Australia, and 11 other nations on the Pacific Rim have agreed to an historic free trade agreement which will open up trade within the region and cover 40% of global GDP.
After talks in Atlanta stalled again on the weekend over the contentious issue of the length of drug makers’ patent protections, talks continued until 5am Monday before a deal was reached.
The 12 countries have agreed to cut tariffs and standardise access for trade througout the region.
For Australia, the deal will see 98% of tariffs for Australian exports to the region eliminated, preserve the government’s preferred 5-year grandfathering of patent rights for pharmaceutical companies and open access to US markets for Australia’s sugar exporters.
Australia’s trade minister Andrew Robb hailed the deal as “transformational” and said it would provide “a very significant contribution to commercial stability in our region but also for peace and stability,” The Australian reports.
“This is a great moment and a great achievement” he said adding he was, “delighted to say that, what is the biggest global trade deal in 20 years, since the Uruguay Round has been concluded.”
On ABC News Breakfast this morning, Robb highlighted that the deal makes Australian business more competitive because there is “one set of rules” across the whole region, which will help Australia’s small and medium-sized businesses, as well as the bigger players.
He added that it also gives access to markets like Canada where “we haven’t had a deal before.”
More broadly though, because the countries involved are so diverse and represent such a big portion of global trade the benefits accrue to ever country and global growth will benefit as a result, IMF Managing Director Christine Lagarde said after the announcement. She added:
The agreement reached today by the countries negotiating the Trans-Pacific Partnership is a very positive development. I have called for a policy upgrade to avoid a new mediocre in the global economy, and rekindling trade is an essential component of this agenda. The agreement is not only important because of the size, as the signatories countries account for about 40 percent of global GDP; it also pushes the frontier of trade and investment in goods and services to new areas where gains can be significant.
The agreement still needs to pass through all the various parliaments of the countries involved but Pacific rim trade stands to benefit greatly from the removal of thousands of tariffs.
Prime minister Malcolm Turnbull said the deal “ushers in a new era of economic growth and opportunity across the fast-growing Asia-Pacific”. In a statement, Turnbull said:
Australia and the Asia-Pacific region are undergoing significant economic transformation. The TPP allows us to harness the enormous opportunities this presents as we look to build a modern Australian economy that can face the challenges of the 21st century.
The TPP writes regional trade rules which will drive Australia’s integration in the region and underpin our prosperity. It builds on Australia’s successes in concluding trade agreements with China, Japan and Korea and delivers more again. As a regional trade agreement, the TPP creates benefits for consumers and businesses beyond those that can be achieved under bilateral FTAs – helping to create jobs and a stronger Australian economy.
Turnbull added: “Importantly, the TPP will not require any changes to Australia’s intellectual property laws or policies, whether in copyright, pharmaceutical patents or enforcement…. The TPP will not increase the price of medicines in Australia.”
Sarah Boumphrey, head of strategic, economic and consumer insight at Euromonitor International said the TPP had the potential to become “an historic agreement”.
“The TPP is more than just a (very large) trade deal – it encompasses labour and environmental measures – for instance all signatories must have a minimum wage in place,” Boumphrey said. “The TPP is a key foreign policy success for President Obama and Prime Minister Shinzo Abe in particular, as both leaders attempt to strengthen their influence in the region, in light of China’s huge economic power.”