Trade update – December/January
December 21/January 22 Trade Update
While New Zealanders and Australians have been sunning themselves on the beach the trade policy world has remained very active. This has included some unexpected developments and more good news.
REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP)
RCEP is a very large trade agreement. It involves the 10 ASEAN members, Japan, ROK, China, Australia and New Zealand. Many of these countries are very important markets for New Zealand. So it is good news that this Agreement came into force on 1 January 2022.
Unfortunately, when it was first conceived RCEP had the potential to deliver greater benefits to New Zealand than it has. The reason for this is that India dropped out of the negotiation. New Zealand does not have a FTA with India, but it does with all the other RCEP members so the trade gains from a RCEP minus India are far lower than an RCEP that includes India.
Even without India RCEP is a nice to have. It usefully simplifies rules of origin in the region and it is the first FTA that links China, Japan and the ROK. That, in itself, is a good thing.
Interestingly, over the past few weeks, there have been reports in progress being made in the long running Australia-India FTA negotiations. Negotiations between the UK and India have been launched. Many are skeptical that these negotiations can be completed, but if they are, they may address some of the issues that have stood in the way of RCEP membership and the New Zealand – India FTA.
Negotiations continues on the outstanding issues in the NZ-UK FTA. New Zealand negotiators are hopeful that this agreement will be signed before the end of the first quarter.
While technical discussions are still progressing, progress on the EU-NZ FTA is expected to slow during the first half of 2022. Once some important elections are out of the way (by June/July) more rapid progress can be expected. Negotiators are hopeful that this negotiation can be finalised by early in the third quarter of the year.
The long running disagreement between the EU and New Zealand over the allocation of meat and dairy quotas has been resolved in the WTO. Details of the outcome have yet to be released publicly. This is probably positive for the FTA negotiation.
Interest in joining CPTPP continues to grow. We have reported before on applications from the UK, China and Taiwan. More recently media reports suggest that the ROK and Ecuador have applied to join the agreement. It is unclear whether the ROK has actually submitted a membership application.