The TPP: Trans Pacific Partnership and/or Time to Party

The much touted Trans Pacific Partnership (TTP) is apparently closer with agreements around pharmaceuticals seemingly reached. In broad terms this is a multilateral trade agreement featuring 12 countries including USA, Canada, Japan and Blue Lake Invest favourite Australia. These twelve countries seek to grow cross border trade and investment to in turn drive innovation and economic growth.

The agreement is garnering a lot of attention with protests from a number of different parties making some quite scary claims. We have not seen this much controversy since Ricki Lee was voted off Australian Idol. While we at Blue Lake Invest won’t be taking a position on the agreement, largely due to the substantive information not yet being available, as investors and economic fan boys we see the value in liberalised trade and a reduction in tariffs for Australian exports.

A concern among the opponents is that free trade agreements threaten local manufacturing by making imports cheaper. This is true, imports are cheaper. But the flip side to this is that Australian inventions like the bee hive tap (Flow Hive), HEGs notorious for inventing the pegs with hooks and Australian apparel companies like RM Williams and Akubra will have greater access to markets overseas, and if executed properly will have stronger intellectual property protection over their inventions.

Here at Blue Lake Invest we have talked in length about the opportunities for dairy in exporting to Asia. With free trade agreements in place with Korea, Japan and the juggernaut that is China this industry is already predicted to boom. But ASX listed companies like Bellamy’s, Bega and A2 Milk can expect to find new markets and be more competitive in those markets with liberalised trade.

The size of this agreement is massive, with total GDP of the 12 participating counties equal to US$28,046.1 billion, and trade with Australia worth AU$226 billion. The combined population will be greater than the EU at over 800 million people or 11.2% of the world population. When you factor in the opportunities secured by free trade agreements with China and South Korea, the opportunity for Australian companies exposed to the global market is significant.

Now, you’re probably wondering what this is doing on the Boiler Room. “Where are the quick wins?” I hear you scream.  Firstly, please use your inside voice. Secondly this is the introduction to a series of companies that I have identified as well poised to capture strong growth from the newly liberalised trade zone.

My next post here will be on dairy giant exporting to the world. If you can’t wait to hear about some dairy fun you might want to read some in depth financial analysis of Bellamy’s here and here, or join the Moovement here.