By Stuart Condie
(Australian Associated Press)
Australian farmers could benefit from the 12-nation Pacific free trade deal to the tune of an extra $US2.6 billion ($A3.67 billion) in annual exports within a decade.
Australia already does $A109 billion of trade with the countries that have signed up to the Trans-Pacific Partnership, representing a third of the nation’s total.
With tariffs reduced or cut for beef, dairy, wine, sugar, rice, horticulture and seafood by the historic accord signed on Tuesday, that could soon be even higher.
“The TPP can transform Australia’s trade by providing businesses with freer market access and new trade and investment corridors,” HSBC Australia chief executive Tony Cripps said.
“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.”
The biggest issue for Australian businesses could be getting to grips with how to exploit new arrangements that make up the world’s largest free trade agreement.
HSBC estimates that only 19 per cent of Australian companies make use of free trade agreements.
“The stumbling block will not be about Australia’s products or consumers’ appetite for them; rather it will be the perception that trade agreements are too complicated to utilise,” said James Hogan, HSBC’s head of commercial banking in Australia.”
“Just because Australia has sealed a deal with this dynamic trade region that makes up 40 per cent of global GDP, it doesn’t mean businesses can capitalise overnight.”
Indeed, the wait could be long.
A joint houses committee of the Australian parliament will scrutinise the deal, which has to be ratified in each country. That could be problematic, especially in countries such as the United States, where Republicans and Democrats are at loggerheads.
“The Trans-Pacific Partnership is interesting from a political point of view but, from a markets perspective, it appears insignificant,” IG markets analyst Evan Lucas said.
“Considering the outcry from The Republican Party and even some Democrats, the deal is unlikely to see daylight for years, if ever.”
Prime Minister Malcolm Turnbull has hailed the deal as a very big win for Australia, while Labor said it will examine the details closely.
Consumer rights group Choice has urged the government to make public all the details of the deal, while ANZ cautioned that not everyone will be happy.
“As with all trade agreements, there will be losers as well as winners,” ANZ said.