CPTPP and Chile
CPTPP strengthens New Zealand’s free trade relationship with Chile, one of our original P4 partners.
New Zealand enjoys comprehensive goods access and preferential services access to the Chilean market already under the earlier Trans-Pacific Strategic Economic Partnership Agreement (P4).
That agreement has also been effective in providing a secure platform for significant New Zealand investment in Chile, primarily in the dairy sector where there is significant potential for improved pastoral production based on New Zealand technology and know-how.
New Zealand’s main exports to Chile are dairy and machinery and specialised equipment, which together account for about three-quarters of our exports. But New Zealand companies targeting Chile are also developing opportunities in sectors such as agribusiness, food processing, renewable energy, mining, health, defence, construction, aviation, forestry, telecommunications and retail (clothing, food and beverage and fuel).
New Zealand and Chile already provide for tariff-free access into each other’s market as a result of P4, which entered into force in 2006.
However, the CPTPP rules of origin accommodate the concept of full cumulation – allowing processing undertaken in CPTPP Parties to be counted towards achieving the origin threshold. This principle means that New Zealand inputs can be counted as part of the qualifying content for goods produced and traded between all CPTPP Parties.
This potentially makes New Zealand materials more attractive for companies in Chile (and elsewhere in CPTPP the region) that plan to utilise CPTPP tariff preferences and we would expect it will improve New Zealand companies’ integration into regional supply chains.
A number of New Zealand firms have a physical presence in the Chilean market: Fonterra, Gallagher Group, BBC Technologies, Glidepath Group, Shoof International Ltd, Trimble Loadrite, New Zealand Agriseeds, ARANZ Geo, Scott Technology, and also Compac Sorting and DC Equipment.
Under CPTPP, New Zealand service suppliers will have improved protection, predictability and transparency when doing business in the Chilean market.
For New Zealand, key outcomes from Chile’s CPTPP commitments include:
- Guaranteed market access commitments for urban planners, engineers (including integrated engineering services), architects (including landscape architectural services), suppliers of ground-handling services, and providers of services incidental to agriculture.
- Commitments that give New Zealand service providers greater certainty around the supply of aircraft repair and maintenance services, airport operation services and selling and marketing of air transport services and computer reservations systems.
- Commitments have been made providing greater certainty for providers of services related to second-language training, corporate, business, industrial training, skill upgrading, private kindergarten, pre-school, elementary or secondary education institutions.
- Locking in current measures around the supply of legal, accounting, auditing, book keeping and taxation services, meaning any further liberalisation of these sectors will flow through to New Zealand.
- Restrictions on legal service providers do not apply to lawyers who provide legal advice on international or the law of another CPTPP party.
New Zealand businesspeople going to work in Chile will benefit from CPTPP in the following ways:
- Business visitors are eligible to stay for up to 90 days with the possibility of having this extended.
- Intra-corporate transferees who are executives, managers and specialists can enter for one year with the possibility of having this extended.
- Professionals and technician professionals from limited ranges of sectors can enter for one year, again with the possibility of having this extended.
CPTPP investment rules provide greater certainty and protection for investors, while preserving the rights of governments to legislate and regulate in the public interest. Strong rules will help ensure that New Zealand and Chilean investors are treated in a fair, equitable and non-discriminatory manner, allowing them to compete on an equal footing with other investors.
While investors in both countries have access to the investor-state dispute settlement mechanism (ISDS), Chile and New Zealand are committed through a joint declaration [PDF, 115 KB] to promote transparent conduct rules on the ethical responsibilities of arbitrators and to take into account the evolving international practice and the evolution of ISDS.