Trans-Pacific Pact signifies hard won gains

Tim Groser – Trans-Pacific Pact signifies-Tim Groser

The Trans-Pacific Partnership Agreement (TPP) will deliver significant benefits to New Zealand and build on the hard-won gains from previous free trade agreements.

This comprehensive agreement offers much better access for New Zealand goods and services in 11 important markets across Asia and the Pacific.

TPP breaks new ground for us. It is our first FTA relationship with the United States, the world’s biggest consumer market, as well as with Japan, Canada, Mexico and Peru.

As a result, New Zealand will now have FTAs covering our top five trading partners – Australia, China, the United States, Japan and Korea.

We have seen from previous FTAs, including the China FTA, how positive they have been for New Zealand trade and investment, and therefore in supporting jobs and growth for New Zealanders. Not being in TPP, on the other hand, would put New Zealand at a competitive disadvantage compared to other countries.

Ending Tariffs

Tariffs will be eliminated on 93% of New Zealand’s trade with its new FTA partners, once TPP is fully phased into trade. This will ultimately represent $259 million of tariff savings a year, around twice the savings initially forecast for the China FTA.

As a result of TPP (a) Tariffs on beef exports to TPP countries will be eliminated, with the exception of Japan where tariffs reduce from 38.5% to 9% (b) New Zealand dairy exporters will have preferential access to new quotas into the United States of America, Japan, Canada and Mexico, in addition to tariff elimination on a number of products (c) Tariffs on all other New Zealand exports to TPP countries – including fruit and vegetables, sheep meat, forestry products, seafood, wine and industrial products – will be eliminated.

TPP also reduces non-tariff barriers to trade and ensures fair access for New Zealand firms doing business in TPP countries.

Lifting standards

TPP sets high standards in many areas. New Zealand is already an open, transparent and trade-friendly country, which means only a fraction of TPP’s obligations will require changes to our current practices.

The most significant change is an extension of New Zealand’s copyright period from 50 years to 70 years. The cost of this to consumers and businesses will be small to begin with and increases gradually over a 20-year period.

Other potentially far-reaching or costly proposals raised earlier in the negotiations were not included in the final agreement. Consumers will not pay more for subsidised medicines as a result of TPP and few additional costs are expected for the Government in the area of pharmaceuticals. There will also be no change to the PHARMAC model.

Protecting medicines

Regarding data protection for biologic medicines, New Zealand’s existing policy settings and practices will be adequate to meet the provisions that we have finally agreed.

Investor-state dispute settlement provisions have been included in TPP, as they have in previous FTAs.

This will give New Zealand investors more confidence and certainty when doing business overseas and does not prevent the Government regulating for legitimate public policy reasons.

TPP also contains a provision that allows the Government to rule out ISDS challenges over tobacco control measures.

Overall, TPP is a very positive agreement for New Zealand, further improving access to international markets, which supports our exporters to grow and create new jobs.

New Zealand supports the release of the text before it is signed by TPP governments but arrangements are yet to be finalised.

TPP, like any free trade agreement, will go through New Zealand’s Parliamentary processes. We expect it to come into force within two years.

Tim Groser is Trade Minister of New Zealand. He was the chief negotiator on behalf of the New Zealand government at the intense talks that were held over five years among the 12 member countries of TPP, leading to the final announcement on October 4, 2015.

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