The US has pulled out but the recently signed trade agreement has still been welcomed, although concerns remain

Trans-Pacific Partnership: what the deal is and what it means for Australia

Australia has joined 10 other nations to sign the long-awaited Trans-Pacific Partnership, which many thought was doomed when Donald Trump withdrew the United States from the Obama-era pact in January 2017.

But after strong lobbying by Japan and Australia, the idea was revived and on Friday they struck the renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or TPP-11.

What is the deal?

The central purpose of the TPP is to further open up the markets of its member countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Trade tariffs will be slashed considerably. The deal will eliminate 98% of trade barriers, opening up access to a combined marketplace worth close to $13.7tn.

The Guardian view on the Trans-Pacific Partnership: not a good deal | Editorial Read more

Even without the US, it’s a hugely significant deal and could become a blueprint for future regional free trade agreements. Other nations have the chance to enter at a later time, if they so wish, and there have been suggestions Indonesia and even the United Kingdom may have some interest.

The TPP also comes at a time when major powers, such as the US, are reverting to protectionist trade policies. The head of policy at the Export Council of Australia, Heath Baker, said its symbolism was significant.

“[The TPP] shows that despite the protectionism coming out of the US, there is still momentum to increasing shared prosperity through freer trade,” he said.

And what does it mean for Australia?

There’s a lot we don’t know about the TPP deal. What we do know is that it’ll have major ramifications for Australia’s agricultural sector. As the trade minister, Steve Ciobo, put it: “The world will be drinking more Australian wine, eating more Australian beef and using more Australian services thanks to the TPP-11.”

The deal will reduce or abolish tariffs on Australian beef, cheese, cotton, wool, seafood, horticulture and wine. There’ll be greater access to Japanese, Canadian and Mexican markets for Australian sugar and dairy exporters.

Trans-Pacific Partnership's benefit to Australia 'very small' Read more

A side agreement has also been signed with Canada to gradually remove tariffs on beef exports over five years. Ciobo also said there will be benefits for financial, professional and education services, as well as advanced manufacturing.

What we don’t have is an officially endorsed estimate on how much the Australian economy will benefit from the deal. Ciobo said such modelling is typically misleading.

An independent thinktank, the Peterson Institute for International Economics, has estimated a benefit of US$12bn (A$15.4bn) for Australia’s national income by 2030. The Greens say that figure is tiny and looks “more like a rounding error”.

The TPP also helps to set new trade norms within the region, something the Export Council said is significant.

“But the benefits of joining aren’t just economic,” Baker said. “The reason that Barack Obama pushed the TPP was to establish the next generation of trade rules. Even without the US, the TPP-11 still does this.”

Are there things we don’t know about it?

One of the persistent criticisms of the TPP has been the secrecy surrounding its true impact on Australia. The text of the agreement and an analysis of its impact on Australia’s national interest will not be tabled in parliament until the end of the month, well after it’s signed. The deal will then be scrutinised by the treaties committee.

Labor, while generally supportive, wants “independent modelling” to demonstrate the benefit of the new TPP to Australia. The Greens are promising to closely scrutinise the contents of the bill when it comes before parliament.

So what’s wrong with it?

There are serious concerns about the impact of the deal on the costs of medicines in Australia.

The Public Health Association of Australia says it risks increasing medicine costs. The association says the terms of the deal benefit the US pharmaceutical industry, while delaying access to cheaper generic drugs.

Some of those rules were suspended when the US withdrew. But the PHAA says that could change if the US decides to re-enter.



Labor, Greens and crossbenchers concerned at Trans-Pacific Partnership Read more

“These include the TPP’s rules for biologic medicines, which could delay access to cheaper versions of expensive cancer and immunotherapy treatments and raise the cost of the Pharmaceutical Benefits Scheme,” said Deborah Gleeson, a spokeswoman for the association. “But while these provisions have been suspended, they haven’t been removed.”

The PHAA also has concerns about rules for alcohol labelling, which it says could block a push for mandatory health warnings.

The Greens, who are bitterly opposed to the deal, say it risks driving up the cost of vital medicines. Greens senator Sarah Hanson-Young said it would send the “costs of vital cancer medications through the roof”.



And what about those investor-state dispute settlement clauses?

These clauses have been very controversial. Many believe they cede too much power to corporations because they allow companies to sue member states if they do not act in line with the TPP’s investment obligations.

Similar provisions in a Hong Kong-Australia trade deal were used by tobacco giant Philip Morris to sue the Gillard government for its 2012 plain-packaging laws.

The TPP does have protection for states from being sued for regulatory measures and there are specific protections preventing tobacco companies from suing over Australia’s laws.

But the PHAA and the Greens fear it will make Australia liable to court action for simply acting in the national interest.