Cheaper Prices on the Way as TPP Trade Agreement Eradicates Tariffs Across 12 Countries
Alcohol in Australia has always been more expensive compared to many other countries across the globe, but now we could be seeing the ball moving back into our court. A recent trade agreement, called the Trans-Pacific Partnership (TPP), looks to be the catalyst that will bring about this change. For example, Mexican tequila and Canadian whiskey (along with a range of other goods and services) will, as a result of this new partnership, become cheaper for us to buy.
The agreement, which our on Trade Minister Andrew Robb signed on the week ending 11th October, means that 12 nations and 40% of the world's economy will reap the rewards of the newly established terms between each other. This is the biggest deal to occur within the past 2 decades and it could open up many more opportunities, especially for Australian consumers and exporters.
Very little is known about the deal at the moment, but it’s something which has been brewing amongst the twelve Pacific rim countries for 5 years now. The 5th of October was the final agreement date after a long negotiation, which had been initiated in efforts to lower trade barriers and tariffs that were originally established to protect common frameworks for intellectual property. The aim overall was to improve labour laws, enforce environmental law and establish investor-state dispute settlement mechanisms. The result, a settled agreement which should trigger a cascade of investment, innovation, economic growth and creation and retention of jobs to all twelve countries.
A very similar agreement exists with the United States and the European union, via the Transatlantic Trade and Investment Partnership. Yet, whilst we still haven’t heard the full details about this new partnership, we do know that at least 5% of the tariff on tequila from Mexico and whiskey from Canada will be eradicated. Did you know that in 2007 $AU14 million of spirits were imported from Mexico alone into Australia.
This agreement doesn’t just affect those of you who like a good spirit or two, as the ladies will be happy to hear that “Australia applies a five per cent tariff on cosmetics from Canada and Canadian whiskey which will be eliminated in the TPP” a Department of Foreign Affairs and Trade (DFAT) spokeswoman has said. Foodstuffs will also decrease in price through the removal of this 5% tariff on things like tinned asparagus from Peru, while beef will see its 9% tariff removed. Over the coming years we'll also see a range of electronics, textiles and garments reduce in price from the 11 other countries within the agreement.
Ultimately, as a result of all this we should hopefully see a significant dent in the current Australia Tax which currently pay on goods coming into our country from abroad!
There are some fears that medicine will become more expensive. Consumer advocacy group Choice has discussed the possibility of intellectual property provisions of medicines impacting their cost in Australia as monopoly 'data exclusivity' periods increase. What this means is that Australians will end up having to wait longer for cheaper, generic drugs to hit the market, while in the meantime being forced to pay higher prices for longer periods of time. However, the DFAT spokeswoman denied this saying there would be no change, only a positive result for all countries involved within the partnership.
If you or anyone you know does business within the TPP area, then the countries that are included within the deal are: Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, USA and Vietnam.