Stephen Jacobi, NZIBF Executive Director, speaks to the Confederation of Indian Industry Partnership Summit in New Delhi about The Future of Multilateralism.
Trade agreements: good things come in threes
This has been a hectic but productive week for New Zealand trade policy, with Parliamentary ratification of two important agreements – the Asia-Pacific mega-regional CPTPP, and the Pacific-focused PACER Plus agreement – and a negotiating session for a third big deal, the Asia-focused Regional Comprehensive Economic Partnership.
Although there is still a little way to go before these agreements enter into force (something that can only be triggered when enough of the members have completed the necessary procedures), New Zealand’s ratification moves us a step closer to new opportunities for more sustainable and inclusive economic growth in the region, for New Zealand and others. And for CPTPP, that may happen sooner rather than later.
“At a time of otherwise fairly dismal prospects for the global trading system, progress on these three agreements shows that many countries are still committed to creating the best possible opportunities for sustained prosperity in the Asia-Pacific region.”
Writing the rules for 21st-Century trade: CPTPP
Six of the eleven members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a mouthful better known by its acronym, CPTPP, need to ratify the deal before the benefits start to flow. The legislation having passed Parliament earlier this week, New Zealand is number four to complete the necessary procedures, with Canada announcing that it had completed the process yesterday (26 October) and Australia hot on our heels. Vietnam is also close, rounding out procedures already completed by Japan, Singapore and Mexico. It is expected that the CPTPP will enter into force (for the first six or seven nations, at least) by late this year or early next year.
The underpinning ethos for CPTPP is a desire to create the best possible environment for dynamic modern business, including by enabling global value chains, the digital economy and cross-border investment. CPTPP writes a powerful set of regional rules to enhance trade, including by trying to sweep away the “grit in the trade machine”, non-tariff barriers such as red tape and unscientific standards, as well as fostering small business opportunities. Once fully implemented, CPTPP will offer exciting opportunities for New Zealand goods and services exporters to new FTA partners Japan (where better beef access is a particular boon), Canada, Mexico and Peru, and improvements to a range of existing markets including Vietnam, Malaysia, Singapore and others.
A new model for sustainable development: PACER Plus
Sustainable development, resilience and inclusive growth are central to a new kind of trade agreement, PACER Plus, signed by New Zealand, Australia and nine Pacific Island nations last year. This week, New Zealand was the first to ratify the agreement – it is hoped that the others will complete the necessary processes next year.
The agreement provides building blocks for greater prosperity for New Zealand’s Pacific neighbours, by building capability, improving opportunities, including for regional workers, and putting in place more predictable trade rules. Many Pacific nations face formidable challenges including small scale, limited resources, isolation and climatic vulnerability. The agreement enables members to integrate more successfully into regional trade thanks to capacity-building aid, while providing flexibility to open up their own markets only very gradually.
For New Zealand businesses (including those from the many Pacific Island communities established here), the agreement will provide greater certainty, less red tape and new opportunities, including for services and investment, in Pacific markets. The deal also ensures that New Zealand and Australia can maintain a level playing field with others in the region who are negotiating their own trade deals with Pacific Island nations.
Mind the gap: RCEP
Our blog earlier this week provided an update on the challenging Regional Comprehensive Economic Partnership (RCEP) trade negotiations. This mega-regional deal encompasses diverse economies accounting for over 40 percent of world GDP, including China, India, the ten-member Association of Southeast Asian Nations, Japan, Korea, Australia and of course New Zealand. Participants met in Auckland this week to try to chip away at remaining differences – of which there are still plenty. RCEP members’ political leaders have made clear that they would like to see “substantial conclusion” of an ambitious deal by the end of this year.
It seems likely that even if this target can be met, there will still be details to hammer out next year – but the effort is certainly worthwhile. This will provide further ballast against the disruptive impacts of the so-called “trade war”, but also, importantly for New Zealand, to give us a solid trade footing with India, with which we have not yet concluded any trade agreements or deals.
At a time of otherwise fairly dismal prospects for the global trading system (and despite the best efforts of New Zealand and other ‘friends of the system’ at a Canadian-hosted meeting this week), the progress on these three agreements shows that many countries are still committed to creating the best possible opportunities for sustained prosperity in the Asia-Pacific region. There is certainly still water to go under the bridge – for some more than others – but this week proves the rule that good things come in threes.
This post was prepared by Stephanie Honey, Associate Director of New Zealand International Business Forum.
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