NZ Trade Relations: TPP Trade Gains For NZ Could Be “Huge”
November 19th, 2009
Evidence relations with the US are deepening in a way which could not have been foreseen just months ago can be detected in different areas. Intelligence exchanges have been tightened, the security relationship is taking a different shape, and last week President Obama confirmed the US, after a protracted review, will join negotiations for the so-called Trans Pacific Partnership, (TPP) which NZ has long seen as its best hope for achieving a free trade deal giving NZ’s exporters tariff and quota free access to the American market.
NZ will face tough choices and must be prepared to make concessions if the TPP is to succeed. But the benefits for NZ exporters, particularly for Fonterra, would be “huge.” The disadvantage those exporters are under, in comparison with their Aust competitors who already have a FTA with the US, is getting larger year by year. If the framework is sound the TPP would attract others and could become a broad Asia-Pacific trade bloc. There is already concern China is becoming the dominant influence in the Asia-Pacific region. This worries not only the US, but other nations in the region.
The US clearly does not want to abdicate its space, and the TPP offers a solution to getting a seat at the regional free trade table. Protectionist elements in Congress will prevent the US entering free trade negotiations with the bigger Asian economies, but the TPP group (Singapore, Brunei, NZ and Chile, plus possibly Peru, Australia and Vietnam) might not be so scary to the protectionists. The TPP negotiators will push for a deal to be sealed by 2011. NZ last week signed up a FTA with Hong Kong to add its pacts with Malaysia, and the Gulf. It rounds off a big year for NZ’s trade negotiators.
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Duncan Cotterill