TPP and Australia: Trumps’ withdrawal, good or bad for Oz?

TPP and Australia has long been supported by Australia’s prime ministers which includes Julia Gillard, Kevin Rudd, Tony Abbott and Malcolm Turnbull, but how will it affect Australian industries now that Trump has withdrawn support from it?

Japan’s Prime Minister, Shinzō Abe, has already expressed that the TPP is meaningless without the US, amidst Australia’s initiative to salvage the deal. Thus with the possibility of Japan also abandoning TPP, how should Australia see it?

TPP and Australia: A promise of permanent GDP of US$15 billion

One of the appealing factors of the TPP to Australia is its promise of a permanent GDP increase of US$15 billion based on the Peterson Institute for International Economics (PIIE). This is an increase of .7% by 2030 and export increase of 5% according to the Business Council of Australia as quoted in the World Bank.

TPP and Australia - a promise of $15B of GDP increaseThe promise of TPP to Australia

However, research by the World Bank published last year gives us a clearer picture of this data. It showed that Australia is likely to experience a gross domestic product increase of less than two percentage points by 2030 as a result of the increased business flowing from the trade deal among the 12 countries.

TPP and Australia- what are the benefits?TPP and Australia: Will Oz benefit from it?

Sadly, when compared to other TPP members, Australia will have the smallest overall increase in exports which only accounts to 5 percent compared to a massive 30 percent for Vietnam and 10 percent for the USA.

TPP and Australia’s agriculture sector

Prior to TPP, Australia’s export products faced over $4.3 billion in tariffs. The ratification of TPP eliminates these tariffs mostly covering beef, sheep meat, pork, livestock, dairy, wine, seafood, wool, cotton, grains and horticultural products.

Minister for Agriculture, Barnaby Joyce  has added that exports to these participating TPP countries were worth $15 billion in 2014 and 2015. This is approximately 33% of the country’s total agricultural exports.

Now that TPP is dead in the water, is this something the agriculture has to worry about?

TPP and Australia’s sugar industry

Under the current FTA agreement with the United States, Australia’s access for sugar was at
87,402 metric tons. With the TPP, an additional 65,000 tonnes of sugar can now be exported to the USA. This is 74% higher than its current limit, which is also worth more than $13million a year to Australian farmers.

TPP and Australia's Sugar Industry

TPP and Australia’s Sugar Industry

Further, Australia is also allowed to provide 23 per cent of any extra raw sugar allocations in the US while removing an in-quota tariff worth about $3 million a year. Now that TPP is gone, the entire deal falls apart together with the hope of unlocking other markets where Australian sugar can be exported.

TPP and Australia’s rice industry

With TPP, Japan will allow Australian rice exports to an additional 6,000 tonnes, increasing to 8,400 tonnes over time. But now that TPP remains to be unratified, the Australian rice industry remains excluded from the Japanese, Korean and Chinese trade agreements.

Without TPP, rice export to Japan remains at minimal.

TPP and Australia's rice industryTPP and Australia’s rice industry

TPP and Australia’s meat industry

The Australian Meat Industry is one of the sectors that awaits the ratification of the TPP as published in one of the articles of the ABC News . This is due to several benefits they will receive from it such as:


There will be a 6 to 50 percent tariff decrease within 15 years of processed red meat from Japan. Tariffs on live cattle and Japanese offal will also be eliminated within the same span of time.


Although it will retain its 35,000 tariff-free beef quota, it will however phase out the above-quota tariff of 26.5% while eliminating the 2.5% tariff on Australian sheep immediately after the deal comes into force


Mexico agreed with the elimination of 20-25% beef tariff within 10 years, 10% of sheepmeat and goat within eight years, and 10-15% tariff on live animals.


The government has agreed to phase out the 17% tariff on Australian beef and the 9% sheepmeat and goat tariff once it is ratified.

However, this will now fail to pass. This is definitely bad news for the Australian meat industry.

Trump and Australia's meat sectorTrump and Australia’s meat sector

TPP and Australia’s cheese industry

Under the current FTA with the US, Australia’s tariff rate quota amounts to about 0.17% of the annual value of the US dairy production and about 2% of the current value of the total US dairy imports. Moreover, amidst an existing FTA with Japan , it still has four tariff rate quotes on cheese.

Cheese makers were optimistic TPP will give them the opportunity to finally get into the Japanese market. It may still be possible, but not for the moment and definitely not through TPP.

TPP and Australia’s trade industry

If the agriculture sector is grieving over the Trump’s withdrawal of the TPP, the trade industry is also feeling the same way and Prime Minister Malcolm Turnbull and Trade Minister Steve Ciobo is doing their best to salvage it.

While the government is insisting that TPP minus one is possible, detractors of the TPP claims this to be a blessing in disguise for the country. Many believe, there is really nothing to worry about for Australia. This is because we have so many bilateral multilateral trade agreements in place.

In the article published by William Shephered  he stated, “Let’s not lose sight of the fact that we already have a free trade pact with the US (AUSFTA), not to mention Japan and New Zealand. These bilateral trade cordials can actually prove more advantageous to colossal multilateral agreements like TPP,…”

At present, Australia does have trade agreements both bilaterally or other multilateral trade agreements with most of the TPP participating members.

  • Australia-US Free Trade Agreement (AUSFTA)
  • Japan-Australia Economic Partnership Agreement (JAEPA)
  • Australia New Zealand Closer Economic Agreement (ANZCERTA)
  • Australia-Chile Free Trade Agreement (ACl-FTA)
  • Singapore-Australia Free Trade Agreement (SAFTA)
  • Australia-Chile Free Trade Agreement (ACl-FTA)
  • Malaysia-Australia Free Trade Agreement (MAFTA)
  • ASEAN, Australia and New Zealand Free Trade Agreement (AANZFTA) – which includes New Zealand, Malaysia, Singapore, Philippines and Vietnam

Amidst no direct trade agreements with Canada, Australia has signed the Canada-Australia Trade and Economic Cooperation Arrangement (TECA) so both countries can foster on trade and economics. Peru and Mexico on the other hand are both part of APEC . This makes it easier for trade to proceed with these nations.

Nothing to worry about Australia – stay calm

So should Australia worry about Trump leaving the TPP and TPP not coming into ratification?

Not really. Australia is doing good without TPP. It’s existing trade agreements with most countries around the globe is sufficient to boost its economy.

As Prof. Peter Robertson, Head of Economics at the University of Western Australia’s Business School said via SBS News.

“Australia has free-trade agreements with the USA ,and there are not many sectors that we don’t have free trade with the USA already. So with us and the USA, not much is going to change.”

Countries without a direct trade pact with the US would be negatively impacted without the TPP but as for Australia, there is nothing to worry about.

What’s more Australia should worry about is how government reacts to the policies implemented by both China and the USA. That is something we should all be observing.