Trade officials head off to save the TPP

By Audrey Young, New Zealand Herald| May 1, 2017

New Zealand trade officials are heading to two important meetings this week, to a TPP-11 meeting in Canada, to save TPP without the United States, and to Argentina to resume talks between Mercosur, an existing South America trade bloc, and CER.

Japan’s shift in position to support the Trans-Pacific Partnership (TPP) despite the withdrawal of the United States by President Donald Trump has given its survival new impetus.

Officials will come up with options to present to trade ministers on the sidelines of an Apec meeting in Vietnam on May 20, including New Zealand’s Trade Minister, Todd McClay, who has been asked to co-chair the TPP meeting.

“Japan is showing significant leadership and we are pleased with that and are happy to join them, ” McClay told the Herald.

“They are a very important part of the future of a common set of rules across the Asia-Pacific.”

New Zealand will be represented at the Canada meeting by Vangelis Vitalis, the former ambassador to the World Trade Organisation.

The major issues are likely to be to legally turn a 12-country agreement into an 11-country agreement and how much of the agreement, including the elements sought by the United States, should remain.

New Zealand is likely to want to preserve as much of the current agreement as possible in order to attract the US back in at some stage in the future.

Officials are expected to narrow down options to present to the Vietnam ministerial meeting, which may then be narrowed again to take to a TPP leaders meeting on the sideline of the Apec summit in November.

Asked if the new moves could lead to TPP becoming an election issue, McClay said he did not think so.

There had been a lot of consultation and engagement after the TPP signing in Auckland last February.

Ultimately the Government had to try to get better access for New Zealand exporters to remain competitive.

“I recognise there will still be some people who have concerns over trade agreements but the wider business community was very clear in their view to Government that they wanted us to go out and fight for better access for Kiwis overseas and they saw TPP as an important part of that.”

Labour, the Greens and New Zealand First oppose TPP.

New Zealand officials and Australian counterparts are also heading to Buenos Aires this week for the first dialogue between CER and Mercosur in five years.

Mercosur is a customs union between Brazil, Argentina, Uruguay and Paraguay formed in 1991 (Venezuela is suspended).

Its countries have a combined population of 260 million and GDP of $2.4 trillion.

“With Australia we are going to push pretty hard to say we would like to formally launch trade discussions and see where that leads.”

It was worth New Zealand putting in the effort.

McClay also talked about the recent conclusion to the Pacer Plus agreement involving New Zealand, Australia and 12 of the 14 other members of the Pacific Islands Forum.

Fiji and Papua New Guinea have been involved in negotiations but have not committed to joining the deal which is due to be signed in Tonga in June – although the text has yet to be released.

McClay said it would give New Zealand better access over time to Pacific Island countries and would create a better framework for investment.

New Zealand had taken a “light-handed” approach to trade liberalisation in the Pacific compared to other agreements and it had a long transition – up to 25 years – and had included a $55 million development package for capacity building.

It was in New Zealand’s interests to have a deal that boosted the Pacific countries’ economies.

“Ultimately we want to build the economies up and find ways for them to export a lot more to us and to other parts of the world…with the view that if we get it wrong then it is going to be more burdensome for them and our involvement in development is going to have to be greater.”

There also a “most favoured nation” clause so that if the islands do a more favourable deal with other countries, New Zealand and Australia would have to be offered the same.

Green MP Barry Coates is critical of Pacer Plus saying tariff cuts would deprive small nations of crucial revenue they needed.

“Promising relatively small amounts of aid money with one hand while stripping Pacific Governments of their right to support local businesses and regulate in their people’s best interests isn’t fair and isn’t right.”

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