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Australia's tech sector weighs opportunities of Trans-Pacific Partnership

Australian IT businesses are evaluating the impact of a trade deal between 11 Pacific Rim countries

Five years of speculation about the terms of the Trans-Pacific Partnership (TPP) trade agreement came to a head this week as Australia's technology and political pundits gave their verdict on a deal as ambitious in its objectives as it is secretive in its design.

Amid murmurs of US intellectual-property imperialism, Australian business groups were cautiously optimistic about the export opportunities for service providers. The TPP promised to remove 98% of the tariffs impeding access to 11 other regional markets.

The Business Council of Australia welcomed what CEO Jennifer Westacott said was an “extraordinary deal for our future prosperity”, noting that TPP member states accounted for 70% of Australia's trade flow.

“The TPP will lower the cost of doing business with more transparent and efficient customs procedures, making it easier for Australian companies to export and do business in the region,” she said. Commitments on state-owned enterprises will ensure Australian businesses compete on a level playing field by setting commonly-agreed rules and promoting transparency of laws and regulations.”

With service businesses employing over 80% of Australians but comprising only 20% of the country's $A26.5bn export market, there is clearly room to grow – and Australia's technology service providers, regional leaders in implementing and delivering cloud-based business services, are expected to be big winners.

“This is the beginning of a set of agreements that will concentrate on opening up service markets and removing barriers to investment,” said Alan Oxley, managing director of Melbourne-based trade consultancy ITS Global.

The services sector comprises a far higher percentage of GDP in developed countries than in developing countries – 80% compared with 40-60%, he said.

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Service-minded Australian technology companies will be able to exploit the TPP to capitalise on this gap, said Oxley. “Everyone in the region knows they've got to get more productivity out of the services sector,” he added.

“They know they've got to close that gap, and this is a natural framework for that type of industry – which has been a major growth industry in the APAC region. We've talked for some time about creating the Asian century – and this is the platform for it.”

However, some compromises are already being observed, with one notable provision being the effective end of data sovereignty – a long-standing hindrance to Australia's uptake of cloud computing because of concerns about unchecked foreign-government access to sensitive data.

Many IT providers have countered these fears by investing in Australian datacentre facilities, but the TPP has putatively removed this requirement in theory, if not in practice.

“TPP countries cannot force businesses to build data storage centres or use local computing facilities in TPP markets,” official Australian advice on the TPP notes. “A commitment by TPP countries not to impede companies delivering cloud computing and data storage services provides a new platform for growth in Australian ICT services exports.

These TPP commitments will increase Australia's ability to competitively deliver services into important and expanding markets.”

Australia’s parliament is likely to table the draft TPP provisions within months – and that's when the real debate will begin, as the local tech industry decides whether the concessions contained in the agreement are worth the opportunities it creates.

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