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The Trans-Pacific Partnership (TPP) aims to create a regional free trade agreement involving nine Asia Pacific countries: Australia, Brunei Darussalam, Chile, Malaysia, Peru, Singapore, the United States, Viet Nam and New Zealand. The agreement would deepen economic ties between its diverse members by opening up trade in goods and services, boosting investment flows, and promoting closer links across a range of economic policy and regulatory issues.
As well as tangible benefits for our exporters and consumers, TPP would safeguard New Zealand’s longer term trading interests. TPP is potentially a platform for wider, regional economic integration. The negotiation gives New Zealand an opportunity to shape future trade liberalisation in the Asia-Pacific region in line with the high quality benchmarks set by the original Trans-Pacific Strategic Economic Partnership (P4) Agreement.
One of the objectives of the P4 Agreement between Brunei, Chile, Singapore, and New Zealand was to create a model that could potentially attract new Asia Pacific members.
When the P4 negotiations finished in 2005, its parties agreed to begin negotiating on financial services and investment (which were not covered by the original agreement) within two years of its entry into force. When these negotiations began in March 2008 the US joined the group pending a decision on whether to participate in a comprehensive negotiation for an expanded TPP agreement. In September 2008, the US announced it would participate fully in the negotiations, and Australia, Peru, and Viet Nam followed suit.
A change of administration in the US delayed the first round of TPP negotiations, but President Obama reaffirmed in November 2009 that the US would engage with TPP countries "with the goal of shaping a regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement". Negotiations for an expanded agreement began in March 2010 [external link]. During the third round in Brunei in October 2010, Malaysia joined the negotiations. New Zealand hosted the fourth round of negotiations in Auckland in December 2010.
In the margins of the APEC Leaders’ Meeting in November 2011, leaders from the nine TPP economies endorsed a report from their Trade Ministers defining the broad outlines of a TPP agreement. For regular updates on progress in the negotiations, visit TPP Talk.
Meanwhile, Japan, Canada, and Mexico have all expressed an interest in joining the TPP negotiations. Before taking a decision on bringing an additional country into the TPP negotiation, there will be a preparatory process that involves discussions with each of the current members to establish whether a prospective member is able to negotiate rules and market access commitments consistent with the quality of the agreement currently being negotiated. No specific timeframe has been set for decisions under this process but for a new member to join the negotiations, all current TPP members must reach consensus.
The Asia-Pacific region is a key driver of global economic growth. Roughly half of international trade, and more than 70 per cent of New Zealand’s trade and investment, flows through the region. New Zealand’s future depends on its economic relationships with Asia Pacific countries.
TPP member countries are home to more than 500 million people; one fifth of APEC’s population. The nine participating economies account for US$17.8 trillion, or just over half, of APEC’s Gross Domestic Product (GDP). The TPP economies are responsible for 36 per cent of total goods trade and 47 per cent of total services trade in APEC. These economies also generated 62 per cent of outward Foreign Direct Investment (FDI) and 58 per cent of inward FDI in the APEC region.
For New Zealand, the grouping is even more important. TPP includes four of the 10 most-important trading economies to New Zealand (1st – Australia, 3rd – US, 7th – Singapore and 9th – Malaysia). Thirty-eight per cent of New Zealand’s trade is with TPP countries; the highest proportion of any of the participants. Brunei is a distant second with 29 per cent of its trade with TPP countries.
The US is the world’s largest economy, with over 300 million consumers. An FTA with the US has been one of New Zealand’s top trade policy goals for many years. New Zealand goods exports to the US are concentrated in the agriculture and related food sectors. New Zealand would benefit from greater access to the US government procurement market and enhanced access for our services exporters. Other potential benefits include an increase in US tourism and investment in New Zealand.
Peru is the only other negotiating partner with which New Zealand does not already have an FTA. Horticultural and agricultural innovation are potential areas for collaboration. A TPP would also promote increased services trade (in education and tourism), along with growth in tourism-related investment.
The recent ASEAN-Australia-New Zealand FTA (AANZFTA) means New Zealand already has an FTA with Viet Nam. The two countries’ complementary trade relationship would be further strengthened by TPP. New Zealand businesses would enjoy an increased commercial profile for in Viet Nam (and each of the other member countries).
New Zealand and Australia have a strong bilateral relationship. The two countries worked together negotiating AANZFTA, and TPP offers another opportunity to cooperate in a regional context.
TPP’s greatest potential, however, is as a pathfinder for wider regional economic integration. A greater degree of coherence in the regulations that govern global supply chains would streamline international trade, with benefits for businesses and consumers. Over time it would remove unnecessary duplication, reduce costs, and unleash greater opportunities for small to medium sized businesses in particular. While the negotiation involves nine countries at the moment, the hope is that it will eventually expand to include other Asia Pacific countries.
New Zealand has already concluded FTAs with some of the TPP participants:
Consultation with business, interest groups and the wider community is continuing during the negotiating process, with information shared about progress and stakeholder input sought on negotiating goals and approaches. We want to hear from interested businesses or individuals about barriers they face in TPP markets.
Fifteen public submissions were received in response to the December 2011 call for stakeholder comment on the expressions of interest from Canada, Japan and Mexico to join the TPP negotiations to better understand the views and interests of New Zealanders with regards to these three economies. These submissions can be found here:
Similarly, when it was announced in September 2008 that the US would participate in negotiations to expand the P4, public submissions were sought the following month. Sixty-five submissions were received, covering a wide range of issues. Extracts can be found here:
In addition, a structured stakeholder programme has been run in tandem with each TPP negotiating round. For example, the 112 registered stakeholder participants at the Auckland round had access to daily briefings from the New Zealand chief negotiator as well as presentations covering specific areas of interest.
If you would like further information about the TPP negotiations, please contact Brody Sinclair by:
Post:
Coordinator, Trans-Pacific Partnership
Free Trade Agreement Unit
Ministry of Foreign Affairs and Trade
Private Bag 18901
Wellington
Phone: +64 4 439 8345
Email: tpp@mfat.govt.nz
If you would like to find out more about doing business in the markets covered by this negotiation, please visit the NZTE website.
