Trade agreement opens access for NZ
Remember the TPPA, and the uproar over New Zealand’s plans to sign it?
An updated version of the trade agreement, now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), was signed back in March, and came into force yesterday.
The deal gives New Zealand access to several new markets, with Japan, Mexico and Canada being the largest.
Tariffs started reducing immediately in these markets, with a further round of adjustments kicking in yesterday.
The deal, which includes Australia, Japan, Canada, Mexico, Singapore, Malaysia, Vietnam, Brunei, Peru and Chile, is largely seen as a reworking of the original Trans-Pacific Partnership, which included the United States before President Donald Trump withdrew.
Catherine Beard, executive director of ManufacturingNZ and ExportNZ, said New Zealand would benefit from $222 million in tariff savings a year.
‘‘The main thing I think that New Zealand always gets a pretty good shot at through trade deals is agriculture. So when the tariffs come off things like kiwifruit, beef, wine, dairy, forestry and seafood products, that’s a lot of money that comes back.
‘‘So that’s money that can then be invested in the business, and then they grow. When business grows, they employ more people. The main benefit [to New Zealand] will be in jobs and wages.’’
Most of those would go to the regions, like Hawke’s Bay, where primary exports such as wine, horticulture and dairy were produced, she said.
Traditional markers of success in international trade agreements are the opening up of new markets without existing free-trade deals – in this case Japan, Canada and Mexico – as well as improved access via lower tariffs into existing markets, such as Malaysia.
Trade and Export Growth Minister David Parker told RNZ that some of the gains in this area would be the elimination of all tariffs on fisheries exports, ‘‘with the majority of savings from today’’, as well as wine producers gaining immediate dutyfree access to Canada, and tariff elimination on summer fruits, ‘‘including cherries, for which the tariffs into Japan will be eliminated within six years’’.
However, University of Auckland law professor Jane Kelsey, a prominent critic of the CPTPP and other similar trade deals, argues that the deal is out of step with where the world is heading, and that we require a sustainable business model for New Zealand.
‘‘[The CPTPP is] an old 20thcentury-style model that certainly doesn’t work for New Zealand – low value-added dairy and raw logs exported mostly into China. So where is the development strategy?’’ Kelsey said. ‘‘We need a national understanding of our future economy in a sustainable and climate change context.’’
Earlier this year, the Government signalled that it would curb the controversial investor state dispute settlement (ISDS) clause in the CPTPP, which allows foreign investors to sue a government where investments are at perceived to be risk because of regulations, but was unable to get any traction.
The clause is widely viewed as having implications for national sovereignty. Instead, the Government asked signatories to sign side-letters agreeing not to sue each other.
‘‘We thought those concerns were overblown,’’ Beard said. ‘‘The main investor we have is Australia in terms of foreign investors. That clause wouldn’t be used in a country with a good court system. It was there to protect New Zealand in overseas markets, where they change the regulation that wipes out your investment. So instead of going to the courts, you would go to an international tribunal.’’
Kelsey said the Government was unable to get letters from the most important signatories. ‘‘They got ones with Peru, Brunei and Malaysia and Vietnam, but not Japan, Canada, Chile and Mexico.
‘‘The consequence is that there is a big song and dance about the new Government complying with its promises of no ISDS. They wouldn’t release the names of the countries, and have been spinning like crazy to justify the U-turn they’ve done.’’
Kelsey argued that, having promised a new model for trade agreements, the Government was continuing with the old model in all the other agreements it was negotiating. ‘‘It’s widely recognised that the benefits of these deals are uneven, and instead they’ve just been continuing with business as usual and doing it in secret.’’
Beard said that, given current global trade tensions, tariff-free trade on items like wine and beef with highearning populations such as Japan and Canada would be significant for New Zealand. ‘‘The CPTPP is quite a good insurance for exporters because it gives a level playing field to our exporters so they can spread their risk a bit. It’s the primary products that usually have the biggest tariffs, and so they have the most to gain.’’
‘‘The main benefit [to New Zealand] will be in jobs and wages.’’ Catherine Beard