The rehashed and renamed Trans-Pacific Partnership (TPP) agreement struck between 11 countries, not including the United States and China, comes into force from Sunday even as New Zealand’s trade minister applauding the huge opportunities that the deal would present for exporters.
The US had pulled out of the TPP negotiation in 2017. The aim of the trade deal is to cut down on tariffs across much of the Asia-Pacific region to promote free trade.
“The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) provides New Zealand with trade agreements for the first time with three significant economies: Japan, Canada and Mexico,” New Zealand Trade Minister David Parker said in a statement. “The CPTPP has the potential to deliver an estimated NZ$222 million ($149.01 million) of tariff savings to New Zealand exporters annually once it is fully in force.”
Australia’s Department of Foreign Affairs and Trade said on its website that for Australia, New Zealand, Canada, Japan, Mexico and Singapore, the deal came into force from Sunday while for Vietnam, the trade deal would be initiated from January 14.
The trade deal would come into force 60 days after they complete their ratification process for Brunei, Chile, Malaysia and Peru.
In the first round of cuts, 90 percent of tariffs on goods in the first six countries were removed on Sunday, investment bank HSBC said in a press release.
Australia is looking forward to favorable conditions for its agricultural exports including wheat, prompting U.S. competitors to warn they will need help to compete.
“Japan is generally a market where we seek to maintain our strong 53 percent market share, but today we face an imminent collapse,” U.S. Wheat Associates President Vince Peterson told a public hearing in Washington on December 10.
“In very real terms, as of April 1, 2019, U.S. wheat will face a 40 cent per bushel, or $14 per metric ton, resale price disadvantage to Australia and Canada,” said Peterson said according to a transcript on the U.S. Wheat Associates website.
The countries in the new trade agreement together account for more than 13 per cent of global gross domestic product (GDP) with a total of $10 trillion and the agreement would reduce tariffs across all of the countries. Had the US not pulled out of the trade deal, the combined GDP of the member countries would have accounted for almost 40 per cent of the global GDP.
In April this year, U.S. President Donald Trump had said that the US would ponder on rejoining the trade agreement if the terms were more favorable for the United States.
(Adapted from Asia.Nikkei.com)