Japan entry radically improves strategic calculation of TPP, says Business Forum

Japan’s prospective entry into the Trans Pacific Partnership (TPP) negotiations announced over the weekend is being welcomed by New Zealand business interests.

“By any calculation Japan’s entry radically alters the strategic calculation of TPP.  This is a game changer ? Japan’s inclusion in the TPP underlines negotiation’s value as a pathway for further liberalisation in the Asia Pacific region and will enable New Zealand to address longstanding market access issues in the Japanese market,” said NZ International Business Forum Chairman Sir Graeme Harrison.

Sir Graeme was reacting to Trade Minister Tim Groser’s announcement on behalf of the TPP partners that that Japan would join the TPP negotiations from July.

“We congratulate the governments of Japan, New Zealand and other TPP participants on reaching this point and look forward to Japan’s involvement at the negotiating table. We also welcome the assurance that Japan is prepared to meet the high level of ambition for TPP.”

Sir Graeme also drew attention to the significant economic gains expected from TPP.

“Economic modelling suggests that adding Japan would increase the income gains from TPP by US$149 billion per year by 2025.  The impact on New Zealand’s outcomes is, unsurprisingly, huge. By 2025, New Zealand’s income gain increases from US$2.9 billion to US$4.1 billion. New Zealand’s change in exports jumps from 4.7% to 6.8% above baseline.

“Even if the figures are half right, these are potentially significant gains which cannot be left on the table. Interestingly the greatest gains are likely to go to Japan itself as it lowers trade and investment barriers: incomes are forecast to rise by US$106 billion, or 2 per cent of GDP, by 2025, and exports by 12 per cent.

“All this of course depends on a successful outcome to the TPP negotiations and to the 12 partners sticking to the bold vision that has been set.  We urge governments to do what is necessary to bring the negotiations to a timely and robust conclusion,” concluded Sir Graeme.