KPMG’s Leonie Ferretter explores the benefits of the Trans Pacific Partnership and what international traders should expect from TPP-11.
Australia became the sixth country to ratify the Comprehensive Progressive Agreement for the Trans-Pacific Partnership (TPP11) on 31 October 2018, joining Canada, Japan, Mexico, New Zealand and Singapore and signalling a likely commencement of the TPP-11 for 30 December 2018. Yet to ratify the Agreement are Brunei, Chile, Malaysia, Peru and Vietnam.
This significant milestone will allow two duty reduction phases for signatories to occur within 2 days. Once all countries have ratified, the TPP-11 will cover 14.4 percent of global world trade, 6.7 percent of the world’s population and a GDP of US$10.6 trillion opening a suite of benefits including tariff reductions for goods of a country of origin of TPP-11 members, services access in the education, financial, professional, transport, mining health, telecommunications and e-commerce sectors, and commitments on regulations on foreign investment.
Recognising the benefits of the TPP in the context of existing agreements
While a number of the members of the TPP-11 have bi-lateral and/or regional free trade agreements in place, the benefit of the TPP-11 is that there are only one set of rules of origin required to be assessed to access preferential duty rates when exporting to TPP-11 members. However, with this in mind, it is also imperative that exporters review the applicable phasing duty rates that will apply under the TPP-11 for each of the importing countries, as the duty benefits may not currently be as great as the benefits under other existing free trade agreements.
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