TPP – traversing new terrain
I have always admired trade negotiators. They are a special breed, who live and breathe trade nomenclature in a manner that can be truly bewildering for us mere mortals.
They are often arguing into the small hours of the morning about in-market tariff rates on every single line exported to a particular market. It’s complex work and their intellectual capacity and resilience is a credit to them.
We owe them and our Trade Minister Tim Groser a huge debt. Firstly to imagine how we could morph a small free trade partnership between Singapore, Chile and Brunei and New Zealand into a global trade game changer such as the Trans Pacific Partnership, covering 11 countries and connecting us to 812 million consumers accounting for 36% of global GDP. It was great vision and successive Governments and officials should be congratulated.
The benefits are significant. The numbers of circa $259 million a year are extraordinarily conservative, assuming no volume or value growth as the agreement comes into force. If we take our experience with the Chinese free trade agreement, the benefits will be many more fold as relationships and commercial opportunity fuse across a backdrop of certainty around ongoing tariff reduction.
It’s this imagining around what could be achieved that is the real power of the TPP. When I worked for Fonterra I would traipse around Washington with the Fonterra Chairman, seeking to inspire US lawmakers to imagine what opportunities existed in Asia, rather than grimly focusing on holding to their protectionist and defensive tariff and subsidy regime.
TPP has been partially successful in achieving tariff reductions in the US. However, one of the huge additional potentials of this agreement is that as Canada, USA and Japan pivot to the commercial opportunities that exist outside their borders, it will set free their imaginations around the value of free movement of goods and services around the world.
New Zealand is well placed to be successful in this emerging environment. We remain world class in offering what global consumers are willing to pay for. As a country of traders we will relish the opportunity to apply our latent skill and experience to such a dynamic environment. We need to make sure we keep increasing our innovation, understanding evolving and diverse supply chains and keeping close to our end consumers.
Finally, we must always prioritise the value long term trusted relationships. They have assisted in negotiating this agreement, and they are the underpinning reason we will gain from the deal.