ExportNZ supports the Trans Pacific Partnership

  • Date Added: 20th September 2012 from ExportNZ

  • By Catherine Beard, Executive Director of ExportNZ

    New Zealand officials have returned from the final negotiating round of the Trans Pacific Partnership (TPP) before the US Presidential Election in November.  

    While progress was made in some areas, no Chapters were finalized.  The intention was before the negotiations began to have several Chapters completed.

    The pending US elections was a major complication to progress, but it seems from media reporting that Chile’s position was to oppose the finalization of any texts.

    A consequence of this failure to finalise Chapter texts is that the two new entrants – Canada and Mexico will have the opportunity to participate in negotiations and suggest changes to non-finalised texts.

    ExportNZ supports TPP for a range of reasons.

    First, we support the agreement because we support any agreement that is going to increase opportunities for New Zealand exporters.  While New Zealand already has an extensive network of free trade agreements, including with a number of TPP participants, the negotiations include a number of major economies that still maintain heavy protection against some New Zealand exports.  These economies are the United States, Canada and Mexico.

    Second, we believe that the TPP membership will grow.  We are expecting Japan to announce its intention to join TPP late this year or early next, and it seems that Korea may be thinking in similar terms.  New Zealand does not yet have FTAs with either of those economies.

    Over time we expect that TPP will expand to encompass all of APEC.  When that happens the long term New Zealand goal of establishing a free trade agreement of the Asia Pacific will be complete.

    Quantifying the benefits of TPP is not straight forward.  We don’t yet know the exact nature of agreed liberalization paths, and we don’t know exactly what TPP membership will be at any point in the future.  But a recent analysis by the Peter Petri and Michael Plummer for the Petersen Institute for International Economics has modeled two possible outcomes.  The 12 member configuration expected by early next year (with Canada, Mexico and Japan as members) and with all of 21 APEC countries as members.

    Based on the 12 member configuration this study shows that New Zealand’s annual exports will be US$4.7 billion larger in 2025 than they would otherwise be.  If TPP has grown to 21 members by 2025 this figure will be US$6 billion a year.

    While these trade gains alone are worthy of our support, we see TPP as having a positive impact beyond our immediate region.

    Already we have non-APEC economies expressing interest in TPP membership.  Several Central and Latin American economies are expressing interest and US officials regularly talk about interest from at least on European economy.  With the WTO talks in continuing stalemate could the threat (or opportunity) of an ever expanding TPP be the fillip needed to restart serious negotiations on the conclusion of the current trade round?  We think it might be.  This is enormously important for New Zealand as it is only in the WTO that effective disciplines on export and domestic subsidies can be negotiated.  These subsidies have as negative an effect on New Zealand’s trade interests as the border barriers that are being negotiated in TPP and other FTAs within the region.

    The conspiracy theorists out there opposing TPP often seem to be suggesting that TPP is a negotiation that is being imposed on New Zealand by evil multilateral corporations intent removing our right to regulate our own economy.  Nothing could be further from the truth.  TPP is New Zealand’s idea.  New Zealand has been promoting it since the late 1990s.  It is an expansion of the Trans Pacific Strategic Economic Partnership between New Zealand, Singapore, Chile and Brunei.  New Zealand is the depository economy for this agreement.  Whenever TPP takes on a new member it is New Zealand that announces this.  

    It is also a multiparty agreement.  Many of the leaked texts that the conspiracy theorists like to promulgate are US negotiating positions.  The US is only one of 9 current negotiating parties.  By the end of the year this will be one of 11.  The final outcome of the negotiation is going to a series of disciplines that all parties can live with.  It is going to be a series of compromises, but New Zealanders can rest assured that the final outcome is not going to see radical changes to the way we regulate our economy.  

    ExportNZ is hopeful that the next round of negotiations, in New Zealand in December, will prove more productive than the recent round in Leesberg. With the US Presidential elections out of the way, we hope we can move to have a conclusion to this negotiation sometime in 2013.  New Zealand exporters need the benefits this negotiation will deliver.