(Read part one here).
Now the text has been released we can start to analyse those gains in greater detail. TPP delivers freer trade in major markets for beef, horticulture, wine, seafood, forest products and manufactured goods. The outcome is noticeably less convincing in relation to dairy, where TPP fails to live up to the vision of a “high quality, ambitious and comprehensive” agreement. That is deeply disappointing, but even in dairy there are some useful, albeit limited gains in Japan, the United States and Canada.
Our services exports like education, professional services and consulting also stand to benefit from improved market access and investors will receive enhanced protection for their offshore investments. Non-tariff barriers in a range of industries can be addressed over time by new disciplines and by specific undertakings to align regulations in sectors including medical devices.
Beyond the immediate gains, New Zealand stands to gain from association with a new body of rules for trade and investment, which we have had a hand in making. Some of these new rules are more relevant for others – like TPP’s binding labour and environment disciplines, the first time ever in any FTA. These will require significant changes to policy in countries like Viet Nam and Malaysia.
New Zealand will be subject to new disciplines in relation to investment, intellectual property and state owned enterprises but the impact of changes required to existing policy – beyond an extension to the copyright term – will be marginal at most. TPP’s investment provisions uphold the continuing right of the Government to regulate in areas like public health (including tobacco) and the environment. Te Tiriti o Waitangi is fully protected. A high threshold is established for investor state dispute settlement. No fundamental changes appear to be required to Pharmac or to patents and data protection terms for medicines, to patent law more generally, to parallel importing or to regulations around the use of the Internet.
Some argue that matters such as intellectual property or even investment have no place in a trade agreement. The fact is that the way business is now done around the world is changing rapidly as businesses operate in multiple jurisdictions through complex value chains and networks, requiring a greater degree of alignment and coherence in regulatory settings between economies.
Think of Pumpkin Patch designing clothes which are made in China for sale in the U.S, or Fisher & Paykel designing whiteware in Auckland for manufacture in Mexico, to be sold to U.S consumers. New Zealand cannot stand apart from these developments.
TPP can only enter into force once signed (the earliest this can be is February 2016) and ratified. Ratification processes differ across economies. The text will be pored over by stakeholders, lawyers, business people and academics. We need time for a detailed assessment but in the big picture there is plenty of benefit for New Zealand.
Stephen Jacobi is Executive Director of the NZ International Business Forum www.tradeworks.org.nz.