Right of Reply: Why Business Supports TPP – Honestly

by | Feb 15, 2016 | Trade Working Blog


By Stephen Jacobi

When Rod Oram said in his column last week that business leaders are being dishonest about the Trans Pacific Partnership (TPP), he was taking issue with the 28 business associations from all sectors of the economy, which signed an open letter expressing support for TPP.  The letter can be found at https://www.tradeworks.org.nz/letter-to-the-prime-minister/.  Public debate on TPP is important, but should be based on substance.  Here are some thoughts in response.

Rod asks if TPP is an FTA? TPP eliminates tariffs on 93% of New Zealand exports to the five countries in TPP with which we do not already have FTAs (US, Japan, Canada, Mexico and Peru).  That’s not 100% – much to our disappointment – but all New Zealand’s export sectors will benefit from TPP, which covers 40% of our exports – meat, dairy, kiwifruit, other horticulture, wine, wood, seafood, manufactured products including medical technologies and agricultural equipment.  The extent of tariff reductions for dairy is less but dairy still benefits more than any other sector to the tune of $102 million in tariff cuts.  Few, if any, FTAs have achieved complete tariff elimination at the outset.  Even CER in 1983 excluded dairy products.  The China FTA provides for continuing safeguard tariffs on dairy.  Are these not FTAs?

Rod asks will TPP make us wealthy?  He points to a New Zealand study, which he co-authored, and which finds a much lower level of economic gains for TPP than the study by Professor Anna Strutt of Waikato University available at http://www.tpp.mfat.govt.nz. Tufts University has a study, which also disputes the higher gains. A number of other international studies find results broadly similar to Professor Strutt.  The difference is the methodology and assumptions, which are used in the analysis. Exporters who know their business are saying that TPP will provide better market access, lower costs and greater business opportunities.  We know from past experience how FTAs deliver jobs and growth. TPP should not be any different.

Rod takes issue with the investor state dispute settlement (ISDS) rules. Business says that we need this sort of protection when, to grow the value chain and get closer to consumers, we invest in other markets where the rule of law may not be as reliable as here.  New Zealand already has ISDS in other FTAs: we have never been challenged and won’t be as long as we deal fairly with foreign investors. That’s because there are safeguards, checks and balances in TPP, which uphold the Government’s continuing right to regulate on a range of matters including the environment, public health, the Treaty of Waitangi and the purchase of agricultural land.

Rod says TPP’s intellectual property rules are “US inspired”.  How is it then that New Zealand has to make very few changes to our own system as a result of TPP? No change to patent terms, biologics data protection, parallel importing or use of the internet. The copyright term will be extended to 70 years after death of the author, which is already the case in the European Union and many other jurisdictions.

Rod suggests the US won’t ratify and the Chinese won’t join.  He may be right.  We will have to wait and see.  It is interesting though to see the number of economies who have already expressed interest in joining – they include Korea, Thailand, Philippines, Taiwan, Colombia, even Indonesia.  That’s because TPP is set to become the “new normal” when it comes to the rules for trade and investment.

Rod suggests that there is massive work to be done on TPP.  On this, he is right.  This work can be done only if New Zealand is at the table. We initiated the TPP-project in the first place.  A lot of the thinking in TPP comes directly from our experience in CER.  If we do not continue this work, heads may turn for a moment, but others will get on with writing the rules for international trade and investment without us.  This is precisely why 28 business associations support TPP and why Helen Clark said it is “unthinkable” for New Zealand to be excluded.

Surely Rod cannot be suggesting Helen Clark is dishonest too?

Originally published in the Sunday Star-Times on 14 Feb, 2016. 


Register to stay up to date with latest news, as well as saving and discussing articles you’re interested in.

Latest News


Perhaps a cyclone was after all a fitting backdrop for the meeting of the APEC Business Advisory Council (ABAC) which was held in Auckland on 12-14 February – the global environment against which the meeting took place is decidedly stormy.  In the event the wind...


As I write this end of year dispatch, NZIBF is preparing to host the first meeting for 2023 of the APEC Business Advisory Council (ABAC).  We are looking forward to welcoming the 200 or so business leaders and senior officials from APEC member economies across the...

NZ Herald: Time to lift our game in India

Following his recent visit to India our Executive Director Stephen Jacobi penned this article advocating a more strategic approach to the further development of the relationship. The article was published by the NZ Herald on 9 December.

APEC Rolls out Priorities for 2023

Issued by the Informal Senior Officials’ Meeting - Honolulu, The United States, 13 December 2022 Aiming to provide tailwinds for member economies to strengthen recovery and resilience, as well as advance broad-based economic growth, the United States rolled out its...

NZIBF 2022 Chair Report

ANNUAL GENERAL MEETING 2022 CHAIR’S REPORT I am pleased to present my second report on the activities and achievements of the NZ International Business Forum (NZIBF) for 2022-23, our fifteenth year of operations.  At the outset I would like to thank Members for...


New Zealand business will be represented at the APEC Leaders’ Week in Bangkok, commencing 13 November, by members of the APEC Business Advisory Council (ABAC). New Zealand’s three members – Rachel Taulelei, Malcolm Johns and Anna Curzon – supported by Stephen Jacobi...

Submission to MFAT for CPTPP Review

30 September 2022 Phil Mellor Economic Division, Ministry of Foreign Affairs and Trade, Wellington (By email) Dear Phil, Thank you for your email of 1 September, seeking our comments on the three year review of the Comprehensive and Progressive Agreement for Trans...