Korea FTA done, now on to TPP

The signing of New Zealand’s FTA with Korea is another “brick in the wall” for New Zealand’s FTA coverage in Asia. Now only Japan and India are missing. But that analogy is not quite right – FTAs are meant to break down walls aren’t they? The agreement with Korea largely does this over time but the end result is not as ambitious as other FTAs we have signed. That’s because our Korean friends proved extremely reluctant to open their market completely. They accepted however that they needed to ensure that New Zealand was not disadvantaged in the Korean market compared to competitors like Australia and Chile who have already secured FTAs. That means that the deal gets a pass mark in terms of major exports beef and kiwifruit and dairy (including milk powder, where a small tariff rate quota was granted). Some useful new access was achieved in wine, mussels, salmon and squash. Even so the deal disappointed in a few areas (two lines of processed wood, frozen deer velvet, squid and some horticulture products). Hopefully we will have another crack at Korean protectionism when Korea seeks to join TPP – that’s if TPP can be concluded satisfactorily. From Washington this week Minister Groser was reported as warning that the stand-off in Congress over Trade Promotion Authority (TPA) risked turning TPP into another Doha. In an interview with Inside US Trade he said that the US, Japan and Canada had so far not made “serious offers” to New Zealand on dairy products and this also risked slowing down the process. TPP has been from the beginning promoted as an “ambitious, high quality and comprehensive” deal. It’s good to see the Minister calling others to account on this. The Korea FTA meets expectations in terms of leveling the playing field in Korea and not creating unhelpful precedents in advance of TPP. As such Minister Groser and his officials deserve congratulations for another step forward in creating a more favourable environment for business in the Asia Pacific region.

This post was written by Stephen Jacobi, Executive Director of the NZ International Business Forum www.nzibf.co.nz