November Trade Update
TPP now known as CPTPP
After a tough and confusing few days in Da Nang TPP has emerged with a new name (Comprehensive and Progressive Agreement for the Trans-Pacific Partnership), four minor issues outstanding, and it has maintained its 11 members (just). There will be strong pressure to wrap up the four outstanding issues and get the Agreement signed early next year. The longer signature is delayed the greater the chance that opposition to this deal will mount. After signature the Agreement will need to go for our ratification process which will involve preparation of a National Interest Analysis (already largely written), consideration by select Committee and the passage of enabling legislation. Even though this is largely identical to the original TPP CPTPP is a new Agreement and will need to be ratified afresh. Once six members ratify the Agreement it will come into force. Unlike the original TPP which essentially required both the US and Japan to ratify it, and six parties will be enough to get CPTPP up and running.
New Trade Minister David Parker, Prime Minister Ardern and the MFAT negotiating team did well in Da Nang and New Zealand’s reputation has emerged enhanced. Before the meeting there were some who worried that the positions taken by the new Government might de-stabilise the overall negotiation. This was not the case. Parker and team were there to find workable solutions and they did.
Canada, in contrast, has severely damaged its international reputation. For some reason Prime Minister Trudeau did not want things finalized at Da Nang. They could have been. New Zealand and others were taken by surprise by the Canadian behavior. Japan and Vietnam appear to be particularly angry with Canada.
You will notice that, suspensions aside, the text of CPTPP is almost identical to TPP. And it is true that most of the suspensions (20 clauses have been suspended until such time as the US rejoins the Agreement) were already pretty much agreed before Da Nang, but New Zealand was instrumental in adding to this list. A review after three years can be seen as a policy win for the new Government. Australia has agreed to a bilateral exemption from Investor State Dispute Settlement and several other countries may well come to the party on similar bilateral exemptions before CPTPP is finally signed.
As this is a new Agreement the proposed approach of reclassifying existing houses as “sensitive” under our Overseas Investment regulations will not require any negotiation of our investment commitment in CPTPP – so long as this change is made before CPTPP is signed.
Although this Agreement will have overwhelming support in Parliament it is still sensitive within the Labour Party. They should take some comfort from the following points:
- This is a different agreement to TPP12 – no United States
- Treaty of Waitangi provisions are respected and protected
- ISDS provisions were narrowed, and the side letter with Australia deals with 80% of investment from the CPTPP countries
- Domestically controversial elements such as the status of Pharmac, biologics and copyright have been suspended
- CPTPP introduces labour and environment gold standards that are enforceable
- Market Access to key export markets is greatly improved – notably Japan. The Government calculates that export industries in NZ currently support 620,000 jobs
Something has gone wrong. A EU Minister was due in Australia and New Zealand in November to announce the commencement of the bilateral FTA negotiations with the EU. This has not happened. Even though the European Parliament supports these negotiations the EU has yet to agree a negotiating mandate for these negotiations. Our sources suggest that this agreement to a mandate may now not happen until early 2018.