TPP Mountain Worth Climbing

Trade Ministers from the 12 TPP negotiating economies are meeting in Singapore 19-20 May. Expectations from the meeting are not high. The meeting is being described as a “check in” and an opportunity for the United States and Japan to debrief on the outcome of their bilateral negotiations at the time of President Obama’s visit to Tokyo last month. We are not holding our breath – there is still more water to flow in the deep river that is TPP, but progress continues to be made. Even so it is timely to reflect on the importance of TPP for New Zealand’s agricultural industries. In a recent article in New Zealand Farmers’ Weekly meat industry leader Sir Graeme Harrison, who also serves as the Chairman of the New Zealand International Business Forum had this to say:

New Zealand’s merchandise exports are 70 percent land based. While export dependency ranges from 80 percent for beef to 96 percent of dairy production, never before has the agri-sector had such a diversity of major markets. Yet prior to the conclusion of the Uruguay Round in 1994, agriculture had been set apart from the global trade liberalisation process enjoyed by industrial goods and New Zealand had endured at least two very tough decades as our economic fortunes were impaired by the excesses of the European Common Agricultural Policy and the contradictions of US and Japanese trade policies.

After so much pain the multilateral Uruguay Round concluded 20 years ago has enabled New Zealand to operate in a global market where European Union (EU) export subsidies on dairy and beef exports have been capped, annual quota volumes for sheepmeat to the EU and beef to the US and Canada have been certain, and tariffs have replaced quotas on a number of products. Such changes, for example, enabled New Zealand to rapidly grow chilled lamb exports.

Bilateral agreements have followed, with the New Zealand/China FTA the most transformational. Our terms of trade have dramatically improved, with the price of exports now exceeding imports. At long last we have access to consumers paying more for what we produce best.

Yet the contradictions of US and Japanese agricultural trade policy persist. My Masters degree thesis was on the very subject of US trade policy and its impact on New Zealand agricultural exports. I submitted it 42 years ago and have subsequently spent over 30 years doing business in Japan, establishing the first foreign owned meat import and distribution company of scale in that country. I can say unequivocally that in all my years of business contact and investments in these two hugely important markets for New Zealand, never have we been closer to getting ground breaking market access changes made possible by the TPP negotiating process.

Let’s hope Sir Graeme is right !