Investment benefits under the TPP
TPP negotiations between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the United States and Vietnam successfully concluded in October last year.
Ministers from these 12 countries formally signed the TPP on February 4 in New Zealand. Since then, each of the signatory countries have been undertaking their own domestic treaty-making processes toward implementation and ratification of the TPP.
The TPP will promote increased and diversified foreign investment into Australia. It will liberalise screening thresholds at which private foreign investments in non-sensitive sectors are considered by the Foreign Investment Review Board.
Thresholds in non-sensitive sectors will be increased from $252 million to $1,094 million for Brunei, Canada, Japan, Malaysia, Mexico, Peru, Singapore, and Vietnam. The higher threshold is already in place for the US, Japan, Chile and New Zealand pursuant to our existing FTA commitments and is also reflected in the TPP. Under the TPP, Australia retains the ability to screen investments in sensitive sectors to ensure they are not contrary to the national interest, and lower screening thresholds will apply to investments in agricultural land and agribusiness.
Australia's investment relationship with the 11 countries that have signed the TPP has grown significantly over the last decade and this relationship makes a vital contribution to Australia.
The TPP will also promote Australian outward investment. It will open up new opportunities in other TPP countries in sectors including mining and resources, telecommunications and financial services. For example, Canada will allow Australian investors to apply for an exemption from the 49 per cent foreign equity limit on foreign ownership of uranium mines, without first seeking a Canadian partner.
Australian investors will also benefit from improved preferential investment screening thresholds in other TPP countries. Australian investments into Mexico below US$1 billion will not be screened. Australian investors will also benefit from commitments offered by Japan, Vietnam and Brunei Darussalam to only impose conditions on foreign investment on the initial sale of interests or assets owned by the government.
The TPP investment provisions contain rules that will provide additional protection to Australian investors operating in TPP countries. These protections include:
- that Australian investors and investments may not be treated less favourably, in like circumstances, than other investors with respect to the establishment, acquisition, operation and sale of investments in TPP countries
- that investments in TPP countries may not be expropriated or nationalised in the absence of prompt, adequate, and effective compensation
- that investments in TPP countries must be treated in accordance with an internationally accepted minimum standard of treatment, which includes obligations of fair and equitable treatment and protection and security of investments
- investor-state dispute settlement provisions that promote investor confidence in TPP countries, while retaining the Australian Government's ability to regulate in the public interest and pursue legitimate public welfare objectives in areas such as health, safety and the environment.
Snapshot of Australia's investment relationship with other TPP countries
Australian investment in TPP countries:
- more than doubled in the last decade to reach $914 billion in 2015, a rise of 7 per cent over the previous year
- comprises 44 per cent of all outward Australian investment.
Investment from TPP countries in Australia:
- more than doubled in the last decade to reach around $1.26 trillion in 2015, a rise of 10 per cent over the previous year
- comprises around 42 per cent of total stock of foreign investment in Australia.