Statement to the Foreign Affairs, Defence and Trade Select Committee, 7 April 2016

By Tony Nowell, ABAC New Zealand Member

Mr Chairman, Honourable Members.

Thank you for the opportunity to speak to our submission.

My name is Tony Nowell and I am speaking on behalf of the New Zealand members of the APEC Business Advisory Council, or ABAC.   ABAC was created in 1995 and is made up of private-sector representatives from all 21 APEC economies, appointed by the Leaders of those economies to provide business advice to the Leaders and to APEC senior officials on important trade and economic issues.  It is to be noted that all signatories to the TPP Agreement are also APEC economies.

I am pleased to be speaking following the New Zealand International Business Forum and the New Zealand-United States Council.  ABAC New Zealand has many shared interests with those bodies, and we support their submissions.

Mr Chairman, Honourable Members

ABAC New Zealand brings a broad strategic perspective to trade and economic matters.    It examines issues not just through the lens of what is good for New Zealand, but also good for the development of trade throughout the wider region.   Bearing in mind our regional strategic interests, the TPP Agreement is a very welcome development.

Let me start by setting out some context.  The APEC region represents 58% of the world’s economy, 47% of its trade and 40% of its population.   What happens in the APEC region has a strategic importance that goes well beyond the Pacific Rim.  And what happens in the APEC region is also, of course, of critical interest to New Zealand as one small part of that large region. In 2014, 74% of our goods exports went to APEC members, while 72% of our imports came from those economies. Fourteen of our top 20 export markets are APEC members, including the three largest economies in the world – the United States, China and Japan.

ABAC’s fundamental concern is with the inclusive and sustainable economic development of the APEC region.   It is hard to foresee how that goal can be reached without a more liberal trade environment.  The economic literature, and our own experience, for example under CER, shows that freeing up trade flows will facilitate greater regional economic integration.  Greater regional economic integration in turn will drive GDP growth, raise standards of living, foster food security and enhance prosperity.

Accordingly ABAC has for many years been a strong advocate for an ambitious vision of a “Free Trade Area of the Asia Pacific”, or FTAAP.

Achieving such an ambitious goal involving 21 economies is unlikely to be straightforward.  But in thinking about how to get there, ABAC has identified the TPP as one of three important “pathways” to the FTAAP.

The concept is that, by using pathways in the form of sub-regional trade agreements, we will be able to achieve the most ambitious and comprehensive region-wide outcome, one that delivers the greatest benefits to the greatest number of people.

The pathway that TPP offers closely aligns with many of ABAC’s stated priorities for the optimal business environment, developed over many years of discussion.  For example, TPP sets some important new rules that will facilitate cross-border investment and trade in services, tries to mitigate the most harmful non-tariff barriers and establish good regulatory practice across the region, sets out new approaches to the digital economy and e-Commerce, includes some important measures designed to help SMEs participate effectively in regional supply chains and value chains, and so on.

In other words, TPP will potentially help to form the basis for a new trade and economic architecture of the APEC region as a whole, and so it will ultimately help to deliver those important strategic goals, of human development, prosperity, food security, job creation and so on, that are our fundamental objectives.

TPP also usefully demonstrates that even smaller, less wealthy and less developed economies, such as Viet Nam or Peru, can help to set the terms of a high-quality trade agreement.  That demonstration effect is crucial as we contemplate trying to achieve a new region-wide architecture.

Accordingly, I am pleased to be able to report that at our last ABAC meeting, which took place in San Francisco in February of this year, the ABAC representatives from all of the TPP economies[1] unanimously welcomed the TPP agreement and called for its early ratification.  I should note that some of those representatives did not see the TPP as the “perfect” agreement.  But they did recognize that the TPP will deliver substantial benefits overall to their economies and communities, and as such must be ratified and implemented.

Our submission concludes that not only is ratification of TPP strongly in New Zealand’s direct economic interest but is also very strongly in our strategic interest for and within the region, and – dare I say it – in our moral interest in helping countries that are less well off than New Zealand, in terms of GDP growth, food security and overall human development and prosperity.

ABAC New Zealand therefore urges you to recommend ratification of TPP.

Thank you, Mr Chairman and Honorable Members.