CPTPP a pos­i­tive step but large chal­lenges re­main

DEMM Engineering & Manufacturing - - NEWS -

Re­cent changes to the TPP agree­ment, now called CPTPP, ap­pear to be a step for­ward, par­tic­u­larly with the po­ten­tial re­moval of some of the more con­tro­ver­sial parts, such as In­vestor State Dis­pute Set­tle­ment (ISDS) clauses. Yet, we need to re­mind our­selves that the pri­mary tar­get of these FTAs is the re­duc­tion of tar­iffs, pro­vid­ing ben­e­fits to our pri­mary com­mod­ity ex­porters, but lit­tle re­lief to our high value man­u­fac­tur­ers, who fre­quently en­counter ob­sta­cles to free trade in the form of non-tar­iff bar­ri­ers.

“Non-tar­iff bar­ri­ers are the ‘dirty lit­tle se­crets’ rarely writ­ten into trade agree­ments, but a mat­ter of daily prac­tice far away from glam­orous trade talks. And prob­a­bly, just as harm­ful to lo­cal man­u­fac­tur­ers is the al­most com­plete lack of en­force­ment of prod­uct stan­dards in our do­mes­tic mar­kets, al­low­ing im­ported goods to trade on a price ad­van­tage. Not to men­tion gov­ern­ment pro­cure­ment prac­tices that in most cases pay lip ser­vice only to the prin­ci­ple of giv­ing lo­cal man­u­fac­tur­ers a fair chance, says Di­eter Adam, CE, The Man­u­fac­tur­ers’ Net­work.

“The re­moval of some of the con­tentious parts of the pre­vi­ous agree­ment is a pos­i­tive move from the Gov­ern­ment, giv­ing the even­tual agree­ment broader sup­port in New Zealand. How­ever, we know from past ex­pe­ri­ence that the re­ally hard work starts once the agree­ment comes into force, in work­ing to re­move the non-tar­iff bar­ri­ers that form the big­gest chal­lenges for high-value man­u­fac­tur­ers mak­ing the most of the mar­kets in­volved.

“Qual­ity trade agree­ments are a vi­tal com­po­nent of im­prov­ing our ex­port com­pet­i­tive­ness, es­pe­cially when non­tar­iff bar­ri­ers that ef­fect man­u­fac­tur­ers are prop­erly ad­dressed. We can­not ig­nore the fact, how­ever, that in spite of a string of re­cent FTAs, such as the China and Korean FTAs, the share of ex­ports in GDP has been drop­ping over the past decade, rather than grow­ing by 25 per­cent – the goal the pre­vi­ous Gov­ern­ment had set it­self not long af­ter com­ing into power in 2008. As the new Gov­ern­ment is rightly point­ing out, New Zealand’s fu­ture pros­per­ity can only be se­cured by sig­nif­i­cantly grow­ing our ex­ports of high-value prod­ucts and ser­vices. And one of the key pre­con­di­tions for that lies in im­prov­ing our pro­duc­tiv­ity, which has lagged through suc­ces­sive gov­ern­ments. Im­prov­ing pro­duc­tiv­ity and thus in­creas­ing our abil­ity to cre­ate high-value goods and ser­vices is where the new Gov­ern­ment should fo­cus.

“The other crit­i­cal en­abler to a more bal­anced ap­proach to growth in our econ­omy is a more favourable and fair ex­change rate, es­pe­cially against the Aus­tralian Dol­lar, given that Aus­tralia is a key mar­ket for our man­u­fac­tur­ing ex­ports. And in that con­text com­ments made by the Act­ing Gover­nor of the RBNZ, Grant Spencer, at the Novem­ber MPS press con­fer­ence that ‘ We’re happy with this [the cur­rent] level of our cur­rency, it’s in the vicin­ity of fair value’ are cer­tainly not help­ful and point to a change from re­cent RBNZ state­ments un­der Graeme Wheeler, set­ting around 60 cents as a tar­get rate. It will be in­ter­est­ing to see the re­sponse of the new Gov­ern­ment to this new assess­ment of ‘ fair value’ by the RBNZ. Ad­dress­ing our ex­change rate, which has re­mained sig­nif­i­cantly above trends in the pre­vi­ous decade, need to be part of the dis­cus­sion in the up­com­ing re­view and ap­point­ment of a new Gover­nor,” said Adam.

DI­ETER ADAM

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