We want New Zealanders to have access to accurate information on the CPTPP. See below for answers to the most common questions we hear and how to give your view.
If you want to know more about CPTPP, contact us anytime by email or post:
Phone: 0800 824 605
Post: FTA Implementation Unit
Ministry of Foreign Affairs and Trade
Private Bag 18-901 Wellington
When did New Zealand ratify CPTPP?
New Zealand ratified CPTPP on 25 October 2018, after the legislation required to implement the Agreement received Royal Assent.
When did CPTPP enter into force?
The Agreement entered into force on 30 December 2018 after six signatories ratified - Mexico, Japan, Singapore, New Zealand, Australia and Canada. Since then, Viet Nam has also ratified CPTPP with the Agreement entering into force for them 60 days later on 14 January 2019.
Can the membership of CPTPP change in the future?
Yes. There is an accession process built into CPTPP.
This means that other trading partners will be able to join CPTPP in the future if existing CPTPP countries agree.
CPTPP may, therefore, lead to better access to even more markets for New Zealand exporters further down the track.
Why is the timing of Japan's tariff cuts different?
Japan's tariff cuts will happen on 1 April each year to coincide with its financial year. So in Japan's case, the first tariff cut was on entry into force and a second would occur on 1 April 2019.
Every other Party will make tariff cuts on 1 January each year after entry into force.
Does the Agreement affect the Treaty of Waitangi?
The CPTPP contains a Treaty of Waitangi exception that explicitly allows the government to adopt any policy it considers necessary to fulfil its obligations to Māori.
This unique provision allows the government to implement policies which benefit Māori without being obliged to offer equivalent treatment to persons from other CPTPP countries.
The Treaty of Waitangi exception is just one of a number of exceptions and reservations which ensure that our government retains its right to regulate in the public interest.
Does CPTPP undermine New Zealand’s sovereignty?
No. We can continue to make our own choices that are in our own best interests. New Zealand also retains the right to withdraw from the Agreement in the future should the government wish to.
We have preserved our right to regulate in the public interest, including in relation to our health system, Pharmac, our public education system, our environment, our biosecurity, our national security and our national treasures.
As with other trade agreements, the CPTPP reaffirms the participating countries’ commitment not to deliberately misuse regulations that are not for legitimate public purposes but are unjustified disguised or discriminatory barriers to trade.
We have an interest in ensuring that other countries do not introduce disguised protectionist trade barriers on our exports, where these have no legitimate policy rationale.
Can New Zealand face an ISDS case on tobacco control measures?
No. We have also notified signatories that investor state dispute settlement (ISDS) claims challenging tobacco control measures cannot be made against New Zealand under article 29.5.
This is in keeping with this Government's view on ISDS. It is a further measure, alongside the suspensions and side letters, to reduce the risk of successful ISDS cases being brought against New Zealand under CPTPP.
Australia and Peru have also taken this step, which Parties are able to do at any time.
Will New Zealand be able to impose restrictions on foreigners buying houses?
Yes. The New Zealand Government has implemented new legislation that restricts overseas buyers of New Zealand homes.
Will New Zealand still be able to screen overseas investment?
Yes. The CPTPP preserves our right to screen overseas investment in the three existing areas of significant business assets, sensitive land (including farmland), and fishing quota.
New Zealand also maintains the right to change screening criteria in relation to those areas.
Is Investor-State Dispute Settlement (ISDS) in the Agreement?
Yes, but there is reduced scope for investors to use ISDS to take a case against the New Zealand Government.
Under CPTPP, private companies who enter into an investment contract with the government will not be able to use ISDS if there is a dispute about that contract. New Zealand’s investment screening regime also remains excluded from ISDS.
Reciprocal side letters with Australia, Brunei Darussalam, Malaysia, Peru and Viet Nam mean that compulsory ISDS will not apply between New Zealand and these countries.
This means that over 80% of foreign direct investment into NZ from CPTPP parties by value will not be subject to ISDS – in other words, investors that provide over 80% of investment from the CPTPP region into New Zealand will not be able to use the CPTPP ISDS mechanism to sue the New Zealand Government.
New Zealand will not allow investor state dispute settlement cases on tobacco control measures. This is a further measure, alongside the suspensions and side letters, to reduce the risk of ISDS cases being brought against New Zealand under CPTPP.
Why was ISDS not removed from CPTPP altogether?
While some countries share New Zealand’s concerns, others wanted to retain ISDS as they consider it a commercial priority. In these circumstances, and given it was part of the TPP, it was not possible to remove ISDS altogether.
Will CPTPP expose New Zealand to ISDS for the first time?
No. New Zealand currently has ISDS with around 14 economies. This was negotiated as part of Bilateral Investment Treaties with China (1989) and Hong Kong (1995) and more recently as part of FTAs with Singapore (2001), Thailand (2005), China (2008), ASEAN countries (2009), Malaysia (2010), Chinese Taipei (2013) and Korea (2015). To date, no ISDS claims have been filed against the New Zealand Government under any of these agreements.
Given that investors can sue governments in ISDS cases, won't the ISDS provisions in CPTPP be risky for New Zealand?
As part of CPTPP, we negotiated successfully to secure strong safeguards around what can and can't be subject to ISDS claims. These safeguards will ensure the government is not hindered in its ability to regulate in the public interest. The new agreement narrows the scope for investors to successfully sue the New Zealand Government, compared with the Trans Pacific Partnership.
Does ISDS give foreign companies an advantage over New Zealand companies?
In New Zealand, local companies cannot bring an ISDS claim against the New Zealand Government, although New Zealand investors will also have the right to take ISDS cases against CPTPP countries. ISDS claims can only relate to disputes about the investment provisions of CPTPP.
Do corporations get to dictate how ISDS panels are formed?
No. The CPTPP text has procedures that would govern the formation of ISDS panels.
The panels would have three arbitrators: one appointed by the government, one appointed by the claimant and a presiding arbitrator appointed by the government and the claimant together.
How does the CPTPP affect labour standards?
CPTPP constitutes the strongest outcome on trade and labour contained in any of New Zealand’s free trade agreements to date.
The commitments made in the labour chapter are intended to protect and enforce labour rights, improve working conditions and living standards, strengthen cooperation on labour issues and enhance labour capacity and capability of CPTPP parties.
For the first time, these obligations can be enforced through dispute settlement.
The provisions help level the playing field for New Zealand companies and employees by setting common labour obligations for all CPTPP parties.
This helps ensure that CPTPP parties do not have a competitive advantage in trade based on poorly-enforced or inadequate labour laws. More information on the specific obligations can be found on our webpage on labour and environment in CPTPP.
What are the main environmental outcomes of the CPTPP?
CPTPP constitutes the strongest outcome on trade and environment in any of New Zealand’s trade agreements to date.
The commitments in the environment chapter will help protect the environment by requiring parties to follow through with commitments made in international environmental agreements and by making these subject to dispute settlement.
The agreement also introduces new disciplines on fisheries subsidies that contribute to over-fishing, and obligations requiring the parties to take action to address the illegal trade of wild flora and fauna. More information on the specific obligations can be found on our on our webpage on labour and environment in CPTPP.
Can New Zealand continue to protect its environment?
Yes. CPTPP includes a number of exceptions and reservations which ensure that the government retains the right to regulate in the public interest, including in relation to the environment.
The Government would not accept an outcome that prevents it from regulating for legitimate public policy purposes. The CPTPP will also not require New Zealand to change its laws or regulations on genetically modified organisms (GMOs).
Will CPTPP lead to more agricultural production than the New Zealand environment can sustain?
CPTPP will remove tariffs and other barriers to New Zealand’s exports while preserving the government's right to regulate to protect our environment.
The Resource Management Act (RMA) is the primary piece of legislation which manages the use of natural resources including the discharge of contaminants into New Zealand's air, land or water.
It requires resource users, including farm owners, to avoid, remedy or mitigate any adverse effects on the environment. Penalties for breaching the RMA include imprisonment for up to two years or a fine of up to NZ$300,000.
Will CPTPP have an impact on the government’s right to regulate in the area of public health?
No. CPTPP includes a number of exceptions and reservations which ensure that the government retains the right to regulate in the public interest, including in relation to public health.
The Government would not accept an outcome that prevents it from regulating for legitimate public policy purposes.
What does CPTPP mean for Pharmac?
Pharmac’s purchasing model remains protected, including its ability to negotiate the best price for medicines for New Zealanders.
In addition, a provision that would have required Pharmac to make administrative changes that would have primarily benefited the pharmaceutical industry has been suspended.
Implementing these changes was expected to cost New Zealand an initial $4.5 million and $2.2 million per year thereafter.
What other pharmaceutical-related provisions have been suspended?
The TPP would have locked in some of our existing laws and practices that protect new medicines from competition with generic copies.
Under CPTPP, there is now no requirement for New Zealand to change or retain its existing data or market protection settings for new medicines, including biologics (medicines derived from a living system such as plant or animal cells).
CPTPP countries also agreed to suspend the obligations to extend the term of a patent in cases where there had been unreasonable delays in:
i) granting that patent, or
ii) if the patent was for a medicine, obtaining approval for the medicine’s entry into the New Zealand market.
Which other intellectual property provisions have been suspended?
A number of the intellectual property provisions included in the TPP will be suspended from the CPTPP, saving us from having to make changes likely to impose some costs on New Zealand.
For example, we no longer need to extend our copyright term to 70 years (from 50 years). This removes one of the most significant quantified costs of the TPP for New Zealand.
A total of 11 intellectual property provisions have been suspended from the CPTPP.
What intellectual property changes has New Zealand made to comply with CPTPP?
Minor changes to the Copyright Act 1994, Patents Act 2013 and Trade Marks Act 2002 came into effect on 30 December 2018. These included:
- new moral and property rights for performers, especially in regards to sound recordings made from their performances;
- a 12-month grace period for patent applications;
- introductions of additional damages as a remedy for trade mark infringements; and
- ex-officio powers for New Zealand Customs Service at the border to detain suspected shipments of pirated copyright works and trade mark infringing goods without a notice from rights holders.
The suspension of 22 items from the original TPP text - many of which were in the intellectual property chapter - mean certain issues of concern to New Zealand will no longer apply.
What market access outcomes were achieved?
With the exception of market access to the United States, all the other market access outcomes New Zealand achieved in the TPP have been retained in CPTPP.
This includes providing New Zealand exporters with preferential access for the first time into Japan, the world’s third-largest economy and our fifth-largest export market.
It will also be New Zealand’s first free trade agreement (FTA) relationship with Canada, Mexico, and Peru.
The high-quality outcomes negotiated in CPTPP mean it will also deliver some benefits for our investors and exporters over and above the market access we achieved in our existing FTAs with Brunei, Chile, Malaysia, Singapore, and Viet Nam.
This is critically important as some of our competitors in these markets already enjoy lower tariffs because of their own separate free trade agreements.
What will CPTPP deliver for goods exporters?
We estimate our goods exporters will benefit from NZ$222 million in tariff reductions per year once the CPTPP is fully implemented.
NZ$95 million of those savings will start as soon as the CPTPP enters into force. Our previous experience suggests that these are conservative estimates.
By way of comparison, for instance, the annual tariff reductions from New Zealand’s free trade agreement with China were initially estimated at NZ$115 million a year.
Since then, trade growth has seen New Zealand’s annual exports to China quadruple.
What benefits does CPTPP provide to services exporters?
CPTPP will help to level the playing field for New Zealand services exporters.
Other CPTPP countries have committed to treating New Zealand services suppliers the same as their domestic services suppliers in a number of areas including professional, business, education, environmental, transportation and distribution services.
Will CPTPP constrain the government’s ability to fund public education?
No. CPTPP has no effect on the New Zealand government’s discretion to fund public education in the way we want to.
What benefits does CPTPP provide in terms of government procurement?
CPTPP will open up greater opportunities to bid for foreign government contracts, particularly in Malaysia, Mexico, Peru and Viet Nam.
New Zealand businesses will be able to compete for government procurement contracts in CPTPP countries on an equal footing with domestic suppliers.
CPTPP also provides New Zealand with better access to government contracts in Canada, Japan, and Singapore over and above the access we have already secured to those markets through the World Trade Organisation Agreement on Government Procurement.
Do government procurement commitments in trade agreements limit central and local government’s ability to spend taxpayer and ratepayer money on locally made goods and services?
New Zealand’s government procurement rules, which reflect our international commitments, are designed to ensure the government spends taxpayer money transparently and delivers the best outcomes for New Zealanders. These rules don’t disadvantage or prejudice New Zealand businesses in competing for government contracts.
Through our free trade agreements, the Government has opened up new opportunities for our New Zealand businesses to sell goods and services to foreign governments. Since government markets offshore are sizable as well as diverse, guaranteed access to compete in these markets benefits New Zealand businesses by providing export opportunities across a wide range of goods and services and are an avenue for greater diversification of New Zealand’s economy.
What will CPTPP e-commerce chapter mean for data transfer and localisation rules?
CPTPP's e-commerce chapter contains rules which help ensure businesses are able to transfer data across borders, and are not forced to store their data within any particular jurisdiction.
This will help to remove trade barriers for New Zealand exporters, particularly those operating in more innovative, data-driven sectors.
These rules come with a “public policy safeguard”, which gives governments the discretion to control the movement and storage of data for legitimate public policy objectives.
This is designed to ensure governments are able to respond to the changing digital landscape in areas such as privacy, data protection and cybersecurity.
Will any legislative change be required as a result of these provisions?
No. New Zealand currently maintains several measures that control the movement and storage of data.
We restrict the movement offshore of sensitive personal health data, for example, and require businesses to store tax data in New Zealand or with an offshore provider approved by the New Zealand Tax Commissioner.
CPTPP will not prevent New Zealand from applying these kinds of measures because they fall within a "public policy safeguard" included as part of these provisions.
Will CPTPP mean New Zealand can run state-owned enterprises the way we want?
Yes. The CPTPP aims to ensure a level playing field between state-owned companies engaged in commercial activities and their private competitors.
It will do this by addressing the potentially distortive effect that preferential treatment for SOEs can have on international trade and investment.
However, our own state-owned commercial companies are already set up to operate on a level playing field with privately owned companies and are subject to domestic competition laws.
New Zealand's current approach therefore meets the CPTPP obligations and is in line with international best practice.
Will CPTPP prevent New Zealand from setting up the state-owned enterprises we want?
No. TPP would not prevent the government from establishing new state-owned enterprises.
Only New Zealand’s larger state-owned companies are covered by the obligations in the CPTPP. The CPTPP sets a threshold to exclude entities with an annual revenue from commercial activities below around NZ$400 million (to be adjusted every three years).
The provisions do not apply to entities such as district health boards, crown research institutes, or public health institutions and service providers.
Will CPTPP prevent any government from nationalising private firms in the future?
No. Nothing in the agreement prevents future nationalisation. However, consistent with international law and domestic practice, fair compensation would need to be paid to owners.