Trade policy remains headline news in the US and UK. Unfortunately there are few breakthroughs to report for New Zealand.
TPP and Mexico
The Government remains keen to keep the idea of TPP alive and is trying to resist approaches from TPP members to negotiate bilateral deals. It is also trying to discourage other TPP participants from negotiating bilateral agreements. The big fear is that Japan and the US will begin negotiations, thus ending Japanese interest in TPP.
TPP members minus the US are gathering in Santiago, Chile in mid-March to discuss next steps for the agreement now that the US has withdrawn. Korea and China are joining this meeting. New Zealand and Australia seem to favour going ahead and implementing TPP pretty much as it stands. But this may not be supported by other parties who will be reluctant to give US companies a “free ride”. They may therefore wish to renegotiate those parts of the agreement that were inserted solely to benefit the US.
Australia and Chile seem to favour Chile joining the Agreement. New Zealand would support this. Japan appears opposed. Korean entry would be more straightforward.
Mexico is seeking to negotiate FTAs with a range of countries to send a signal to the US that it has options other than NAFTA (which President Trump is seeking to renegotiate). New Zealand is one of these countries. Trade Minister Todd McClay visited Mexico last week to explore possibilities. We understand that this idea is still alive but New Zealand is worried about implications for TPP 11 if we begin such a negotiation. This will be a delicate balancing act. It may be that Mexico gets angry with New Zealand if we delay decisions too long. This is a potentially lucrative market for New Zealand.
EU leaders keep making all the right noises but are using the forthcoming French election as an excuse for not proceeding to actual negotiations with New Zealand. If they use the German election as the same excuse in a few months time we should begin to be worried.
The idea of a negotiation is still alive but processes are moving slowly.
China is pushing hard for an early outcome in the RCEP negotiations so that it will send a signal to the US that China is now the lead champion for free trade globally. Unfortunately we are still years away from a quality agreement being on the table. Australia and New Zealand may be in a minority in arguing for quality rather than a quick and dirty “political deal”.
Still no progress. Individual members say they support finalizing the agreement with New Zealand but collectively nothing has happened. New Zealand is still not sure whether the GCC will demand a re-negotiation of the deal that came close to finalization 6 years ago.