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Opening statement to the Senate Foreign Affairs, Defence and Trade References Committee Inquiry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11)

Opening statement by Mr George Mina, First Assistant Secretary, Office of Trade Negotiations, Department of Foreign Affairs and Trade

As tabled on 30 July 2018

Thank you very much, Chair, for giving us the opportunity to address this Committee on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the TPP-11.

The achievement of a final deal earlier this year on the TPP-11 represented an extraordinary success for Australian trade policy and global trade reform. This deal represents the world's most significant trade and investment agreement in more than two decades. With the elimination of 98 per cent of tariffs in a regional free trade zone that already accounts for over one fifth of Australia's total two-way trade, the TPP-11 tariff cuts alone will have a significant positive impact on imported goods for Australian households and businesses, and the reduction in non-tariff barriers will also deliver substantial gains for our exporters.

With its membership representing 13.5 per cent of the global economy, the TPP-11 is an opportunity Australia cannot afford to miss. By lowering tariffs and providing a framework to address barriers to trade – existing and emerging – the TPP-11 will help make Australian exports more competitive. The deal will contribute to enabling Australian farmers to sell more produce, our service providers to provide more services, and our manufacturers to make and sell more goods to other TPP-11 countries.

At a time when the principles of openness and a rules-based approach to trade are under significant strain, this outcome is also very timely. Australia has a huge opportunity, through ratifying the TPP-11, to stand up for open trade and investment and defend the rules-based approach, which is integral to Australia's ongoing prosperity.

On 7 May and again on 25 June we appeared before the Joint Standing Committee on Treaties' hearings on the TPP-11, where we provided strong arguments for its early ratification and implementation by Australia. As we appear before the Senate Committee today, we note the range of views expressed by interested parties on the TPP-11. The Committee will be familiar with many of these issues from its inquiry into the original TPP which ran from 2016 to 2017. We would like to take this opportunity to again address some of the issues raised by some stakeholders.

One of those issues is investment, and investor-state dispute settlement in particular. I can confirm for the Committee that the investment chapter in the TPP-11 provides a carefully negotiated balance to ensure that the modern high-standards of governance required to attract foreign investment are upheld, while in no way inhibiting governments' ability to continue regulating in the public interest, including by adopting health and environmental measures.

On the TPP-11's temporary entry outcomes, some of our most important service industries, such as mining, professional, financial and education services, will benefit from unprecedented new access to operate in TPP-11 markets. This opens up opportunities for Australian service exporters to some of the most dynamic economies of our region, also among the fastest-growing in the world, whose appetites for world-class services are only expected to grow.

Another issue that has been raised is economic modelling. Multiple independent economic studies of the TPP and the TPP-11, including one undertaken by the reputable Peterson Institute for International Economics, have found that the TPP-11 would have positive economic benefits for all member countries. For Australia, the Peterson Institute concluded that the TPP-11 would increase Australia's income by half a per cent of national income by 2030. Now, as the Government has made clear during the consideration of this and the original TPP Agreement, economic modelling of FTAs is only one tool to assess whether an agreement is in the national interest. The benefits of many of the TPP-11's rules, such as those relating to promoting transparency and fair competition, cannot be readily quantified by economic modelling.

I also recall the extraordinary efforts made to consult stakeholders and seek the views of interested individuals and organisations, both in relation to the original TPP and the revised TPP-11 Agreement. During the negotiating process for the original TPP alone, we engaged in over 1000 briefings with 485 stakeholders, consulting a wide range of groups including peak industry bodies, companies, academics, unions, and consumer and civil society groups. Including today's proceedings, the TPP process as a whole has been the subject of four separate parliamentary inquiries, which have received over 450 public submissions.

We note for the Committee that the JSCOT inquiry into original TPP recommended that the treaty be ratified, and that the Senate References Committee recommended in February 2017 that the Government defer taking binding treaty action until the future of the TPP was clarified through further negotiations with major trading partners. We are pleased to report to this Committee that these negotiations have resulted in a deal that preserves the high standards and integrity of the original TPP deal. Australia played a key role in achieving this historic outcome.

Given the significant contribution the TPP-11 will make to the global trading system, it is important for Australia to ratify this Agreement as early as possible. Sixty days after six of the 11 signatories have ratified the Agreement, the TPP-11 will enter into force for those six countries. Three other TPP-11 signatories have already concluded their domestic treaty approval processes. Singapore, Japan – Australia's second largest trading partner and Mexico – a new FTA partner for Australia under this Agreement – have already ratified the TPP-11. Only a further three signatories must ratify the Agreement for it to enter into force. Our assessment is that at least three others will ratify this year.

It is also vital that Australia reaps the benefits of the TPP-11 as soon as it enters into force. Prompt ratification is essential to ensure our competitors do not obtain more favourable access into TPP-11 markets than that of our own businesses. To illustrate this, if Australia were not one of these first six countries and the Agreement entered into force in 2018, Australian agricultural businesses would miss out on real opportunities, losing out on an immediate round of initial tariff cuts, and a second round of cuts in the first half of 2019. The New Zealand wine industry could gain an edge over Australia with access to phased out tariffs in markets such as Canada, Malaysia, Mexico and Vietnam, jeopardising Australia's current wine exports to TPP-11 countries which are valued at around $454 million annually. Dairy businesses, without preferential tariff reductions when exporting to Japan, Canada and Mexico, would face heightened competition with exports from New Zealand.

We have seen interest expressed in joining the Agreement from other important economies in our region and beyond. Early ratification of the TPP-11 will mean Australia will continue to play a leading role in shaping the future of the Agreement. The core promise of this Agreement lies in its potential to draw the region together under a common architecture based on strong and transparent rules, fair and open competition and non-discriminatory regulations. The TPP-11 represents a major down payment on regional economic integration, a process which will benefit Australian businesses not only today, but also in the decades to come.

Thank you for the opportunity to make these opening remarks. We commend to the Committee the early ratification of the TPP-11.

Last Updated: 7 September 2018
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