Preparing for trade talk time

As most of you would be aware, Australia has recently signed two international trade agreements which will potentially have a significant impact on the Australian agricultural sector.

The information availble indicates that the Trans-Pacific Partnership Pact, whose signatories account for nearly 40% of global GDP, will reduce 98% of tariffs in TPP nations. 

The World Trade Organisation Agreement will result in the removal of an estimated $15 billion in subsidies worldwide. 

Two of Australia's major trading partners, the United States and the European Union, are responsible for more than 70% of these subsidies. 

The government has indicated these agreements are expected to increase Australia's agricultural exports; more grain to Japan, more beef to Mexico, more wine to Asia, to name a few.

However, some commentators remain unconvinced of the benefits of these agreements. 

The World Bank has suggested the TPP will only increase Australia's GDP by as little as 0.7% by 2030. 

Whatever the ultimate effect, it will be important for those in the agricultural sector to make sure they are considering the ways in which these trade agreements might impact on them. 

For example, if goods are to be supplied direct to overseas markets, it is important that you ensure appropriate contracts are in place. 

Among the range of issues that will need to be dealt with in any contracts, it will be important to include terms on how you are to be paid, what guarantees are in place regarding payment, whether SA/Australian laws are to apply and, if there is a dispute, whether the dispute is to be dealt with in SA or elsewhere.

Failing to look at these issues could mean you end up losing, rahter than benefiting, from these trade agreements. 

By Anthony Kelly, Partner

This article was originally published in The Stock Journal on Thursday 12 May 2016. 

Practice Area: Farm Law , Corporate, Commercial & Business

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