Ai Group Opening Statement: Inquiry examining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11)
Ai Group welcomes the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11). This agreement has the potential to transform Australian industry’s engagement across the Pacific.
The real benefits of this agreement lie in the impetus it gives our trading partners to undertake the structural reforms that Australia has in the main already undertaken. The TPP will provide Australian companies with a guaranteed set of rules in which to operate throughout the region and protect Australian interests.
Perhaps we won’t see the true benefit until an Australian company needs to rely on those rules to protect their interests. This demonstrates the true value of multilateral agreements over bilateral agreements. While the former are more complex and take longer to negotiate and implement, the benefits of having a group of economies agree on a single set of rules has multiplier effect.
A significant amount of global trade now consists of goods that are inputs into Global Value Chains(GVC), which is why multi-lateral agreements such as the TPP are highly valued among manufacturers with an international focus. While many Australian companies are already well entrenched in major GVCs, they will appreciate the competitive advantage that the elimination of all industrial tariffs will give them over competitors.
When Australian companies are able to compete on quality and innovation rather than price, they invariably succeed.
Provisions within the agreement to make it easier for companies to transport tools of trade across the region in the delivery of services will also support the efforts of Australian Services exporters in these industries.
Australian Industry was promised a modern agreement in the TPP and we are also pleased to see guaranteed commitments for e-commerce and cloud computing, ensuring that this is an agreement for the 21st century. As our manufacturing sector recognises the opportunities of Industry 4.0 and the internet of things protection of the free flow of data across borders will be essential for the future of the Australian manufacturing sector.
Importantly, for the first time in a trade agreement, TPP-11 countries will guarantee the free flow of data across borders for service suppliers and investors as part of their business activity. This ‘movement of information’ or ‘data flow’ is relevant to all kinds of Australian businesses – from a manufacturer with offshore sales offices and online order systems to a telecommunications company providing data management services to businesses across a number of TPP-11 markets. Worldwide data flows are the railways of the future and as such their value lies not in the country that holds the data but rather in how far that data can stretch across the globe.
Finally, Chapter 5 of the TPP-11 seeks to enhance trade facilitation and custom procedures in a manner that is predictable, consistent and transparent. Broadly defined, trade facilitation is any measure that contributes to lowering trade transaction costs and creating standard efficiencies. Among the many ways to enable trade, reforming border administration requires relatively little money and can be done quickly. Unlike tariffs, which do provide revenue for governments, all the resources spent on overcoming administrative barriers are lost. It has been estimated that halving trade facilitation costs could deliver nearly ten times the benefit of halving tariffs.
In summary, we see this modern agreement as the template for future FTAs and recommend it to the panel.
Statement delivered by Louise McGrath, Ai Group National Manager Business & International Advisory Services
To read Ai Group’s full Submission to the inquiry – Click here