The Australian Government has just announced the signing of an historic trade deal involving 12 countries including Australia, Canada, USA, Mexico and Japan.
The Trans-Pacific Partnership (TPP) as it is known, covers 40% of global GDP according to a release provided by the Department of Trade and is set to benefit a range of industries and companies if the deal is ultimately passed by the governments of all 12 countries.
While details remain thin, it is believed that amongst the biggest winners from the TPP from Australia's perspective are agricultural producers along with the education, manufacturing, resource and energy sectors which all stand to benefit from significant tariff reductions across the 12 member zone.
While only time will tell whether the following companies do actually achieve any meaningful benefits from the TPP (if and when it comes into force), here are some of the potential winners and grinners:
BlueScope Steel Limited (ASX: BSL) – according to the Dept. of Trade the TPP will create new market access by eliminating or significantly reducing tariffs on iron and steel products.
Navitas Limited (ASX: NVT) – according to the Dept. of Trade, Australian universities will be able to expand their education services into major south east Asian export markets.
Australian Agricultural Company Ltd (ASX: AAC) – according to the Dept. of Trade, the TPP will reduce tariffs on our beef even further – down to 9%.
Bega Cheese Ltd (ASX: BGA) – according to the Dept. of Trade, the TPP will foster growth in our dairy exports.
Given that the agricultural sector appears to be one of the major beneficiaries of the TPP, leading listed agricultural service and input suppliers Elders Ltd (ASX: ELD) and Ruralco Holdings Ltd (ASX: RHL) should also see flow on benefits.
Should you buy?
While politicians love to sing the praises of a signed free trade agreement, in reality it's hard to see the value created at the company level. For investors, the change in value ascribed to companies which stand to benefit from the TPP is likely to be small or none in the near term.
