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The TPP: Helping Overcome Australia's Tyranny of Distance

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By Jennifer Mulveny

One extremely painful way to pass the time on the 14.5 hour flight from San Francisco to Sydney is to check the in-flight map after three movies and a nap of questionable duration. As I watch the little hour glass spin over the map, I hope that I’m at least out of the double-digit hours remaining to my destination --- straining to see just a bit of color edging its way onto the screen of endless blue.

Sighting a coastline is indeed a sight for sore eyes and shows just how far Australia is from just about anywhere, save New Zealand, Papua New Guinea and the southern islands of Indonesia. This “tyranny of distance” for Australia, as it is often called, makes regional and global economic engagements with other countries absolutely critical. A valuable and growing market sitting quite literally on the bottom of the Earth, Australia heavily relies on bridges with the rest of the world in order to realize its full potential.

The recent signing of the Trans-Pacific Partnership (TPP) free trade agreement in Auckland is one of these bridges, a multi-pronged one, in fact, with 11 other countries. The TPP creates deeper and wider regional and global integration than any of Australia’s existing trade agreements—setting predictable and stable rules for connecting Australian businesses to potential customers abroad.

Intel’s Managing Director for Australia and New Zealand Kate Burleigh helped lead Australia’s tech industry support for the TPP after it was signed February 4. Kate pointed out that Australia’s digital future “exists well beyond our borders,” and that the agreement will help many small and medium-sized Australian companies, including start-ups, predictably access global markets. Predictability is key: the TPP holds trading partners accountable for opening markets to Australia’s goods and services.

Taking the 50,000-foot view: The TPP will account for over 25 percent of world trade and close to 40 percent of world GDP. Diving a bit deeper for the land down under, consider that Australia’s exports of goods and services to TPP partners were worth $109 billion last year, which equals one-third of all Australian exports. Under the TPP, tariffs will be eliminated on $9 billion of Australia’s dutiable exports to TPP countries. That’s significant. And Australia will not have to change a single law to make it a reality. In fact, it’s Australia’s trading partners, many in Southeast Asia, that must follow new rules in areas such as privacy, intellectual property protection, and allowing private enterprises to compete with state-owned enterprises. These were heavy lifts.

Kate also referred to the new rules of the road that TPP will put in place affecting the movement of data and protecting Australian-grown technology. The TPP framework on protecting intellectual property, for example, is absolutely critical for the future of an economy that is increasingly digital. It also requires our Asia-Pacific partners to modernize their rules on privacy and investment so that Australian companies can predictably do business abroad under enforceable rules.

Finally, some critics point out that Australia will not benefit as much as other TPP countries or that its existing free trade agreements are sufficient. It is important to note that many markets are already open to Australian products and the TPP success is more about strengthening the rules of the game than lowering tariffs. But scrapping duties on $9 billion worth of products certainly should not be discounted.

Further, the TPP includes concessions by countries that are beyond Australia’s current free trade agreements with Japan and the United States, and new access to countries with which Australia has no existing FTA, such as Canada, Mexico and Peru. The TPP will also streamline trade and investment rules in the region, which will more closely connect the Asia-Pacific region and bolster Australia’s participation in regional value chains.

The tyranny of distance can seem insurmountable for companies in Australia and those that want to do business here from abroad. (The in-flight map is but one example). But the TPP can help narrow this distance by creating new opportunities and further protecting current international business. It creates a firm foundation for Australia’s modern economy and will help the “ideas boom” to flourish beyond the local population of 24 million people.

As Australia’s Minister for Trade and Investment Andrew Robb said of the TPP: “Australia simply cannot afford to not be part of it.”
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