You heard it here: the sun will rise the day after the TPP signing. Contrary to wide-spread belief, the sky will not fall on 4 February, but neither will a new dawn for freer trade be with us just yet – at the very least we will need to wait until the treaty is ratified in each member country and until the required number of ratifications by TPP members is achieved. In New Zealand there is an extensive parliamentary process to conclude and a vote by MPs on the final implementing legislation.
TPP will be the subject of extensive debate in coming months. At this stage we see at least three ways in which we believe TPP will deliver benefits for New Zealand.
First, New Zealand’s trading interests are well covered, if not comprehensively. All sectors will benefit from tariff reduction and/or elimination – dairy (yes even dairy – because dairy faces the highest barriers), beef, kiwifruit, other horticulture, wine, seafood, wood and manufactured products including medical devices and agricultural technology. These are tangible trade gains that will over time improve our competitiveness, reduce costs and open up new markets.
Second, the Government’s continuing right to regulate is secured even while foreign investment is protected. Important areas like public health (including in relation to tobacco), the environment, the Treaty of Waitangi and the purchase of farm land are all safeguarded. High hurdles are established for initiating investor state dispute settlement and it will be highly unlikely New Zealand would be successfully challenged.
Third, the only major change to existing policy in New Zealand is the increase in copyright term which will move from 50 to 70 years after the death of the author. For most New Zealanders the effect of this will be hardly noticeable at all. The Government has estimated over the very long term a cost of an additional $55 million spread across the economy as a whole. That compares with an estimated $2.7 billion increase in GDP.
On 5 February the issue before the country will be whether New Zealand should proceed to ratify or not. The deciding point for our elected representatives will be whether the trade benefits outweigh potential policy risks. We believe a significant trade outcome has been achieved at minimal cost. Those opposing TPP will need to be able to explain why their concerns are of such overwhelming impact that these tangible trade benefits should be set aside.
This post was prepared by Stephen Jacobi, Executive Director of the NZ International Business Forum.