral pacts with the likes of Indonesia and India, for example.
We already have a free trade pacts with the US (AUSFTA) as well as New Zealand and Japan. AUSFTA, which was brought into force in 2005 has resulted in more than 90 per cent of imports from Australia entering the United States tariff-free, proving high quality trade agreements such as this are beneficial.
There is also opportunity for a renewed focus on completing the Regional Comprehensive Economic Partnership Agreement (RCEP), which includes Australia, India and Southeast Asian countries, although there have been real issues on advancing that deal in a meaningful way.
The government is expected to introduce legislation to parliament this week to ratify the deal, in the hope the US president may have a change of heart.
However, Andrew Hudson of Rigby Cooke Lawyers predicts that ‘in all likelihood, countries will probably return to a conservative position with limited bilateral deals with long term allies. In our case, this may include seeing deals with Canada, the EU and UK form and perhaps Mexico.’
If you have any concerns or would like to discuss Free Trade Agreements please do not hesitate to call a Seabridge Customs Consultant on 1800 727 195.