The first meeting of CPTPP countries since the free trade agreement came into force is an opportunity to build on the deal’s potential in what could be another difficult year for trade advocates, Trade and Export Growth Minister David Parker says.
Parker is heading to Tokyo later this week for the first meeting of the CPTPP Commission, made up of the 11 countries which have signed the agreement.
After years of negotiations and the withdrawal of the United States under President Donald Trump, the deal came into effect on December 30 last year, allowing two rounds of tariff cuts to date.
Parker said Kiwi exporters were already benefiting from the CPTPP, including the beef sector – which had been “cleaned out” by Australian competition – and kiwifruit growers who now had a better position in relation to Chile.
The Tokyo meeting was an opportunity for the 11 countries to discuss the next steps for the deal, including possible expansion.
“I think it’ll be [a chance] to have a discussion about what is the vision for CPTPP as an international agreement with a view to how fast and where it should expand to,” Parker said.
“Three G20 countries, Japan, Canada, Mexico, with which we had no secure trading relationship, now we have through CPTPP. It’s a huge, hugely important piece of insurance for New Zealand.”
A number of countries had already expressed informal interest according to media reports, such as the UK, South Korea, Thailand, and Indonesia, he said.
The deal would also provide important ballast for New Zealand in what was likely to be a difficult year for international trade in 2019, following on from similar protectionist sentiment in 2018.
“Three G20 countries, Japan, Canada, Mexico, with which we had no secure trading relationship, now we have through CPTPP. It’s a huge, hugely important piece of insurance for New Zealand.”
National Party trade spokesman Todd McClay said the Government needed to do everything it could do bring more countries into the CPTPP fold, with the US “the first priority”.
While Trump had said he did not support the original TPP deal, the US had also expressed an interest in greater trade with New Zealand which could be used for a renewed push, McClay said.
“Trade negotiation is not about day-to-day discussion, it’s about the medium to long term and ultimately the US was enticed to the TPP negotiations for strategic reasons, there’s even more reason for them now to be involved in the Asia-Pacific.”
Another busy year for trade
Having seen the CPTPP enter into force last year, 2019 looms as another busy year on the trade front for the Government.
Parker said its priorities would be advancing FTA negotiations with the European Union and the RCEP grouping, as well as making progress with the China FTA upgrade.
“There’s been progress made on a number of chapters in the last six months, so progress continues to be made and we’ll want to advance that this year,” Parker said of the China upgrade.
Free trade talks with the Pacific Alliance countries in South America were “more uncertain” than last year, he said.
“New Zealand now has two choices: we can sit back and wait and see what happens then make the most of a bad situation, or we can do what successive governments have always done which is look to have a progressive, outward-looking trade agenda and go looking for new opportunities.”
That was due in part to recent elections in Colombia and Mexico but also the existence of the CPTPP, of which most Pacific Alliance countries (with the exception of Colombia) are already a part of.
McClay said upgrade talks with China and Singapore “seem to have floundered”, and the Government had to ensure new, high-quality deals were signed as soon as possible.
It also needed to be more assertive when it came to the possible consequences of Brexit for Kiwi exporters, he said.
“New Zealand now has two choices: we can sit back and wait and see what happens then make the most of a bad situation, or we can do what successive governments have always done which is look to have a progressive, outward-looking trade agenda and go looking for new opportunities.”
WTO appeals process crucial
Another trade issue looming large is the fate of the World Trade Organisation (WTO). Its appellate body for trade disputes will cease functioning by the end of the year unless the US lifts a veto on the appointment of new judges.
Parker said New Zealand accepted many of the WTO criticisms being made by the US, but felt it was best to find a way through rather than kill off the organisation.
“There are improvements that are needed to it, but it’s the best thing that we’ve currently got and we don’t want to lose it.”
McClay said the loss of the WTO disputes process would be particularly damaging for New Zealand, which had won all the cases it had taken to the appellate body throughout its history.
“If we don’t have the appellate body there to adjudicate then the world trading system grinds to a halt – for big countries like the US that is much much less worrying, for a country like New Zealand it could be detrimental to the economic future in the short to medium term.”
