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 October 31, 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 two days. Once all countries have ratified, the TPP-11 will cover 14.4% of global world trade, 6.7% 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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