26 Apr Trade Agreements: Benefits for Australia
The Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (TPP-11) has been catapulted into the news, firstly for the fact that it is one step closer to implementation with its recent signing, and secondly for President Trump’s announcement that perhaps his decision to withdraw the US from TPP might be revisited.
On 8 March 2017, the TTP-11 was signed in Santiago, Chile. The treaty will come into force after six member countries pass enabling laws domestically. The legislation is currently before the Australian Parliament.
The Department of Foreign Affairs and Trade (DFAT) has outlined some of the benefits that the TPP-11 will bring to the Australia-Japan relationship. For example, Japan’s tariffs on Australian beef imports which were valued at A$2.1 billion in 2016-17, will decrease to 9% over 15 years. Australian exporters will also have improved access for dairy products, which includes the elimination of cheese tariffs into Japan which is a $100m market according to DFAT. Interestingly, for the first time in 20 years, Australian rice exporters will be able to access the Japanese market, with an initial quota of 6,000 tonnes assigned to Australia under the agreement.
Meanwhile, Australia’s Foreign Investment Review Board (FIRB) will lift the threshold of manadatory notification on inbound investment to A$1,134 million for “non-sensitive” sectors. It is anticipated that investment conditions in Japan for TPP signed countries such as Australia will be relaxed with Japan committing only limiting the conditions it imposes on foreign investment from TPP countries to ‘the sale of interests or assets owned by the Japanese Government’.
JAEPA fruitful for Australian agricultural exporters
According to the Office of Minister for Trade Tourism and Investment, Steven Ciobo, in 2017 total value of goods exports to Japan increased 24% to $45 billion. The main export items are coal, iron ore and beef. In 2017, the value of frozen beef exports was up 24%, although fresh or chilled beef exports were only up slightly by 1%. According to the Minister, the value of citrus exports also increased – up 15% for oranges and 66% for mandarins. All of these products have had tariffs cut through the Japan Australia Economic Partnership Agreement (JAEPA), with the most recent cuts implemented on 1 April 2018.