CPTPP partner: Australia
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trading block that represents 495 million people with a combined gross domestic product of CAD $13.5 trillion – a full 13.5% of global GDP. Through the CPTPP, Canada now has preferential access to half a billion consumers in the world’s most dynamic and fast-growing market, which will strengthen Canadian businesses, grow the economy, and create more well-paying jobs for middle class Canadians.
The CPTPP entered into force for the first six countries to ratify the Agreement – Australia, Canada, Japan, Mexico, New Zealand, and Singapore – on December 30, 2018, and for Vietnam on January 14, 2019. For the remaining signatories (Brunei, Chile, Malaysia, and Peru), the CPTPP will enter into force 60 days after that country ratifies the Agreement.
Why Australia matters
- Australia is the eighth largest destination for Canadian direct investment abroad, and by far the largest destination in Asia-Pacific ($26.5 billion in 2016).
- Canada and Australia share a strong and diversified commercial relationship, driven by an increase in two-way investment and trade in services.
Overview of Canada-Australia Trade
Top Canadian exports to Australia (average 2015-2017, CAD $)
Top Canadian exports to Australia (2015-17 average, $CAD)
- Total value of exports to Australia: $1,950,000,000
- Industrial machinery: $417,000,000
- Electronic and electrical machinery and equipment: $207,000,000
- Agricultural goods : $200,000,000
- Aerospace: $196,000,000
- Miscellaneous products: $183,000,000
Key facts and figures
- Canadian merchandise exports: $1.9 billion (2015-2017 average)
- Canadian merchandise imports: $1.8 billion (2015-2017 average)
- Canadian service exports (2016): $1.74 billion
- Canadian service imports (2016): $1.05 billion
- In 2016, Canada welcomed 334,000 visitors from Australia.
- In 2016, Australian travellers spent approximately $793 million.
Canada’s top merchandise imports from Australia (2015-2017 average)
- Agricultural goods (including wine, frozen beef and chilled sheep meat): $593 million
- Chemicals and plastics: $430 million
- Metals and minerals: $353 million
- Medical goods and pharmaceuticals: $177 million
- Industrial machinery: $135 million
Canada’s top service imports from Australia (2016)
- Travel: $449 million
- Commercial: $443 million
- Transportation and government: $161 million
Canada’s top merchandise exports to Australia (2015-2017 average)
- Industrial machinery: $417 million
- Electronic and electrical machinery and equipment: $207 million
- Agricultural goods (including frozen pork, prepared chocolate products, and maple syrup): $200 million
- Aerospace: $196 million
- Miscellaneous industrial products: $183 million
Canada’s top service exports to Australia (2016)
- Travel: $711 million
- Commercial: $687 million
- Transportation and government: $343 million
How the CPTPP helps Canada-Australia trade and investment
- The CPTPP strengthens the rules-based trading environment and provides enhanced market access for exporters to, and investors in, Australia.
- The CPTPP establishes duty-free access for trade in goods between Canada and Australia, eliminating tariffs for key Canadian exports including:
- agricultural products:
- chocolate and chocolate preparations (tariffs of 5% were eliminated upon entry into force)
- breads, cookies and other baked goods (tariffs of 5% were eliminated upon entry into force)
- whisky (tariffs of 5% were eliminated upon entry into force)
- forest products and value-added wood products:
- lumber (tariffs of 5% were eliminated upon entry into force)
- printed materials (tariffs of 5% were eliminated upon entry into force)
- builders’ joinery and wood carpentry (tariffs of 5% were eliminated upon entry into force)
- chemicals and plastics:
- safety fuses (tariffs of 5% were eliminated upon entry into force)
- miscellaneous articles of plastics (tariffs of 10% will be eliminated within four years of entry into force)
- plates and sheets of plastics (tariffs of 5% will be eliminated within four years of entry into force)
- metals and minerals:
- iron and steel products(tariffs of 5% will be eliminated within four years of entry into force)
- aluminium (tariffs of up to 5% were eliminated upon entry into force)
- other industrial products such as construction equipment, cosmetics, and medical equipment, including:
- lifting, handling, loading or unloading machinery (tariffs of 5% will be eliminated within four years of entry into force)
- make-up and skin care products (tariffs of 5% were eliminated upon entry into force)
- medical, surgical, dental and veterinary equipment (tariffs of 5% were eliminated upon entry into force)
- To reflect North American sourcing and production patterns, Canada secured a bilateral side letter with Australia that establishes an alternate rule of origin for motor vehicles. This includes a lower regional value content requirement, allowing Canadian auto manufacturers to benefit from preferential tariff treatment when exporting to Australia under the CPTPP.
- The CPTPP also allows companies to invest with greater confidence in Australia, offering them protections from unfair and discriminatory treatment, as well as greater predictability and transparency.
- Through the CPTPP, service providers also benefit from improved access commitments in key sectors such as:
- professional services (e.g. legal services, landscape architectural services)
- environmental services
- transportation services and
- other business services (e.g. services related to manufacturing).
- New commitments on temporary entry of business people make it easier for certain categories of Canadian business persons to Australia, including high-skilled Canadian professionals and technicians as well as their spouses.
- Suppliers of goods or services now have access to new government procurement opportunities in Australia, supported by open, fair, and transparent processes when bidding on government procurement contracts.
- The CPTPP also provides robust and enforceable provisions on labour and environment.
Sectoral opportunities in Australia
- Australia is ideally suited to the aerospace industry, given the country’s relatively isolated location and large land mass; the commercial aerospace industry generates tens of billions of dollars in revenue annually.
- Opportunities exist for operators of rotary and fixed-wing aircraft and providers of simulation/training technologies and maintenance, repair and overhaul services.
- Agri-food and seafood
- Australian demand for natural, organic and functional foods is growing strongly, with sales of organic products expanding 15% annually in recent years.
- In addition, Canadian seafood exports have doubled over the past five years.
- Clean technology
- Australia continues to introduce more clean energy solutions (especially wind and solar). This has also created a need for in-grid stabilization technologies, energy storage technology and “virtual power plant” distributed generation management solutions within microgrids.
- Industrial scale remote, off grid options are also of interest to extractive companies that require cost effective, reliable energy supply.
- Defence and security
- As Australia updates and enhances its defence capabilities, spending is projected to reach Australian (A)$42.4 billion by 2020-21, and A$58.7 billion by 2025-26.
- Australian educational institutions are seeking to enhance and strengthen linkages with foreign partners, to strengthen capacity in both traditional and leading-edge fields of study.
- Although commodities prices have moderated in recent times, the volume of Australia’s resources and energy exports is forecast to continue to grow robustly in the next few years.
- The focus in the future will be on innovative products and services that facilitate cost containment and operational efficiency.
- Forest products and value-added wood products
- Opportunities are growing in value added products such as cross-laminated timber, biomaterials and bioenergy.
- Information and communications technology
- Revenues generated by digital technologies have grown by more than 50% over the past three years. The sector now accounts for 5.1% of Australia’s GDP.
- Opportunities exist across multiple industries such as financial services, marketing and advertising, health technology, education and training, artificial intelligence and machine learning, data analytics, Internet of things virtual reality, and blockchain.
- The Australian government has committed A$75 billion over the next 10 years to an infrastructure investment program.
- This, combined with state and territory contributions, totals approximately AU$135 billion for a public infrastructure pipeline.
- The projects include, but are not limited to, new transport and social infrastructure projects, including intelligent transportation systems, smart cities, and asset privatizations.
- Life sciences
- Opportunities in the Australian health sector can be found in health technology, medical devices and natural health products.
- Natural health products are the fastest growing sub-sector, with annual revenues growing from A$1.9 billion to A$4.7 billion between 2011 and 2016.
- Science, technology and innovation
- Both Australia and Canada have identified innovation and research and development as key contributors to future economic prosperity.
- Canada’s experience in supporting and facilitating collaboration between academia and industry, researcher exchanges and mobility, with particular emphasis on small and medium-sized enterprises, could offer knowledge and expertise to Australia in this area.
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