The Sydney Morning Herald, 26 July 2015. TPP: Australia on the verge of joining huge new Pacific trade deal, by John Garnaut.

An edited extract of the original article appears below.
Australia is on the cusp of joining a huge new United States-led trade deal which will “set the rules” for doing business in the region at the expense of China.The Trans-Pacific Partnership, involving twelve Pacific-Rim nations, could be sealed in coming days, after talks that had drifted for five years narrowly escaped death in the US Congress.

“It could be done this week,” said Trade Minister Andrew Robb last night, as he prepared to depart for what he hopes will be one final round of talks in Maui, Hawaii…

But the recent surge of negotiating momentum owes at least as much to geopolitics as it does to economics.

A range of nations that might once have bristled at American muscle-flexing are now encouraging it – as they hedge against China’s growing propensity to throw its weight around.

Fairfax can reveal that the twelve prospective members have agreed to rules that would make it harder for the kind of state-owned enterprises which dominate China’s outward investment profile.

“One rule is that governments can’t give SOEs benefits that allow them to undercut the market,” said one source close to negotiations, saying that SOEs would be penalised if they received discount loans when investing in TPP nations…

Tellingly, it is understood that negotiations for this novel SOE chapter have been led by Australia, despite its reliance on Chinese trade, and endorsed by Vietnam, despite its own reliance on state-owned firms.

In another global first, the TPP will include enforceable anti-corruption provisions which will also have an outsized impact on Chinese firms.

They will mirror the OECD’s anti-corruption guidelines and the UN Convention against corruptions, except that they will link to dispute resolution provisions…

“What a lot of economists don’t get is that geo-politics is more important than trade flows,” he said.”If the security foundation doesn’t work then trade flows will dry up in an instant.”…

 

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