Chetna Prakash looks at how city-dwelling, coffee-sipping Australians can make good on the Trans-Pacific Partnership.
Last week, Prime Minister Malcolm Turnbull had some “breaking news” for us. The PM introduced the Trans-Pacific Partnership deal as “the gigantic foundation stone of our future prosperity.” The TTP deal had all the necessary sound bytes to dominate the media.
First of all, it could be reduced to a catchy acronym (TPP), which as we know, determines whether or not it makes it to the realms of the water-cooler discussion.
Second, it involved some heavy sounding numerals to back it up: 12 nations forming 40 percent of global GDP came together to sign the TPP.
To top it all, the Trans-Pacific Partnership involved the dramatic story of our Trade Minister, the Honourable Andrew Robb, staring down his American counterpart to deny big-pharma companies extended protections on patents. As we know, big-pharma companies are evil; denying them anything can only be a good thing.
But what exactly are latte-sippers like me to glean from the trade treaty? How would the crumbs from the global 40 percent make their way into our wallets?
So, latte in hand, I decided to wade through some industry and trade data.
Any multi-partner free trade agreement (such as this one) opens up new markets for your products, thereby opening up your own internal market to products from outside.
So, it is good news for products you can efficiently make at a competitive price (which can now access newer, bigger markets) and bad news for products that you make inefficiently, the latter of which will now have to directly compete with more efficient manufacturers from other nations.
On top of the TPP’s winner list are sugar, beef, dairy, rice and other agrarian products. Due to our large tracts of farming land, we produce high quality agriculture products at competitive prices. Thanks to the Trans-Pacific Partnership, our sugar farmers will, for the very first time, gain access to the US market. Going by obesity levels over there, it seems a financially astute decision. Australians are also seasoned producers of high quality beef, and Trade Minister Robb has dropped the rich, finicky, beef-loving Japanese into our collective laps. We can further implement our rice crop and will be sending over larger quantities to our Asiatic neighbours. It all makes sense.
However, what does the gain of farmers mean to city-dwellers like me? After all, agriculturalists and latte-sippers are not mutually exclusive.
For one thing, it means greater taxes coming out of the sector, some of which will flow back to our cities. So if you are an artist on social benefits – your future has just been fortified.
But it seems we could reap further benefits as well.
As import tariffs on food and other household products (from countries such as US, Japan and Canada) drop, we can expect our supermarkets to access a much larger variety of goods at cheaper prices.
This is good for our household budgets.
Above all, the supermarket conglomerates will be the biggest beneficiaries of this. After passing some of these profits to us, they should invest the rest in business development leading to more jobs in allied services such as tech companies, consulting firms, advertising and marketing firms, architectural firms, financial institutions etc.
In the long run, higher profits will also encourage other supermarket chains to enter Australia and break the miserable duopoly of Coles and Woolworths.
We also will soon be able to buy a lot more retail products online from the US, at cheaper prices, with barriers surrounding e-commerce being eroded due to the TPP.
Unfortunately, this means that those employed by the retail sector – David Jones, Myers, and Harvey Norman – are in for rocky times. Unless, of course, they can provide some meaningful service that consumers value over the cheaper online shopping experience.
The biggest losers of the Trans-Pacific Partnership, by far, are the manufacturers of white goods. (Cars, electronics etc.) There is no way we can compete with the Americans (price) or Japanese (quality) in this sector.
This does not necessarily mean the death of manufacturing. If the Government plays its hand well, it might actually mean a rethinking of where our efficiencies truly lie.
When we speak of the manufacturing industry in Australia, we should not be talking of cars and white goods – even though they dominate the popular imagination. Instead, we should be focusing on food processing, which comprises one-fourth of the manufacturing industry. We produce high-quality raw food products. That, coupled with the recently gained access to heavy-duty, food loving markets like America and Japan, and the positives are obvious. What’s more, we will now be able to import the machinery required for this sector at much lower rates.
With some imagination and Government backing, we could be manufacturing the high-quality noodles, rice, stocks, juices, cheeses, milk, wines and more, for the 127.3 million Japanese who, like us, understand (and value) quality in food. This trickles down to benefit the latte-sippers, as food processing is as much about strategy, marketing, advertising and design as it is about manufacturing.
When Andrew Robb said that “existing manufacturers may have to transition and change the focus of their business, or increase their investment to become more efficient,” this is what he meant. There are vast opportunities hidden in the framework of the Trans-Pacific Partnership. Seizing these opportunities will mean change in our lives and will ask of a willingness on our part to abandon what doesn’t work, and experiment with the possibilities of new markets, ideas and cultures.
The only thing required of us is an appetite for risk. Do we have it?