TPP-11 Myth busters

FACTS vs FICTION

Myth: Without economic modelling there is no way of understanding the benefits of the TPP-11 for Australia.

Wrong.

  • The TPP has been modelled - the Peterson Institute for International Economics (PIIE) has calculated that TPP-11 will lead to an increase in Australia's national income by 0.5 per cent by 20301.
  • However, modelling, including of the kind done by the PIIE, understates the potential benefits of the TPP-11 because it is mainly focussed on tariff reductions.  Modelling the impacts of other aspects of the TPP-11, such as services market access, improved customs procedures, enhanced investment conditions and rules on transparency, are very difficult.
  • Similarly, modelling is not currently able to quantify the benefits from a regional deal, such as the TPP-11, which provides a framework in which value chains can function more efficiently and at lower cost among the countries in the Agreement.
  • Ultimately, free trade agreements (FTAs) like the TPP-11 help to break down trade barriers.  The fewer trade barriers Australian businesses face, the easier it is to trade, which in turn brings productivity improvements and higher competitiveness levels across our economy.

Myth: The complexity of the TPP-11 will make it difficult to understand, and add costs.  

Wrong.

  • FTAs can seem complicated, but the Government is already taking significant steps to ensure Australian businesses have the necessary information and advice to understand how to take advantage of the benefits of these agreements.
  • DFAT's online FTA portal2 is a valuable tool for businesses to access information on FTA rules and tariff rates.  
  • In addition, the Government – through DFAT and Austrade – has been conducting a range of FTA seminars across the country aimed at providing advice to Australian businesses and industry, particularly targeted at small and medium sized companies.  Almost 100 such seminars have been held and they have received positive feedback from attendees.
  • Longer term, as articulated in the Government's Foreign Policy White Paper, Australia is working to achieve a region-wide and inclusive trade and investment arrangement under one set of rules.  While this will take time to achieve, the conclusion of the TPP-11 is an important step in this direction.  The Regional Comprehensive Economic Partnership (RCEP) negotiations and our negotiations with the Pacific Alliance are other potential stepping stones.

Myth: Investor-State Dispute Settlement (ISDS) provisions allow foreign companies to sue the Australian Government for loss of expected profits.

Wrong.

  • TPP-11 investment rules help protect Australian investments and ensure Australian businesses are given a fair go – for example, by being given due process in local courts overseas.
  • Investors cannot sue under ISDS for a mere loss of profits where a government has decided to change its policies or regulations.  Instead, investors need to show that the government has broken a TPP-11 investment rule – for example, by nationalising an investment without compensation, or by denying the investor due process in a local court.
  • TPP-11 investment rules mean that the Australian Government can continue to make laws that are in the public interest, including regarding health and the environment.  There are also rules that will deter frivolous claims and ensure that the Government is free to determine laws and policies without the threat of legal action.

Myth: The TPP's Intellectual Property provisions will result in higher prices for medicines and impose changes to Australia's IP laws.

Wrong.

  • TPP-11 Intellectual Property rules will not increase the price of medicines for Australians or require changes to the Pharmaceutical Benefits Scheme or Australia's intellectual property legislation or settings. 

Myth: There will be in an influx of temporary workers from TPP-11 countries.

Wrong.

  • TPP-11 rules will make it easier for Australian businesses and workers to provide services and expand their reach in TPP-11 countries.  
  • Nothing in the TPP-11 will require Australia to change the skills assessments and licensing procedures for the temporary entry of skilled professionals.
  • Employers wanting to sponsor workers from overseas still need to meet all of the other visa requirements that already exist – for example, in relation to minimum skills, qualifications and experience, and market salary rates and employment conditions equivalent to Australian workers.
  • Further, the TPP-11's commitments on the temporary entry of skilled professionals into Australia are limited to five discrete categories: intra-corporate transferees; contractual service suppliers; investors and independent executives; installers and servicers of machinery and equipment; and short term business visitors.
  • Australia has only offered to waive labour market testing for TPP-11 countries where they offered similar arrangements to Australia.

Myth: The Government negotiated the deal in secret.

Wrong.

  • The outline of the legal instrument and suspension request as agreed by the TPP-11 Ministers in Da Nang has been on the DFAT website since 11 November 2017.
  • The market access schedules of TPP-11 countries have been on the DFAT website since November 2015.
  • The TPP-11 retains most of the concluded TPP-12 agreement.  For the TPP-12, DFAT received 83 written submissions from stakeholders, and consulted with 485 organisations and individuals (not including State/Territory governments).  Additional consultations and engagement occurred in relation to TPP-12's provisions that will be suspended in the TPP-11.
  • The text of the TPP-11 Agreement was released publicly on 21 February 2018.
  • Once signed, the TPP-11 text will be tabled in the Australian Parliament.  The Agreement will then be reviewed by the Joint Standing Committee on Treaties (JSCOT) with a National Interest Analysis (NIA).

Myth: The TPP will limit Australia's sovereignty.

Wrong.

  • The TPP-11 clearly recognises the right to regulate to protect public welfare, including in the areas of health and the environment.
  • Australia will continue to write its own laws and Australian courts will continue to rule on matters of Australian law. ISDS tribunals will only be able to rule on whether a TPP investment rule has been broken. They will not be able to overturn an Australian court's decision or force Australia to change its laws.

Myth: The TPP will require changes to our foreign investment screening process for real estate.

Wrong.

  • Rules requiring foreign investors buying Australian urban land to seek Foreign Investment Review Board (FIRB) approval will not change under the TPP-11. Australia will also still have the right to make laws in relation to proposals by foreign investors to buy Australian urban land.
  • The TPP-11 will increase the threshold value at which sales of non-sensitive businesses for private investment to TPP-11 countries will be automatically reviewed by FIRB, from $261 million to $1,134 million.  The threshold for sales of sensitive businesses remains at $261 million.  The threshold for proposed foreign investments in Australian agricultural land is $15 million or more (cumulative), and $57 million or more for agribusinesses – the same threshold for non-TPP-11 countries.


Last Updated: 22 February 2018