The Trans Pacific Partnership deal was closed on Tuesday morning with 12 trade ministers from the member countries agreeing to the partnership. The Australian Federal government is seeing the 12-nation TPP as a first step towards a broader regional free trade agreement. The U.S., on the other hand, is promoting the partnership as a crucial step in rebalancing to Asia that will offset China’s increasing influence in the region.

Newly elected Prime Minister Malcolm Turnbull described the deal as a “gigantic foundation stone for our future prosperity.” An in-principle support was given by the Labor opposition. Australian Trade Minister Andrew Robb sealed the biggest trade agreement in more than two decades. Sealing the TPP is set to affect 40 percent of the global economy. New markets for Australian services providers, manufacturers, farmers and investors were opened early Tuesday in line with the closing of the deal.

U.S. President Barack Obama is facing a tough test passing the TPP through Congress ahead of the November 2016 elections. As the Australian Financial Review reported, impact of the deal to blue-collared workers concerns the labour-aligned Democrats, while Orrin Hatch, chairman of the Republican Senate Finance Committee, criticises the deal as falling “woefully short” for America. Canada was also not spared from domestic political resistance. The TPP will struggle to come into force if the U.S. will not ratify the TPP.

Australian service providers in mining, finance, education, engineering and logistics will benefit the most from the lowering of trade barriers in the Asia Pacific region, the AFR noted. The region is a good market to Australia as it is projected to have 3 billion middle-class consumers by the year 2030.

For the first time, through the TPP, businesses will be allowed to operate near the level of local firms in countries such as Malaysia, Vietnam, Mexico and Peru. Standardisation of international rules for goods, services and investment, as well as licence recognition, allows the free flow of trade of countries in the bloc.

While barriers were removed, the TPP also means rivals can access markets that Australia holds leverage to. Agricultural access to Japan and South Korea by the Australian government breeds better results through bilateral agreements, but rivals New Zealand, Canada and the U.S. can now have access to them, as well as other lucrative markets like Malaysia and Singapore.

Turnbull firmly stated that Pharmaceutical Benefits Scheme will not be affected as there will be no impact on the price of medicine. Labor opposition initially opposed the TPP because it would have driven up prices of some prescription medicines in the country. This was one main concern that was discussed in the meeting prior to the closing of the deal. Labor also opposed the inclusion of the Investor State Dispute Settlement (ISDS) provision as it allows foreign companies to challenges decision of Australian state and federal governments.

Both of these issues were addressed by Turnbull stating that "It's not going to make drugs more expensive in Australia, whatsoever." Robb, for his part, said that he negotiated safeguards for the ISDS "to protect legitimate government regulation in the areas of health and environment.”

“There are winners and losers but overwhelmingly this will drive enormous job growth and create all sorts of wonderful opportunities.” Robb was quoted by the ABC as saying.

Robb hopes more countries can join the TPP. If ratified by all nations, the TPP will cover Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam. There are hopes for China to join the partnership as it will be forced to adopt higher standards in areas such as intellectual property protection and environmental regulations. China for its part is cautious but not hostile in joining the TPP.

The architecture of the agreement is open for other members to join which will amplify the benefits of the pact to Australia.

After all 12 signatories have ratified it through their parliaments and other domestic processes, the TPP will enter into force after 60 days.

Should this not happen within two years, it will enter into force 60 days after the two-year period. However, this only holds true if six original signatories, which must account for 85 percent of the combined GDP of the 12 signatories, ratified the agreement.

If both Canada and the U.S. hold out, the TPP would definitely collapse. Should the U.S. choose not to ratify the agreement, the TPP could collapse as well.

Contemporary trade challenges will be addressed and the TPP can stand as a model for many other future trade agreements around the world.

Contact the writer at feedback@ibtimes.com.au, or let us know what you think below.

RELATED STORIES