Introduction
5.1
The Committee received submissions and heard witness statements about prospective economies in the Indo-Pacific region that could be encouraged, or may have shown an interest, in applying to the CPTPP.
5.2
This chapter examines views on expanding the CPTPP to the United States of America, India, Indonesia, the Philippines, the Republic of Korea (South Korea), and Thailand.
United States of America
5.3
The Committee heard evidence about the history of US involvement in the TPP negotiations that preceded the CPTPP and heard arguments for and against its future accession to the agreement.
History of US involvement
5.4
The first formal round of TPP negotiations was held in Melbourne on 15-19 March 2010, with the participation of over 200 officials from Australia, the US, New Zealand, Chile, Singapore, Brunei, Peru and Vietnam.
5.5
Aspects of the TPP negotiations which was a precurser to the CPTPP was covered in Chapter 1.
5.6
DFAT’s submission noted that ‘the US played an integral role in the negotiation of the TPP.’
5.7
DFAT added that ‘following [the US’] notification that it did not intend to become a Party to the TPP in January 2017, the CPTPP was a collaborative effort of the other 11 signatories to give effect to commitments negotiated in the TPP and was concluded with the goal of US re-engagement in the future.’
5.8
In its submission, DFAT noted that the TPP (the earlier form of the CPTPP) ‘has only been ratified by Japan and New Zealand and has not entered into force,’ and that ‘the US could also choose to re-engage with the TPP’ (rather than the CPTPP).
5.9
In his submission, former Australian Prime Minister the Hon Tony Abbott AC remembered President Barack Obama’s address to the Australian parliament in November 2011, where the President stated that ‘the Trans-Pacific Partnership was to be the economic arm of the United States’ historic “pivot” to Asia.’
5.10
Mr Abbott expressed the view that during the negotiations the US was ‘caught up in American domestic debate about unfair competition and intellectual property theft from China’ leading both major US parties to support the US’ withdrawal from the agreement.
5.11
As outlined by DFAT, ‘the CPTPP incorporates, by reference, the provisions of the Trans-Pacific Partnership (TPP) - the Agreement that was under negotiation with the US before it notified its intention to not become a Party - with the exception of a limited set of suspended provisions.’
5.12
DFAT continued stating that, ‘[s]hould the US request accession to the CPTPP in the future, consensus among existing CPTPP Parties would be required to reinstate the suspended provisions.’
5.13
Australian Business in Europe (ABIE) supported the reintroduction of the suspended provisions:
The ABIE member organisations support a strong innovation ecosystem and note that some of the original TPP provisions on IP protection which were not incorporated into the CPTPP after the United States withdrew from the Agreement. We understand that Australia’s IP provisions as well as those of the EU and UK would not be in conflict with these “suspended” IP provisions and we would support their inclusion in any expansion of the CPTPP.
5.14
According to the Australian Fair Trade and Investment Network (AFTINET), ‘[t]wenty-two of the original TPP-12 provisions were suspended, but not removed, in the CPTPP. The rationale for suspending but not removing them was that the US may re-join.’
5.15
In terms of the substance of the suspended clauses, AFTINET submitted that ‘[m]any of these provisions are intellectual property provisions that increase monopolies on the most expensive biologic medicines, which would delay the availability of cheaper forms of these medicines for an additional three years.’
5.16
In the situation of expanded CPTPP membership, Dr Patricia Ranald from AFTINET called for advocacy against the reinstatement of the suspended provisions and their subsequent ‘expensive biological medicines’ saying:
So, if there are applications from either the US to rejoin or the UK to join the CPTPP, we would want Australia to vigorously oppose any additional medicine monopolies which would make these biologic medicines more expensive for an additional three to five years.
5.17
In its submission, ActionAid stated its concern about patents and medicines, in particular the suspended TRIPS Plus provisions, were these provisions to be reinstated with the expansion of the CPTPP:
While many of the worst TRIPS Plus provisions that were included in the original TPP were suspended from the CPTPP, there remains a significant risk that these provisions are reinstated, particularly if the agreement is opened up to new members. This has the potential to increase the cost of medicines for developing country members and reduce access to critical medicines for vulnerable communities.
5.18
To explain what TRIPS and TRIPS Plus are, ActionAid footnotes Médecins Sans Frontières’ explanation in their submission:
Common examples of TRIPS plus provisions include extending the term of a patent longer than the twenty-year minimum, or introducing provisions that limit the use of compulsory licences or that restrict generic competition.
The case for US accession to the CPTPP
5.19
DFAT stated that it would welcome US reengagement with the CPTPP and had the opportunity to do so given it ‘played an integral role in the negotiation of the TPP’:
Following its notification that it did not intend to become a Party to the TPP in January 2017, the CPTPP was a collaborative effort of the other 11 signatories to give effect to commitments negotiated in the TPP and was concluded with the goal of US re-engagement in the future.
5.20
Mr Abbott favourably viewed the return of the US to the CPTPP:
I certainly think that it is high time to start beginning discussions with the United States about whether it might not be in their national interests, as well as in the interests of our region more generally, for them to reconsider their aloofness from the TPP, which was, after all, originally their idea.
5.21
The Perth USAsia Centre described the US as ‘the most attractive addition’ to the CPTPP due to benefits it would provide existing members:
Economically, its accession would almost triple the economic size of bloc, offering market access gains across many sectors. Politically, it would also serve as an indicator of US re-engagement with institutions in the Indo-Pacific, and of renewed commitment to its relationships with allies and friends in the region.
5.22
The National Farmers Federation (NFF) submitted that the US if it were to re-join the CPTPP, could provide ‘a number of tangible benefits to Australian producers seeking to export to the US.’ They described the existing trade relationship:
Australia is the fourth largest exporter of agricultural products to the United States, valued at approximately $4.6 billion annually.
The US is Australia's third largest export market for beef in both volume and value, worth approximately $2.3 billion annually. It is the second largest market for Australian lamb, with total sheep meat exports worth approximately $900 million annually. US membership of the CPTPP is likely to significantly improve market access for these commodities - and many others - and thereby improve their export earnings.
5.23
The Australian Sugar Milling Council suggested that the US would be ‘worthy of potential access to the CP-TPP if the following TRQ [tariff-rate quote] concessions could be earned:’
Australia currently has a very small minimum WTO allocation of 87,403 tonnes of raw sugar (out of a total import demand of 2.2 million tonnes) and 22,000 tonnes of white sugar to this market.
This is the most lucrative market globally for raw sugar because of the generous U.S. Government mandated price controls (today’s price of US$26c/lb or A$764/t is well above the current global Futures price of A$466/t).
Internal analysis of likely future sugar consumption in the U.S.A. out to year 2040 indicates a strong average per annum increase of 0.6% or around 150,000t in additional demand per annum.
Of note is that if the US-AUS TPP settings were restored the Australian sugar industry’s revenues would be $31 million higher in 2020/21 compared to what was actually earned; and
Australian industry would seek a TRQ [tariff-rate quota] concession similar to that negotiated but not implemented under the TPP.
5.24
Mr David Rynne from the Australian Sugar Milling Council elaborated on this saying:
As we know, they [the US] were previously a member of the TPP but withdrew, and, in withdrawing from the TPP, they took some considerable concessions from us—the Australian sugar industry—and it would be great to have those concessions reinserted through the US rejoining this agreement.
5.25
Australian Business in Europe supported expanding the CPTPP to the US, saying:
The new Biden administration in the United States is already on record as supporting multilateral trade agreements and it is understood that there will be a renewed push to promote trans-pacific trade. ABIE would welcome the encouragement of Australia in promoting a truly international Comprehensive Agreement for International Partnership in which not only the United States, but also the European Union, the United Kingdom and members of the European Economic Area would participate. This is admittedly a long-term goal and current projects, such as the afore-mentioned EU-Australia FTA and UK-Australia FTA, should not be put on hold in the hope of implementing a full “Comprehensive Agreement”.
5.26
The Perth USAsia Centre noted that internal US politics could obstruct its accession:
In 2021, many of the domestic obstacles that led to US withdrawal in 2015 a loss of manufacturing jobs, trade tensions with China, and concern environmental and labour standards remain. The pressures of COVID-19 on the US policy agenda also leave little space for ambitious trade policy reforms. US accession, if it is to occur, is not likely until the later period of the Biden Administration.
5.27
DHL Express Australia expressed the view that because of the Australia-United States Free Trade Agreement, which is already in force, US accession to the CPTPP would not substantially benefit Australian businesses:
Whilst it could benefit from entering into a regional Free Trade Agreement (FTA), Australia’s direct interests would largely be unaffected in that the Australia-United States FTA is already in existence, providing trade benefits for both countries.
5.28
In their submission, the American Chamber of Commerce in Australia wrote that ‘[t]he Chamber is a strong supporter of the CPTPP and the principals behind the agreement, notwithstanding America’s decision to withdraw.’ They further stated:
We recommend that the Government ensure any expansion of membership of the CPTPP does not diminish but rather upholds the standards of the current Agreement.
5.29
Mr David Olsson, National President and Chairman of the Australia China Business Council highlighted the competitive impact of China’s application to join the CPTPP has had on the US:
What China's application has done right now is to accelerate the interest by the United States and other nations in this agreement. The United States has not got a proper trade policy with respect to the Indo-Pacific region at this stage. It has developed, we know, through the AUKUS agreement, a security policy, but there is no proper trade policy at this stage. There is a lot of discussion going on within the US at the moment as to whether they should or should not reactivate their interest in the TPP. We don't know exactly where that's going to at the moment.
5.30
Dr Jeffrey Wilson, Research Director, Perth USAsia Centre expressed the view that a large economy such as the US would be beneficial for the CPTPP:
There are issues about market access relativities being discussed, but it plays a systemic role in trade liberalisation, because that is the US government saying, 'This is the line we stand behind and not just in the CPTPP; these rules are what we think should be everywhere.' Having the world's largest economy and historic leader of the global trade system saying that does hold traction. What that means is that there's a size aspect—so the bigger the member the better.
5.31
Mr Russell Wiese, Director, Customs and Global Trade Law expressed doubt as to ‘whether Australia would gain from having the US as a member’:
In fact, I recall at the time the economic impact of the TPP was actually more beneficial for Australia with the US not being part of the TPP than it was when the US was meant to be part of it. The reason for that is simply the fact that Australia already had a bilateral FTA with the US. You needed to compare how much additional benefit it would get from having the US as a member of the TPP with the detriment that it might suffer from countries such as Japan and New Zealand who didn't have an FTA with the US all of a sudden having that FTA.
5.32
Mr Wiese emphasised that Australia should not reactively seek to admit as many economies as possible to the CPTPP and cautioned ‘against assuming more is automatically better’:
…we currently are very well positioned in terms of our FTAs. We've negotiated good FTAs. We've done that over a long period of time. We're very lucky to have bilateral FTAs with both China and the US—and with Japan and Korea, for instance—and we just need to consider what we may be giving our competitors if we allow those countries into multilateral FTAs which we are in fact a party to.
5.33
The National Farmers Federation (NFF) expressed concern about US accession, stating that ‘[t]he US is a key competitor with Australia in several key exports markets, including those which are members of the CPTPP. Improving US access to these markets would likely result in Australia losing some portion of its market share.’
5.34
The NFF stated that as a ‘strong supporter of a rules-based global trading system… the direction of US trade policy in recent years has alarmed the agricultural industry.’ Reasons for alarm included:
The blocking of appointments to the WTO Appellate Body, effectively rendering the Dispute Resolution Mechanism of the WTO non-functional;
The imposition of Section 301 tariffs on $234 billion worth of Chinese goods, ruled illegal by the WTO;
The imposition of section 232 tariffs on steel and aluminium products from a number of countries, currently before a WTO Dispute Panel; and
The withdrawal from the already negotiated Trans-Pacific Partnership.
5.35
The NFF declared that it ‘does not reject international competition’ but emphasised that ‘competition with US producers is not predicated on a level playing field’ as their production subsidies and domestic support payments will ‘provide unfair and artificial advantages to US producers in global export markets’:
In 2019-2020, the US Government provided $28 billion (USD) in support payments to its farmers. According to its own Congressional Research Office, these payments put the country $10 billion above its allowable limit, as prescribed by the WTO Agreement on Agriculture.
5.36
As a result, the NFF recommended that if the US desires to re-join the CPTPP, ‘the Australian Government request that the US bring its program of domestic support payments into line with the prescriptions set out in the WTO Agreement on Agriculture.’
5.37
The International Institute for Strategic Studies (IISS) highlighted that America may not be the ideal candidate for CPTPP membership it once was, as the US has developed:
…a more assertive approach towards China and has adopted various policies inconsistent with the rules-based international order promoted by CPTPP members, including its use of (internationally) illegal tariffs against China rather than seeking remedy by legal means for China’s unfair trade practices.
5.38
The Northern Territory’s Department of Industry, Tourism and Trade highlighted the potential loss to Australian agricultural exporters as a result of US accession:
The real ‘game changer’ will come about if the United States, the globe’s number one agricultural exporter, subsequently becomes a party to the CPTPP, as this will likely provide first time preferential access to the United States goods entering a number of markets in which Northern Territory and Australia’s agricultural goods compete.
5.39
The Committee recommends that the Australian Government work with other CPTPP members to encourage the United States to renew its interest in the CPTPP.
India
5.40
The Committee heard evidence on the prospect and case for India to accede to the CPTPP.
5.41
Trade and Investment Queensland (TIQ) advocated that India would make a welcome addition to the CPTPP as ‘Australia’s eighth largest, and Queensland’s fourth largest, trading partner.’
5.42
TIQ highlighted that Queensland could further engage with India in mining equipment, technology and services (METS):
India’s mining laws and regulations are similar to Queensland’s and many of Queensland’s METS companies are engaged and have established relationships with Indian firms and providing their products and services.
5.43
International education was also raised by the TIQ as an area that Australia could leverage by India joining the CPTPP as ‘India is currently the second largest market for international students for Australia and Queensland behind China.’ Horticulture was another area that TIQ suggested Australia might build on if India ascended to the CPTPP:
India has also been one of Queensland’s top destinations for horticulture products specifically pulses.
5.44
Queensland companies are well-placed to seize these opportunities, and TIQ anticipates that the inclusion of India in the CPTPP could further increase the export prospects of Queensland companies.
5.45
The Export Council of Australia noted that ‘if India proceeds to negotiate and accede to the CPTPP, then it will have to address the various administrative processes that currently hinder Australian exports to that market.’ The Council noted several areas for development for further growth between the two countries as part of the CPTPP:
Information technology and software;
Indian export performance;
Greater access for Australian exports; and
Reduction of Indian tariffs.
5.46
The International Institute for Strategic Studies (IISS) noted that ‘the Indian government has shown little appetite to participate in the CPTPP’ thus far, but nonetheless presents as ‘the best alternative to China as a market for Australian exports, especially in the long run.’
Southeast Asia
5.47
The Committee received submissions supporting the inclusion of Southeast Asian economies to the CPTPP including Indonesia, the Philippines and Thailand.
5.48
The Department of Foreign Affairs and Trade listed Indonesia and the Philippines as potential prospective economies:
Indonesia is Australia’s 13th largest two-way trading partner and the Philippines is Australia’s 24th largest trading partner (2019-20). As both are ASEAN member states, our trading relationship is underpinned by AANZFTA and both are signatories to RCEP. In addition, the Indonesia-Australia Comprehensive Economic Partnership Agreement entered into force in 2020. In 2015, Indonesian President Widodo expressed interest in joining the then TPP. The Philippines has recently resumed a study into CPTPP membership. DFAT understands both are in the early stages of considering CPTPP accession.
5.49
The Perth USAsia Centre noted that ‘[t]hree Southeast Asian economies are also considered potential CPTPP members. At various times, the governments of Thailand30, the Philippines and Indonesia have all expressed some kind of interest in joining the CPTPP, and established informal studies into the process.’ The Perth USAsia Centre further noted:
The economic attraction of CPTPP membership for these countries is obvious: preferential access to a number of large developed-country markets; and the ability to attract inward investment, especially needed for post-COVID recovery. Research by the Peterson Institute for International Economics has found that the GDP gains from CPTPP membership are greatest for developing economies that benefit most from expanded market access. As the CPTPP expands – particularly if the US and/or Korea joins – these economic attractions will gain in strength.
5.50
However, the Perth USAsia Centre noted that ‘the bar required for Southeast Asian developing economies is very high. It would demand very extensive economic reforms – particularly around labour standards, state-owned enterprises and services – that affect many sensitive industries.’ The Perth USAsia Centre further observed:
These governments have also just completed long-running negotiations for the Regional Comprehensive Economic Partnership (RCEP) in November 2020, and in the short-term will be focused on domestic reforms required for its ratification. When the stresses of COVID and its recovery are also considered, there is arguably not enough policy space in Southeast Asia for the ambitious reforms required by the CPTPP just yet. However, in future years their membership is a real possibility.
Indonesia
5.51
The Committee heard evidence on the prospect and case for Indonesia to accede to the CPTPP.
5.52
The Australian Sugar Milling Council suggested that Indonesia would ‘be worthy of potential access to the CP-TPP if the following TRQ [tariff-rate quote] concessions could be earned:’
Australia currently competes for around 4 million tonnes of market-driven raw sugar demand at a 5% duty. This reduction bought Australia’s duty into line with Thailand.
Raw sugar purchases by Indonesian refiners are pegged to global Futures prices.
Internal analysis of likely future sugar consumption in Indonesia out to year 2040 indicates a very strong average per annum increase of 2.5% or around 268,000t in additional demand per annum.
Industry would seek no quota limitation and 0% duty for raw sugar to this market.
5.53
The Export Council of Australia similarly supported Indonesia’s potential accession to the CPTPP saying ‘[a]s Australia’s closest neighbour with a young, digitally savvy population on the rise, Indonesia is a market that Australian businesses can more closely engage with, enabled by the CPTPP.’
5.54
The Export Council of Australia expressed the view that ‘[while] Australia already has free trade agreements with Indonesia, such as the Indonesia-Australia Comprehensive Economic Partnership Agreement, the ASEAN-Australia-New Zealand Free Trade Agreement and the Regional Comprehensive Economic Partnership, there is still merit for including Indonesia as part of the CPTPP.’
5.55
The Export Council of Australia highlighted potential areas of opportunity in Indonesia for Australian businesses through the CPTPP:
(i) Securing global supply chain – Australia to identify and invest in businesses in Indonesia, in order to secure alternative sources and supply. This may require building the capacity of Indonesian firms, skills of staff, and adoption of standards;
(ii) Filling gaps in higher value-added activities – even in Indonesia’s competitive export sectors, they lack higher value-added activities such as R&D, design, customer analysis, marketing and branding. [Note: lower value-added activities include procurement, production, logistics and transport.] These higher value-added areas are where Australia can provide additional exports, at least in services;
(iii) Strengthening the business environment – this includes creating a conducive environment for innovation, business dynamism and a supportive ecosystem. In addition, this will help implement commitments in trade facilitation, investments and standards.
5.56
Grain Growers welcomed the possible inclusion of Indonesia in the CPTPP, noting the growth ‘in flour (bread and noodles) consumption – and robust expansion in local livestock and feed industries.’
5.57
Grain Growers noted that ‘Indonesia is one of Australia’s largest wheat trading partners, valued at A$1.3 billion per annum; however, wheat is predominantly being utilised for milling purposes, with further opportunities for feed grain apparent. It is important to note that the other key markets supplying Indonesia with wheat is Canada and the United States.’
5.58
Grain Growers further submitted that any CPTPP negotiations with Indonesia should account for competition from Canadian grain:
Consideration of Indonesia’s accession to the CPTPP should be done with knowledge that Indonesia is a strategic opportunity for Australian grains and risks to increasing competition should be managed appropriately by the Australian government in consultation with industry. It is noted that Canada has launched public consultations on a Comprehensive Economic Partnership Agreement (CEPA) with Indonesia. This should be noted by the Australian Government to ensure that Australia’s existing agreement and benefits are not in jeopardy and if there are opportunities to improve the access further.
The Philippines
5.59
The Committee heard evidence on the prospect and case for The Philippines to accede to the CPTPP.
5.60
The Australian Sugar Milling Council suggested that the Philippines, further to their comments regarding the US and Indonesia, would be ‘worthy of potential access to the CP-TPP if the following TRQ [tariff-rate quote] concessions could be earned:’
Australia currently has a small WTO allocation of 64,050 tonnes of raw and 64,050 tonnes of white sugar.
Australia currently competes for around 261,000 tonnes of market-driven raw and white sugar demand at a 65% applied tariff (compared to Thailand’s 5% applied tariff for raw and white sugar).
Industry reports that domestic production is falling and domestic consumption is increasing strongly.
Raw and white sugar purchases into this market are pegged to global Futures prices.
Industry would seek no quota limitation and 0% duty for raw and white sugar to this market.
5.61
Grain Growers supported the inclusion of the Philippines in the CPTPP as ‘like many other states in the region, the Philippines are experiencing strong population and consumption growth which in turn presents increased opportunities for Australian wheat and barley exports. Agricultural exports to the Philippines are on the rise because of this increased demand.’
5.62
Grain Growers also noted the ‘Philippines is also a party to the AANZFTA [ASEAN-Australia-New Zealand Free Trade Agreement], through which Australia benefits favourable tariff arrangements for the supply of wheat and barley in contrast to most competitors.’
5.63
However, Grain Growers warned that ‘it should be noted that Australia is at risk of price competition when looking at other exporters of feed wheat, notably Argentina and Black Sea countries.’
Thailand
5.64
The Committee heard evidence on the prospect and case for Thailand to accede to the CPTPP.
5.65
DFAT also suggested Thailand as a possible member of the CPTPP, submitting that ‘Australia has a substantial trading relationship with Thailand.’ DFAT further noted:
Two-way trade in goods and services was worth AUD 21.5 billion in 2019-20, making Thailand our 10th largest trading partner.
5.66
DFAT detailed that ‘Australia’s trade relationship with Thailand is underpinned by the Thailand-Australia FTA (TAFTA). Australia and Thailand are also parties to AANZFTA and signatories to RCEP.’
5.67
Under TAFTA, which came into force in January 2005, DFAT wrote that it has ‘eliminated over 90 per cent of Thai tariffs on goods imported from Australia and improved our services and investment market access.’
5.68
DFAT noted that the ‘Thai Government is considering CPTPP membership. In October 2020 a parliamentary committee delivered a non-binding report which recommended Thailand accede to the CPTPP at some point in the future.’
5.69
Article Three, a trade policy advisory firm, endorsed expansion of the CPTPP as a way to liberalise trade with economies such as Thailand:
More open and efficient domestic services and investment frameworks would be encouraged through wider adoption of binding commitments to broader and deeper liberalisation. Services and investment are now crucial to trade however barriers are still generally much higher than for trade in goods. Thailand, for example, has generally high barriers to services.2 CPTPP accession would help to reduce some of these barriers.
5.70
Grain Growers identified Thailand as a potential welcome addition to the CPTPP for Australia, noting that ‘Thailand is an exiting market for Australian cereal grains, predominantly importing wheat (447kmt) and barley (126kmt).’
5.71
Grain Growers noted that Australia already has ‘preferential access via the Thailand-Australia Free Trade Agreement and the ASEAN-Australia-New Zealand Free Trade Agreement with benefits from these being: tariffs on wheat barley, sorghum to be eliminated at Enhanced Integrated Framework.’
5.72
Grain Growers further submitted that it supported any future trade negotiations to improve recognition of standards and reduce of non-tariff barriers:
Opportunities to improve dialogue and recognition of standards and reducing non-tariff barriers are supported in principle by Grain Growers, noting Australian Government should work to ensure practical solutions on NTMs [non-tariff measures] are achieved either through the agreement or alongside. It is noted that Thailand has expressed its intent to explore the option of joining the CPTPP.
Other considerations
5.73
The Committee received evidence that was not specific to one economy’s potential to accede to the CPTPP, but relevant to several economies.
5.74
The Australian Sugar Milling Council identified the US, China, Indonesia, the Philippines and Taiwan as advantageous markets to Australian sugar exporters. The Australian Sugar Milling Council selected these five economies, having undertaken a market scan to identify those prospective countries where:
Sugar demand is growing (and as such, where physical premiums could be earned);
Australian sugar supply is competitive on freight compared to Thai and Brazilian supply;
Improvements in TRQ settings would put Australian supply on par or below the cost of alternative supply to that country; and
That country is not already a signatory to the CP-TPP (e.g. Vietnam, Malaysia and Japan are signatories) and has not recently negotiated, or in the process of negotiating, a free trade agreement (e.g. the UK and EU).
5.75
The Australia China Business Council (ACBC) stated that greater economic power was required as a ‘truly comprehensive CPTPP would ideally include all three of the major Indo-Pacific powers: India, the United States and the People’s Republic of China.’
5.76
The Northern Territory’s Department of Industry, Tourism and Trade similarly suggested that these economies should be welcomed:
An inclusive approach could expand membership, including to fast-growing economies such as India, the United States and China, should they commit to the agreement’s disciplines.
5.77
The Australia China Business Council submitted that as a major regional economies, it supports China, India and the US in the CPTPP:
A truly comprehensive CPTPP would ideally include all three of the major Indo-Pacific powers: India, the United States and the People’s Republic of China. The ACBC therefore supports efforts to extend membership of the CPTPP to those nations.
5.78
Article Three, a trade policy advisory firm, recommended expanding the CPTPP into markets across Asia:
Expanding the membership of the CPTPP across Asia would ensure the entirety of regional manufacturing value chains can receive the benefits of the agreement, avoiding trade distorting impacts across markets and increasing the competitiveness of these value chains. Taiwan, Korea and China all play an important role in regional value chains operating across ASEAN, North Asia and Asia Pacific.
5.79
The Minerals Council of Australia was optimistic of expansion of the CPTPP to include regional economies throughout Asia in stating that:
Modelling shows sustained real annual income gains of $15.6 billion and boosts Australia’s exports by $29.9 billion by 2030 under the CPTPP. The modelling finds that mining industry exports would increase by 0.5 per cent by 2030 compared to the study’s base scenario – a figure that more than doubles under a scenario whereby the CPTPP is expanded to include Indonesia, Korea, the Philippines, Taiwan and Thailand.
5.80
Dr Jeffrey Wilson, Research Director, Perth USAsia Centre highlighted the cumulative effect smaller economies can have to influence similarly sized economies in joining the CPTPP:
There's obviously some buy-in for some smaller members. A country like Vietnam sends a message as well. Vietnam, upon accession, had a lot of state-owned enterprises and had to do a lot of heavy lifting on reforms to do the labour chapter, for example. If they can say, 'We can do that to be part of this trade block,' that sends a message to an Indonesia or a Philippines and so on that you can actually have different countries.
5.81
Regarding Pacific island countries (PICs), the United Nations Pacific Regional Anti-Corruption (UN-PRAC) Project’s submission ‘particularly focuses on the CPTPP’s potential role in addressing corruption in relation to trade in the Pacific and the benefits to both PICs [Pacific island countries] and Australia that flow from combatting corruption.’
5.82
UN-PRAC noted that Article 26 of the CPTPP ‘requires signatories to maintain legislation to punish bribes and other advantages given to public officials.’ Further:
[Article 26] requires signatories to promote integrity, honesty and responsibility among its public officials through measures such as providing adequate procedures for the selection and training of individuals for public positions, requiring various financial and assets declarations, and facilitating reporting by public officials of acts of corruption to appropriate authorities (Art 26.8). Chapter 26 also complements the United Nations Convention against Corruption (UNCAC) by encouraging accession by all parties to UNCAC and recognizing and explicitly stating that it does not conflict with several existing anti-corruption regimes, including UNCAC (Art 26.6).
5.83
UN-PRAC held the view that as UNCAC is mentioned in Article 26, ‘this explicit reference means that UNCAC and the CPTPP can work together as effective and mutually re-enforcing anti-corruption tools.’
5.84
The Committee recommends that the Australian Government work with other CPTPP members to encourage informal discussions with Thailand, Indonesia, the Philippines and other economies which have expressed an interest in acceding to the CPTPP.
Senator the Hon David Fawcett
Chair
Joint Standing Committee on Foreign Affairs, Defence and Trade
9 February 2022
Mr Ted O’Brien MP
Chair
Trade Sub-Committee
9 February 2022