From Our Blog
TPP – on a midnight train to Georgia
TPP negotiators meet in the unlikely place of Atlanta this week in what some believe may be the last attempt to conclude these long drawn out negotiations. New Zealand has a lot at stake – access for dairy products to the highly protected and subsidised markets of the United States, Japan and Canada gets the most attention, but better trade and investment conditions for the other 75 percent of our exports and integration in an area representing 40% of global GDP are no less significant.
TPP was at the outset styled as an opportunity to craft a “high quality, ambitious and comprehensive” agreement. Yet the protectionist and anti-competitive forces, which are alive and well in some of the world’s largest economies, might yet succeed in ensuring a sub-optimal outcome. Although New Zealand played a key role in getting TPP underway in the first place, we simply don’t call all the shots in this complex negotiation. Trade Minister Groser has been open in admitting that success is not guaranteed at Atlanta.
Those opposed to TPP claim it will have all manner of negative effects on New Zealand, but the debate has been hopelessly one-sided in the absence of a completed agreement. Once an outcome is secured, hopefully in Atlanta or possibly at the APEC meetings in Manila in mid November, a properly informed debate can take place. New Zealanders can have their say in the Select Committee process which follows transmission of the final text to Parliament. MPs will get to vote on implementing legislation without which TPP cannot come into force.
The great baseball player and part time philosopher Yogi Berra left us last week aged 92. One of his great sayings was “it ain’t over till it’s over”. Never a truer word was said in relation to TPP.
This post was prepared by Stephen Jacobi, Executive Director, NZ International Business Forum.
Think Europe as well as Asia
A decision about whether the New Zealand and the European Union will launch negotiations for a free trade agreement is expected later this year. A discussion paper prepared by the NZ International Business Forum outlining the case for a NZ/EU FTA is to be released at an event held in Wellington on 16 September.
Europe is already a very significant trade and investment partner for New Zealand: the EU is a top export market, second largest source of imports, and second-largest source of investment. Although the relationship is in reasonable shape, many New Zealand exports still face barriers, at the border or behind it, which add costs, generate uncertainty or in some cases even make trade uneconomic.
New Zealand should be trying to target European investment to match with NZ resources and know-how and then jointly market these opportunities using our network of FTAs in Asia. This will create new business, growth and jobs in areas such as agriculture and food as well as technology, services (including tourism, education, and environmental services), niche and high-value manufacturing, research and investment.
A copy of the discussion paper can be found here.
Background on the European Union and its trade policy can be found at: http://europa.eu/pol/pdf/flipbook/en/trade_en.pdf.
This post has been prepared by Stephanie Honey, Associate Director of the NZ International Business Forum.
APEC – inter-dependence, inclusiveness, integration
For New Zealanders APEC is normally something that happens in exotic locales like Vladivostok (2012), Bali (2013), Beijing (2014) or this year in Manila. New Zealand last hosted in 1999 and we will do so again in 2021.
APEC is the way the 21 governments of the Asia Pacific region seek to influence the growing inter-dependence of their economies through trade and investment, economic co-operation and capacity building. Unlike the WTO, APEC is a voluntary and non-binding instrument – it works on the basis of good ideas rather than rules.
This year’s APEC Chair, the Philippines, is promoting the concept of inclusive growth in which all members of society benefit. The initiative is being promoted through a range of different meetings of Ministers, officials, business people and stakeholders throughout the year culminating in the annual Summit in November. Last week Sanchia Jacobs from Auckland Council joined an APEC Mayoral Forum in Cebu looking at building liveable and competitive cities. This week Catherine Beard from Export NZ will be discussing how the region’s services industries can co-operate to improve the regulatory environment both for services providers and consumers. Later in the month Small Business Minister Craig Foss will participate in a Ministerial meeting on how to foster the health and vitality of SMEs.
It’s often said New Zealand’s future lies in the region we call our home. Even our traditional relationship with Europe is being seen through this lens as we discuss how to link European investment with New Zealand enterprise to take advantage of business opportunities in Asia. The APEC goal is for deeper and smoother economic integration as our businesses, cities and peoples become ever more closely connected.
This post was written by Stephen Jacobi, Executive Director of the NZ International Business Forum and an Alternate Member of the APEC Business Advisory Council (ABAC).
Can we focus just a moment on the big picture please?
The Chinese stock-market dive, the impact of fluctuating commodity prices, a report on the sources of increasing foreign direct investment, a rancorous public debate on trade, prospective negotiations in Paris on climate change – all these show one thing: New Zealand is linked inextricably to the rest of the world.
Sovereignty is a much debated term right now whether in Athens or Akaroa, but alongside it there is also inter-dependence: we depend on the rest of the world for the lifestyles we enjoy and we need the rest of the world to solve problems that plague the global commons.
Trade is an important part of that inter-dependence. Trade brings you the car you drive, the clothes you wear, the medicine you take, the device you use and a lot of the food you eat. Yet trade is changing as economies become increasingly integrated and inter-connected.
The TradeWorks site is dedicated to fostering greater understanding of these issues. You’ll notice some changes to the site and some increased traffic on our twitter feed in the coming month.
It is right and proper that the issues to do with globalisation, inter-connectedness and inter-dependence need to be robustly debated. But one thing is sure, New Zealand gains a lot from it’s interactions with the rest of the world.
This post was written by Stephen Jacobi, Executive Director of the NZ International Business Forum.
Making sense of the TPP end game
There’s an old Peggy Lee song – “If that’s all there is, then let’s keep dancin’”.
That essentially was how the TPP negotiations ended up in Maui. The deal on the table was insufficient so Ministers decided to keep on talking.
How did this happen? Going into Maui there were still significant issues to be addressed. In particular, from a purely New Zealand perspective, there had been no engagement from Canada on market access for dairy and the bilateral negotiations between the United States and Japan had not been fully revealed. Other participants had their own issues (cars, sugar, rice) and no-one was ready to tackle other significant issues like intellectual property until market access was settled (so much for those who say TPP isn't really a trade deal!). It was somewhat ironic that it was Mexico which finally scuttled the chances of a conclusion at Maui – precisely (and probably quite rightly) because it felt its interests in the motor vehicle supply chain were not being adequately addressed by the US and Japan. Whether cars or dairy, it is not feasible for major exporters to conclude an agreement with totally unsatisfactory outcomes.
Where to from here? The Maui outcome does not spell the end for TPP. Far from it. Progress was reported in a number of areas including previously contentious ones like investment and the environment. The latter is a big win for TPP – the first FTA ever to have binding environmental obligations. There are now fewer outstanding issues on the table. If negotiators and Ministers can get together soon – hopefully before the end of the month – the momentum can be maintained and any backsliding from what was agreed in Maui can be prevented. The longer it takes to re-engage, the harder it becomes. The Canadian election now called for 19 October is a complicating factor. Leaving the re-engagement until APEC until November would not be a good sign.
Is there anything in it for New Zealand? Yes of course. A substantive outcome on dairy, granting significant new access to consumption in TPP economies must be part of any final deal but New Zealand stands to benefit across the range of our export industries. In just four products (beef, horticulture, seafood and wine) we pay tariffs of $130 million a year to TPP members. We can save this and there will be new trade as well. The Government continues to reassure us that the adjustment required in sensitive areas like pharmaceuticals or patents can be managed. But the big prize from TPP is being part of the new rules for trade and investment in the region that takes 70 percent of our exports – can any New Zealand Government seriously afford to turn away from this?
This post was written by Stephen Jacobi, Executive Director of the NZ International Business Forum (www.nzibf.co.nz). Further commentary on the TPP outcome from Maui can be found here.
Welcome to the TPP negotiators.
New Zealand has been a key player in the Trans Pacific Partnership agreement. Given the potential benefits of TPP for New Zealand in terms of economic growth and job creation, it is good to see that negotiations are being held in Auckland between 3 to 12 December. As such, the representatives of some major New Zealand businesses and business organisations have written to Government endorsing its current approach to TPP negotiations. They note that there are complicated public policy issues involved in negotiating such an agreement, and that solutions need to be sought that are in New Zealand's overall interests. They also welcome the hard working negotiators.