The United States and Australia already had a free trade prior to the Trans-Pacific Partnership, dating back to 2005. Under the Australia/US Trade Agreement (AUSFTA), 99% of American goods exported to Australia are duty free, and the two countries have worked together to make agricultural trade conditions more sanitary. Trade in goods and services also increased between these two friendly countries. So when the United States decided to get on board with the Trans-Pacific Partnership, Australia soon followed.
Why Australia? Australia is a strong market for the US, as well many other TPP countries. With an agreement like the TPP, other pacific countries will have more access to Australian goods and vice versa.
- Australia exports a huge number of America’s goods. The country is the US’ 15th largest market.
- Exports of US goods to Australia have increased 99% since the AUSFTA was ratified in 2005.
- Exports of Australian goods to the US has increased 45% in that same time period.
- Australia supplies the world with agricultural goods such as beef and lamb.
- Australia is also a valuable producer of precious stones and medical instruments.
- Australia’s service in trade with TPP countries numbers $22 billion – almost a third of their service exports are already with TPP countries.
- In 2012, US imports of Australian private commercial services numbered $6.8 billion – up 74% since pre-AUSFTA days.
- TPP countries will have more access to Australia’s resources such as liquefied natural gas, iron ore, and coal.
- Australia will be able to import TPP resources such as refined petroleum, crude petroleum, and passenger vehicles.
- The third most popular import Australia gets from other countries is travel – so expect to see even more Aussies backpacking through the Pacific region.
Australia already has a beneficial trade agreement with the US, but with the TPP the country will be able to eliminate 98% of tariffs in the pacific region. For products like Australia’s beef and sugar, this is great news. Tariffs on beef from Australia to Japan will nearly vanish, and for the first time in decades, Australian sugar will be able to gain new access in the US market, as well as reduced tariffs in Japan and Canada. Service in trade with TPP countries, which is already a significant portion of Australia’s total export in services, will only grow with the TPP agreement.
Another important friend to the US in the TPP is New Zealand. The country, which consists of two big islands and a few smaller land masses, is remote – and therefore stands to benefit greatly from this trade agreement with so many other countries. The TPP will allow this outlying country to diversify its investments as well as its trade in services and goods. Unlike Mexico, New Zealand does not have a huge amount of trade agreements, so the TPP will open up new markets for New Zealand. New Zealand, although remote and scenic, is more than just a great backdrop for blockbusters. Here are a few facts about New Zealand’s trade, and what it stands to gain with the TPP.
- New Zealand is the United States’ 55th largest trade partner.
- 55th may not seem like much, but the US imported $3.5 billion worth of goods from the country.
- The US supplies New Zealand with items like aircraft, vehicles, and electrical machinery, and agricultural products such as dairy, fresh fruit, and prepared foods. In 2014, US exports numbered $3.5 billion.
- New Zealand exports many goods to the US, including meat, wine, and glue.
- New Zealand already participates in trade with TPP countries, exporting $28 billion worth of goods and services. The TPP will cause this number to grow.
- The TPP will lower duties and tariffs for about 95% of New Zealand products.
- Duties paid on New Zealand goods to the US, Canada, Mexico, Peru, and Japan, all TPP countries, were estimated at $334 million per year.
- Trade tariffs will be eliminated for goods destined for Vietnam and Malaysia.
Because New Zealand did not already have existing trade agreements with some of the biggest economies in the TPP, the country will benefit immediately. The tariffs to the US, Canada, Mexico, Peru, and Japan were costing Kiwi exporters nearly a third of a billion dollars – and now these will be significantly lower, saving New Zealand an estimated $137 million.
Are you ready to do business with Australia and New Zealand?