In World Economy News 13/01/2016
Australia stands to gain almost nothing from the mega trade deal sealed with 11 other nations including United States, Japan, and Singapore, the first comprehensive economic analysis finds.
Prepared by staff from the World Bank, the study says the so-called Trans-Pacific Partnership would boost Australia’s economy by just 0.7 per cent by the year 2030.
The annual boost to growth would be less than one half of one 10th of 1 per cent.
Other members of the TPP stand to benefit much more, according to the analysis. Vietnam’s economy would be 10 per cent bigger by 2030, Malaysia’s 8 per cent bigger, New Zealand’s 3 per cent bigger, and Singapore’s 3 per cent bigger.
The study explains that highly developed nations such as Australia are either relatively reliant on things other than trade for economic growth or are already fairly free of trade restrictions.
Australia and the United States benefit the least from the Trans-Pacific Partnership. The study says it would boost the US economy by only 0.4 per cent by 2030.
Non-members would suffer as members directed trade to other members. The biggest loser would be Thailand, whose exports are set to fall 2 per cent while Vietnam’s grow 30 per cent.
Since sealing the deal in October the Australian government has been reluctant to commission an economic analysis of its effects, turning down an offer from the Productivity Commission.
Prime Minister Malcolm Turnbull described the deal as a “gigantic foundation stone”, saying it would deliver “more jobs, absolutely”.
It opens up trade between members but makes trade more difficult with non-members through a process known as “cumulative rules of origin” where members lose privileges if they source inputs from countries outside the TPP.
The Productivity Commission has been strongly critical of the provisions saying that they turn so-called free trade agreements into “preferential” agreements.
The Partnership also requires members to sign up to tough intellectual property provisions and to submit to investor-state dispute settlement procedures administered by outside tribunals.
World Trade Online says the negotiating parties are planning to sign the agreement in New Zealand on February 4. It says Chile has confirmed the date and some trade ministers have already made arrangements to travel to Auckland, but it says New Zealand has yet to issue formal invitations.
The deal will not come into place until it has been ratified by at least 6 of the 12 signatories representing 85 per cent of their combined gross domestic product.
President Obama is expected to use Tuesday’s State of the Union address to push for US ratification.
Australia has to table the agreement in Parliament for 20 joint sitting days and consider a report from the joint standing committee on treaties before it can ratify the agreement.
Labor has yet to announce its position. It has said previously that it opposes investor-state dispute settlement procedures but has agreed to them in the Korea and China free trade agreements.
A spokeswoman for Trade Minister Andrew Robb said the agreement would deliver enormous benefits by driving integration in the fast-growing Asia-Pacific, and establishing one set of trading rules across 12 countries.
“The World Bank report demonstrates that all 12 member countries – representing around 40 per cent of global GDP – will experience economic growth and increased exports,” she said.
