We are TPP enthusiasts. As envisaged when it was signed in early 2016, the benefits of TPP were expected to be substantial for New Zealand. That original agreement stood to create one of the world’s largest free trade areas, covering 40% of GDP and almost 900 million consumers. It would have transformed the way we do business in the Asia-Pacific region, and help build growth and jobs.
So, what is TPP?
Trans-Pacific Partnership – a.k.a. TPP – is an agreement which was signed by twelve Asia-Pacific economies on 4 February 2016. Although signed, the TPP has not yet entered into force. The agreement was aimed at bringing down barriers to trade and investment in the region. TPP set out a new set of rules which would make the way we trade with member economies simpler and fairer and would mean that it was easier and cheaper to do business with each other.
New Zealand was one of the original visionaries for the TPP agreement, along with Brunei, Chile and Singapore. Australia, Canada, Japan, Mexico, Peru, the United States, Vietnam and Malaysia all subsequently joined the negotiations and signed the agreement. Thailand, the Philippines, South Korea and other members of APEC are all potential members.
What’s happening with TPP?
TPP was signed in early 2016 and the text has been released for all to see. In order to come into force, however, TPP needs to be ratified by the members. Under TPP rules, ratification by members representing 85% of the agreement’s GDP is required for the agreement to come into effect. In practice this means that both the United States and Japan must have ratified.
To date, both New Zealand and Japan have ratified, and a number of other member economies have approval processes in train. On 24 January 2017, however, newly-elected United States President Donald Trump signed an Executive Order withdrawing the United States from TPP, confirming a campaign commitment he had made. The remaining TPP member economies are currently considering their next steps, and intensive contacts are underway among the parties (including with the United States). Most remain strong supporters of the strategic and economic importance of such an agreement even without the United States, although there are clearly complex issues to be worked through. The United States meanwhile has indicated that it is interested in pursuing bilateral approaches to trade agreements.
How can I find out more about TPP?
MFAT’s website is a great guide to all things TPP. Check out the details of the agreement here.