Money Finance News What a doomed TPP might mean for all Australians
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What a doomed TPP might mean for all Australians

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The 19 months of negotiation that went into brokering the Trans-Pacific Partnership are looking more and more like a waste – an outcome that may relieve Australian consumers but worry foreign policy experts.

The trade deal will, if it ever comes into formal effect, create a trade bloc between Australia, the USA, New Zealand, Canada, Japan, Mexico, Malaysia, Singapore, Brunei, Chile, Peru and Vietnam, thereby creating the world’s largest trade zone covering almost 40 per cent of the global economy.

It’s looking shaky. Only one of the 12 member nations (via their legislatures) needs to fail to ratify the treaty before the deadline of October 2017 and it could be doomed. After that deadline, at least six nations accounting for 85 per cent of the combined GDP would need to ratify. But would they if a crucial signatory like the US abstained?

The US presidential race between Hillary Clinton and Donald Trump offers evidence that it could be the USA that undermines the deal.

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Both Trump and Clinton say they oppose the TPP. Photo: Getty

During the July 25-28 Democratic National Convention, Ms Clinton’s campaign chairman John Podesta told the Wall Street Journal that the Democratic nominee opposed a congressional vote on the TPP and was seeking a “new approach” to the agreement, not a mere “renegotiation”.

Mr Trump has also repeatedly promised to oppose the deal. It is Congress, not the US president, that must ratify the deal. But either leaders’ influence over their party could be crucial.

Two Australians experts told The New Daily the chances of the TPP’s enactment have diminished, and that Australian consumers may not notice its absence – and that they might even be better off without it – but that it could matter to world affairs.

‘Good for average Aussies’

UNSW economist Dr Tim Harcourt, former chief economist of the Australian Trade Commission, told The New Daily that, in some ways, the TPP is an example of free trade “going too far”.

He gave the example of its protections for cross-border investment and the right for multi-national companies to sue governments in courts of arbitration if they enacted legislation that hurts their commercial interests – such as Australia’s plain packaged tobacco.

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Dr Tim Harcourt

Dr Harcourt noted the arguments of some opponents that trade deals like the TPP fail to account for labour rights and the environment. And he said that while Australian consumers might miss out on a “very gradual” decrease in prices of overseas imports, this benefit would probably only have affected them “right at the margin”.

“In some ways, perhaps re-evaluating some of these international agreements to make them more pro-jobs and pro-environment wouldn’t be a bad thing.”

Dr Jeffrey Wilson at Murdoch University’s Asia Research Centre agreed that the impact on consumers would likely be “marginal”.

“The impact on ordinary Australians either way will be marginal in the short term. The TPP mostly offers complex and long-term benefits for Australia’s trading interests, which will take years to materialise.”

Watch economist Robert Reich, former labor secretary to Bill Clinton, criticise the TPP:

‘Bad for foreign policy’

Murdoch University’s Dr Wilson was far more concerned about the “significant” impact of a failed TPP on Australian and US foreign and trade policy.

“The TPP is one of the most important, if not realistically the only, element of US foreign economic policy in the Asia-Pacific,” Dr Wilson told The New Daily.

“It is also the ‘economic wing’ of the US’s ‘Pivot to Asia’ strategy. Australia has also been a major supporter from day one. If the TPP is defeated in Congress it will be one of the greatest foreign policy failures of the US in recent history. It will also leave US claims to ‘leadership’ in the Asia-Pacific, which Australia has aligned itself with quite explicitly, in tatters.”

UNSW’s Dr Harcourt agreed that a failed TPP would probably be a “missed opportunity” in terms of foreign politics.

“Japan and America would be disappointed because in some ways, the TPP is a chance for them to re-grasp economic leadership in the Pacific. They are worried about China with respect to investment in the Asia Infrastructure Investment Bank and so on,” he said.

“It wouldn’t be the end of the world, but it’s a bit of a missed opportunity to get all those countries agreed to provide all those opportunities, but I think with the Pacific alliance I think we have very strong ties to the Asian countries now. We’d be able to build up something again that could be even better.”

* This article has been corrected to better reflect the TPP ratification process.

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