GDP gains from deal downgraded

Government figures show the fully implemented trans-pacific trade pact could add up to 1 per cent of New Zealand’s annual GDP - or just 0.3 per cent.

This is a significant downgrade on prior analysis of the agreement, which estimated gains would be at least 1 per cent, or $4 billion.

The Ministry of Foreign Affairs and Trade has released the National Interest Analysis of the new-look trade pact, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Trade (CPTPP), along with the full text of the agreement.

This is the first National Interest Analysis to cover the new-look agreement, which took shape after the United States pulled out of the agreement.

It puts the gains to New Zealand’s economy at between 0.3 and

1 per cent, or about $1.2b to $4b in

2014 dollars.

Most of those gains come from non-tariff barriers, which are harder to model than straight up tariffs. The Government expects tariff reductions to add about

$760m per year at full implementation, which is expected by 2040 at the latest.

A prior analysis with the US in it estimated that it would add at least 1 per cent to our GDP.

CPTPP critic Jane Kelsey has argued these gains are minuscule

"Any teacher knows that a suspension is very different from an expulsion. These things are there and they are there so they can come back in." It's Our Future spokesman Oliver Hailes

compared with the risks involved with signing up to the agreement.

The analysts estimate the costs of not signing the agreement at a $183m reduction in GDP, and an erosion of supply chain competitiveness as the other countries increase trade without New Zealand.

Trade Minister David Parker made the point that New Zealand had estimated lower tariff gains before signing its free trade agreement with China, which ended up producing much more economic uplift.

‘‘The effects of this on the New Zealand economy will spread from the freezing works floor through to the owners of the processors and farms,’’ Parker said.

‘‘Trade is not just for the benefit of big companies, it’s for the benefit of the 600,000 or so people that work in our export industries.’’

The controversial investor-state dispute settlement (ISDS) clause has been narrowed but not removed. ISDS clauses allow foreign investors to sue governments for law changes in an overseas tribunal.

New Zealand and Australia have signed a ‘‘side letter’’ that will stop investors from both countries suing under ISDS.

Most of the biggest wins come from 22 provisions in the agreement that have been suspended after the US pulled out.

For any of these to come back into effect all countries would need to agree.

Kelsey and other critics insist that by ‘‘suspending’’ these provisions but not removing them the door is left open – particularly since CPTPP nations will be very keen to get the US into the agreement.

‘‘Any teacher knows that a suspension is very different from an expulsion. These things are there and they are there so they can come back in,’’ It’s Our Future spokesman Oliver Hailes said.

The Green Party remains opposed to the agreement, while National is likely to support it.

National’s Todd McClay argued the agreement is basically the same thing he signed while in government, with any changes already well in train before last year’s election.

❚ Just enough wins, Opinion A7