Are the times changing ?

It’s sometimes assumed that nothing much changes with trade but a powerful new animation from NZTE and MFAT illustrates the changes in New Zealand’s export profile in the period since 1983 when we signed CER with Australia.  Check it out here.  The rise of China and developing economies is made clear as their growth  picked up and we secured new bridgeheads through the FTAs we successfully negotiated.  The rise of ASEAN, the comparative decline of the United States and Japan, the continuing significance of Australia and the prospective importance of India are pretty plain to see.  Congratulations to all those at NZTE and MFAT who made this presentation available – we need more of this to build public understanding and support for change.

These changes are very much behind the moves to establish the Trans Pacific Partnership (TPP).  At stake is the degree to which New Zealand is able to integrate in the wider Asia Pacific region and the rules, which are going to govern trade and investment in the future.  TPP is making agonisingly slow progress.  In recent weeks another meeting of Chief Negotiators has come and gone.  Negotiators continue to chip away at differences on a range of issues.  President Obama has even suggested a deal could be done by November. We’ve heard that before.  It’s hard to see much progress can be made before the Congressional mid-term election on 2 November or before a new Congress has granted the President a Trade Promotion Authority (TPA).   In New Zealand some are now suggesting that New Zealand should quit TPP if, as may well prove likely, the United States and Japan find they cannot commit to eliminate all tariffs including on products of most interest to us.

That would be a big call.  The NZTE animation shows that our future lies clearly in the Asia Pacific and the role that can be played by FTAs in building business growth.  TPP has never been a blank cheque.  It can work in New Zealand’s interest only if it leads to new business opportunities.  An agreement, which offered little in the way of new market access and new business, would be of little advantage.  On the other hand an agreement, which offered commercially meaningful market access would need to be considered seriously. The substance of the agreement needs to guide our negotiating strategy.  TPP is taking too long but even as negotiations drag on, possibly into 2015, other nations including even China are showing renewed interest.   That’s because integration and inter-dependence, fuelled by the development of regional and global value chains, are the drivers of future trade and investment.  In such a dynamic environment New Zealand needs to way up very carefully the strategic choices it has to make.

– Stephen Jacobi, Executive Director, NZ International Business Forum (www.nzibf.co.nz).