Remarks to Select Committee – CPTPP

REMARKS TO FOREIGN AFFAIRS, DEFENCE AND TRADE COMMITTEE INTERNATIONAL TREATY EXAMINATION OF THE COMPREHENSIVE AND PROGRESSIVE AGREEMENT ON TRANS PACIFIC PARTNERSHIP (CPTPP)

AUCKLAND, 21 MAY 2018

STEPHEN JACOBI, EXECUTIVE DIRECTOR

Mr Chairman, Honourable Members

I am Stephen Jacobi, Executive Director of the NZ International Business Forum, and am pleased to be joined this morning by Associate Director, Stephanie Honey, who also serves as Adviser to the New Zealand members of the APEC Business Advisory Council (ABAC).

We have the honour to present to you the submission of the NZ International Business Forum in respect of your examination of the Comprehensive and Progressive Agreement on Trans Pacific Partnership (or CPTPP) Treaty.

The New Zealand International Business Forum (NZIBF) brings together the leaders of the country’s major international sectors plus the leading business organisations.

You will have heard already from some of our members in respect of this treaty.

This is the third time I have appeared before a Select Committee to advocate that New Zealand should proceed to ratify the Trans Pacific Partnership.

The two previous occasions were in respect of the earlier TPP.

NZIBF members were disappointed when the US Administration decided to withdraw from the earlier agreement, thus effectively preventing its entry into force.

Thanks to the efforts of both former and current Trade Ministers and our talented negotiators we are delighted to see TPP continue in the amended form of CPTPP.

Now, as then, we believe this treaty to be strongly in New Zealand’s interest.

CPTPP preserves the market access gains from the earlier agreement, eliminating and reducing tariffs and non-tariff barriers, for both goods and services, though sadly not in relation to the United States, but particularly in relation to the four economies where we do not have FTAs in place namely Canada, Japan, Mexico and Peru.

Securing improved market access, on a level playing field with our competitors, in the Japanese market is critical to securing New Zealand success in that market.

CPTPP puts in place new and improved trade rules, which will benefit small and medium sized businesses as well as larger ones, particularly in the digital space.

CPTPP brings forward new, enforceable disciplines to protect the environment and to secure decent working conditions in member economies.

CPTPP upholds the Treaty of Waitangi and safeguards the Government’s right to take actions to advance the Maori people.

CPTPP sets some new benchmarks for the way foreign investors should be treated and provides for arbitration and dispute settlement between states and foreign investors.

CPTPP provides numerous safeguards to enable governments to continue to regulate in the public interest in matters concerning public health and the environment.

Because CPTPP has suspended a large number of provisions relating to intellectual property in the former TPP, which were mostly demands of the United States, CPTPP has little if any impact on New Zealand’s intellectual property regime or on health policy.

According to the independent economic modelling in the national interest analysis, CPTPP, on the upside, has important economic impacts in terms of growth, foreshadowing improvements in real wages and job creation, and, on the downside, presents minimal risks in terms of job losses.

CPTPP also paves the way towards a high-quality broader Asia-Pacific regional free trade area that would help to deliver sustained prosperity into the future.

But CPTPP is not perfect.

The market access gains are limited in respect of the dairy sector.

The provisions concerning the environment and labour, while breaking new ground in many respects, could be further strengthened as the treaty evolves in the future.

While the agreement provides for investor protection, NZIBF members are disappointed that those protections for New Zealand outward investors in markets including Australia, Malaysia and Viet Nam as well as others have been limited by side letter.

NZIBF members certainly understand the public disquiet about investor-state dispute settlement, and acknowledge the Government’s new policy direction, but the result is an agreement which is inconsistent in application amongst New Zealand’s investment partners and between New Zealand’s various agreements.

We look forward to continuing to discuss with the Government how we might address these concerns in the future.

None of this suggests to us that New Zealand should not proceed to ratify CPTPP at this point.

I urge you, members of the Select Committee, not to make the perfect the enemy of the very, very good.

Not to proceed with CPTPP – after over a decade of effort – would marginalise New Zealand in a global trade environment which is increasingly under stress as protectionism gains ground.

Proceeding to ratify CPTPP – and being amongst the first six members to bring the treaty into force – would send a strong signal about New Zealand’s openness to trade and investment and about our belief in the rules-based order for regional economic integration.

We therefore commend this treaty to you and urge all members of the New Zealand Parliament to indicate their support for ratification at the earliest possible opportunity.