Our international trade consultant, Charles Finny was in Washington recently representing ExportNZ at the Global Services Summit, and he had the following to report back.
Attendance at the Global Services Summit and associated calls on trade policy experts in Washington DC were concerning when it comes to progressing a positive trade agenda.
The WTO and the participants in the plurilateral WTO Trade in Services Agreement negotiations are claiming that Agreement is possible by the end of the year.
The Agreement had some controversy in New Zealand recently thanks to Jane Kelsey and newly elected Green Party MP Barry Coates making claims that it was potentially even more threatening than TPP.
The major concern identified by Kelsey and co related to the coverage of “new services” (services that we don’t have at present but that might be invented in the future) and whether a participating government would have to regulate these new services for health and safety, national security etc if this agreement is finalised.
There is a major disagreement between the United States and the EU over new services. The EU doesn’t want them automatically covered, the US does. The major point of difference seems to be similar to the Jane Kelsey concern over the right to regulate these new services.
It was therefore very useful to hear from USTR Ambassador Froman that the US position is identical to that I believe New Zealand supports. New services would be covered automatically by the agreement but this would not restrict the right to regulate for human health and safety etc.
Unfortunately this is not the only outstanding issue in this negotiation. And even though there are several more rounds of negotiation scheduled before the end of the year I did not meet one person (as the last round of TiSA negotiations had just been concluded in Washington DC pretty much every delegation was in the room) who thought that there was any chance of TiSA being concluded by the end of the year.
There is no doubt that the Obama Administration is proceeding with plans to seek approval for TPP post the Presidential election but prior to the inauguration of the next President “the lame duck period”. This is just too “lame duck” for the President. It is “lame duck” for a number of Senators and House of Representatives members who are either retiring or who may have lost their seats in the 8 November election. Legislation is being drafted and intensive lobbying is underway.
I knew all this before leaving New Zealand but what surprised me is the importance being ascribed to “enforcement” of TPP commitments and also the “certification” provisions of the Agreement and of the US Government’s trade negotiating authority. Under these the US is required to certify that TPP members are in full conformity with their commitments under the Agreement, otherwise the US can deny the benefits of the Agreement to a participant. It seems that the US believes that at least one participant is not implementing what has been agreed.
To make matters worse, there are some senior Congressional staffers suggesting that some provisions of the Agreement need to be renegotiated. This clearly can’t happen in the time available. The provisions most talked about for renegotiation are the Tobacco exclusion and those relating to so-called “biologics”.
If the atmospherics around TPP were gloomy, the mood of those from the EU were positively dark given the difficulties being faced in getting the proposed FTA with Canada ready for signature. Canada is heavily protectionist and inefficient in the agriculture space yet concerns about increased competition from Canada in agriculture was one of the principal reasons for the rejection of the proposed deal by the Wallonia Legislature. New Zealand is seeking to begin negotiations with the EU and is far more of a threat to Wallonia (or other EU) agriculture than Canada. This does not bode well. The Canadians seem to be in a state of total disbelief.
UK officials and business representatives remain totally uncertain about what the Brexit outcome will finally look like vis a vis the rest of the EU. However, there is confidence that a number of countries are lining up to negotiate FTAs with a post-EU Britain. New Zealand (along with Australia) was mentioned consistently as one of the front runners for a negotiation. There was no suggestion that Australia might have stollen the march on New Zealand. Clearly no formal negotiations can begin while the UK is still am member of the EU.
Confidence remains high that negotiations will resume soon on settling outstanding differences between New Zealand and the Gulf Cooperation Council. Minister McClay’s visit to the region went well from all accounts.
Trade Strategy Refresh
A series of meetings have been held around New Zealand and with business groups on a proposed refresh to New Zealand’s trade strategy. There was some concern initially that the proposal might rule out future FTA negotiations. But with the UK a real prospect and recent talk about Sri Lanka this now doesn’t seem to be the case.
Many groups are welcoming the prospect of a more transparent negotiating process in the future and more focus on non-tariff barriers and on services and investment.
The Prime Minister’s travel to India with a business delegation is a great opportunity to press New Zealand’s case for a higher quality outcome to the FTA negotiation than is currently in prospect. Progress in this negotiation has been painfully slow.
China FTA Refresh
While the issue continues to be raised at senior levels there seems little interest from the Chinese side in revisiting the terms of the 2008 FTA with New Zealand. No real negotiation seems in prospect.