30 March 2014

Trans-Pacific Partnership Agreement (TPPA)

The Trans-Pacific Partnership Agreement is a free trade agreement currently being negotiated by nine countries:

  • The United States,
  • Australia,
  • Brunei Darussalam,
  • Chile,
  • Malaysia,
  • New Zealand,
  • Peru,
  • Singapore,
  • Vietnam.

The Prime Minister says the government wants a TPPA that would eliminate all tariffs.
"TPP participants already take 38 per cent of our exports," he said.
"A comprehensive, 21st century agreement would provide many opportunities for New Zealand businesses.
"Forecasts suggest the gains for New Zealand could be as high as 1.4 per cent of GDP, roughly $US2.9 billion ($NZ3.5b)."

However, problems with the TPPA Negotiation Process:
•The TPPA needs transparency. The TPPA countries have not released any texts or negotiating positions to the public. The only information the public has about the contents of the TPP intellectual property chapter is from a leaked draft US proposal from February 2011.
•The TPPA needs public input. The TPPA intellectual property chapter isn’t limited to provisions on trade and tariffs—it would implement substantive provisions of copyright law, which affects users, technology companies, and creators. Despite this, the US hasn’t meaningfully tried to inform or engage the public. Only large companies—not public interest advocates—are allowed to view and influence the US’s negotiating positions.
Key interests and benefits:

•The TPP has the potential to form a building block for Asia-Pacific regional economic integration. It is in Australia’s interests to be involved in order to shape the direction of the initiative.
•Regional rules of origin will provide new opportunities for Australian exporters to tap into global supply chains.
•The TPP could provide additional market access for goods and services into the markets of existing FTA and future TPP partners.
•Inclusion of Investment and Financial Services chapters in the TPP could provide improved opportunities for Australian financial services providers by mitigating barriers, such as foreign restrictions on capital and investment flows.
•The TPP provides a framework for engaging with countries with which we do not have an existing bilateral trade arrangement. For example, there is potential for better access for dairy products and mining services to Peru through the TPP.

"A free-trade area is a trade bloc whose member countries have signed a free-trade agreement (FTA), which eliminates tariffs, import quotas, and preferences on most (if not all) goods and services traded between them. If people are also free to move between the countries, in addition to FTA, it would also be considered an open border. It can be considered the second stage of economic integration. Countries choose this kind of economic integration if their economic structures are complementary."

The Trans Pacific Partnership could open up significant trade opportunities for NZ.  A Free Trade Agreement with the other 8 countries would make NZ products more attractive to foreign buyers by reducing tariffs on agricultural products.  Increased sales will, in turn result in a stronger economy.  Maybe there will be some set-backs but on the surface the positives appear to out-weigh the negatives.