New Zealand’s TPP Position

The article “Trans-Pacific Partnership (TPP) Negotiations” analyzes the TPP, and in specific, how it could potentially benefit New Zealand. In overview, the TPP “aims to create a regional free trade agreement involving 12 Asia Pacific countries”. This agreement is proposed to deepen economic ties and benefit the economic status of all countries involved. But how will this affect New Zealand directly? Firstly, the negotiation opens New Zealand up to future trade liberalization in the Asia-Pacific region. New Zealand’s “economic future” depends on developing these strong bonds with the Asia-Pacific. If all goes according to plan, the estimated GDP gains for New Zealand are US$2 billion in 2025 ( a .9& increase). Likewise the estimated export gains are US$4.1 billion (a 6.8% increase). A few specific benefits for New Zealand businesses through the TPP are “tariff elimination and reduced compliance costs for goods exporters, more opportunities to access government procurement contracts, and reduced barriers to services trade and investment”. If the Trans-Pacific Partnership goes according to plan, it could not only open the doors for larger countries that are major economic players, but all countries involved in the agreement. New Zealand is strategically positions to not only benefit the TPP and all other players involved, but increase its own economy as well.

Thailand could benefit from TPP

New Zealand has suggested that Thailand should consider joining TPP during the public scrutiny process by member states, saying that the partnership will be world’s largest trade agreement. NZ’s ambassador to Thailand said that since Thailand was a strong trading nation and heavily reliant on exports, which accounts for 70% of its GDP, joining TPP would increase trade opportunity and ensure the country’s future growth.

Thailand is moving forward to membership of Regional Comprehensive Economic Partnership (RCEP) which has 16 countries – 10 Asean members, but RCEP can’t compensate for non partnership in TPP, whose market size and larger GDP is much larger.

Thailand should consider joining every trade agreement possible as it is important to benefit from the different angles offered by each pact, and it would help open up opportunity for the Kingdom to increase market access to all. Following the TPP’s implementation, the combined trade of its member economies will double.

For instance, New Zealand has strengths in service businesses such as education and IT, and cooperation under the TPP should help promote those sectors’ growth into other markets while other service businesses will need more investment from other countries to help develop their growth. Meanwhile in regard to bilateral trade between Thailand and New Zealand, Levermore said that almost 10 years from the implementation of their free-trade agreement, he expected there would be a revision of the FTA to promote more trade and investment growth on both sides as well as leveraging closer cooperation in many sectors.

New Zealand’s special agricultural trade envoy, Mike Petersen, said that under the bilateral FTA he expected that Thailand and New Zealand would tighten their cooperation in many sectors, particularly in agriculture as New Zealand has high expertise in the industry. Since New Zealand has high expertise in five key agricultural sectors – dairy products, beef, sheep, farming and wine – the country foresees closer cooperation with Thailand as well as more trade and investment for both sides.

New Zealand could also help transfer technology and know-how in quality agricultural production and improve capacity for Thai farmers which would in turn increase consumer satisfaction according to Petersen. Bilateral trade amounted to about Bhat 60 billion last year.

Full report: http://www.nationmultimedia.com/business/TPP-could-benefit-Thailand-30271118.html

Tim Groser & TPP

Fran O’Sullivan’s Opinion

Regardless the outcome from the TPP, it has secured a $2.7B a year for New Zealand. The trades and deals that have been under negotiations for the past several months have granted somewhat of an access to NZ dairy producers to the major consumers markets such as Japan, US and Mexico. This achievement has been accomplished by Tim Groser, current NZ politician and former diplomat. But not everything that shines is gold, as the deal did not reach the expected impact. However, it’s still a decent income. Mr Groser expects to see better outcomes in the near future as tariffs from particular products in the dairy market are eliminated.

Original article: http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11524262

TPP Deal Reached

The recent trade deal reached between 12 Pacific countries, including the U.S. and Japan, was described as the ‘largest regional trade accord’ in history, in an article by the New York Times. The agreement is hailed as an important first step after two years of intense negotiations. The deal is set to open new markets, protect workers, and preserve the environment. While these 12 countries have an agreed upon deal in place, the next step will be for the agreement to make its way through each participant’s respective legal system. How might the current deal change as it is vetted through the respective country’s political processes? What are some benefits to the new TPP? What are some of the downsides to the new TPP?

No increased medicine costs under TPP Agreement

New Zealand will not face increased medicine costs as a result of TPP deal. New Zealand and Australia won’t change their existing policy on biologics as a result of the agreement which has created some negative feedback from American pharmaceutical companies.

New Zealand’s trade minister Groser said that New Zealand will not pay any more for medicines and the cost of subsidy will not go up by a large extent. It will roughly cost $4.5 million in the 1st year to setup the software to provide additional info. And after that $2.5m a year will be the operating costs. Prime Minister John Key was very happy with the deal as he thinks it would give their exporters better access to more that 800 million people with expected financial benefits of NZ$4.7 billion annually.

Fonterra was disappointed by limited gains for dairy in TPPA as several countries refused to remove all blocks to free trade for NZ’s dairy and beef exports. He said TPP was a small but significant step for the sector, and the dairy deal was a long game that would eventually lead to elimination of tariffs on cheese exported to Japan.

Finally, the negotiators agreed on a minimum period of data protection for next-generation biologic drugs of at least 5 years after a deadlock over rights for drug manufacturers. The US had sought 12 years of protection to encourage pharma companies to invest in expensive biological treatments.The outcome is a two-track system with an 8 year protection for biologics and status quo for all other drugs.

Read full report: http://www.stuff.co.nz/national/politics/72688061/no-increased-medicine-costs-under-tppa

Trans-Pacific Free Trade Deal Agreed Creating Vast Partnership

According to the article, http://www.bbc.com/news/business-34444799, the Trans-Pacific Partnership (TPP), the biggest trade deal in decades, was struck on Monday after five years of bitter and tense negotiations. The TPP cuts trade tariffs and sets common standards in trade for 12 Pacific Rim countries and covers about 40% of the world economy. However, although negotiations have been finalized, the deal is yet to be ratified by law makers in all 12 countries.

For President Obama, the TPP trade deal is a major victory. He stated: “This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products.” In opposition, however, US Senator and US Democratic presidential candidate hopeful Bernie Sanders argues that Wall Street and big business have “won again,” stating that the TPP deal will cost US jobs and hurt consumers.

Additionally, China was not involved in the TPP agreement, however the Obama administration is hoping that it will be forced to accept the majority of the standards outlined by the TPP. He was quoted: “When more than 95% of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.”

Furthermore, the final round of TPP negotiations were delayed over how long pharmaceutical companies should be permitted to maintain a monopoly on their drugs. The US wanted twelve years of protection, while Australia and New Zealand argued for five. A compromise was reached, however the definitive protection period has yet to be confirmed.

Finally, the auto industry as well as the agriculture industry were also areas of intense negotiations. In regards to the auto industry, countries agonized over how much of a vehicle must be manufactured within a TPP country in order to qualify for duty-free status. Agriculture was another sticking point, as countries such as New Zealand wanted more access to markets in Canada, Mexico, Japan, and the US; Canada wanted to keep access to its dairy and poultry markets strictly limited, however.

Australia and New Zealand want USA to rush the TPP

Previously I had posted how the TPP was formed from just the original 4 members to the current 12 members and how USA has become a driving leader for the ongoing negotiations.

Andrew Robbs, the minister for trade and investment for Australia has urged them to help rush the proceedings so that Australia and New Zealand do not have to suffer from stalling at this point of the negotiations as per http://www.afr.com/news/politics/andrew-robb-demands-us-tear-down-barriers-or-no-tpp-deal-20151001-gjz0pm

Over the past few weeks, Australia has pushed for 87000 tonne sugar quota from the USA and some of the US congressmen have backed this deal, but the majority have concerns whether such high import values would be good for the US market?  New Zealand wants more from the dairy point of view, asking for increased imports from the others especially USA for their kiwi butter, cheese and milk powder citing dairy accounting for at least 30% of their GDP.

USA feels that allowing Australia to a further 87000 tonne limit would jeopardize the other countries like Mexico and their local manufacturers. The same goes for New Zealand’s demand considering that USA itself is a huge manufacturer of dairy products. The USA imports are worth more than $100 Billion in agricultural products as per http://www.abc.net.au/news/2015-04-10/what-hope-for-us-sugar-concessions-in-tpp/6383638

With each countries prioritizing their own demands and the fact that soon the elections for Canada followed by USA and Japan will be held, will there be a mutual agreement soon?

http://www.reuters.com/article/2015/08/04/us-australia-usa-sugar-idUSKCN0Q909W20150804