TPP: Facing up to the realities

By Brierley Penn

When a panel of business leaders in the US-NZ trade relationship took the stage during the second day of the Pacific Partnership Forum, the key takeaway from their discussion was unquestionable. The TPP must be completed as soon as possible, lest we witness the painfully slow crawl to progress that marked the Doha Round of WTO discussions.

Asked what it was about the TPP negotiations that kept him awake at night, Calman Cohen of the Emergency Committee for American Trade, responded that the nightmare is always that TPP negotiations never reach a conclusion.

“That is the great fear, that negotiations lose momentum,” he said. “More time does not guarantee a higher standard agreement. The challenge is to get things done, and the leaders need to be committed to that agenda.”

Alongside this focus on urgency, however, also lies a vital need to address the key sensitive issues of each partner nation. If the partnership is going to be a comprehensive agreement, each country needs to be prepared to bring its own sensitive issues to the table.

Each nation will inevitably have issues and areas that are sensitive to their people, but the panel stressed that larger countries being willing to compromise their position would be essential to achieving practical and effective outcomes for the partnership.

We can’t expect Canada to open up its dairy market if the US doesn’t open up its market for sugar. For Vietnam, its apparel market will be the driver for entry. With such a range of different priorities and values positions, the discourse must be open if any progress is to be achieved.

“The sensitive issues must be addressed, but they must be addressed early, not late. The tendency is to leave the sensitive issues until late in the negotiation.”

The possible entry of Japan into the agreement complicates this further, but also adds greater momentum to get the deal signed, raising the stakes even further.

“Japan coming into TPP does become an enabler,” said John Wilson of Fonterra. “The conversation in Japan is not if TPP, it’s when. Their conversation with the NZ dairy sector is how do we make the changes that are required, and give us time to do that.”

The panel suggested that entry into the TPP would be an integral part of Japan’s strategy moving forward, providing an important chance to regain the status and momentum for growth that their country desperately needs.

When it comes to reaching conclusion on these issues, and negotiating an agreement that will inevitably require sacrifice on the part of constituents of member nations, it is vital to build domestic awareness of the upsides of the TPP. Providing information internally about the potential benefits of the deal will allow government and trade officials to achieve real progress.

“It’s incumbent on all of us in a domestic setting to keep up impetus for the process,” Simon Power said. “It’s about telling the story in a way that makes small businesses and the people that are going to benefit really see what the upside is going to be.

This is particularly true in the context of international trade, where many small businesses

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don’t have access to the resources necessary to comprehend the ‘spaghetti bowl’ of trade agreements that they are expected to benefit from. The dirty secret is that most businesses do not avail themselves of the opportunities that free trade agreements provide, given that they can’t tailor their business model to each individual trade agreement. Simplifying the supply chain will also be vital in this regard.

The final concern lies in ensuring that trade agreements remain relevant, in an age where technological advancements rapidly transform the landscape of trade and bilateral relationships. Issues such as cross-border data flow, not contemplated in previous trade agreements, are now matters of significant concern.

“The TPP, to be next, has to be an evergreen accord. Structures need to be put in place in the agreement that allow regulators and other government officials to come together on a regular basis to discuss issues that were not contemplated at the time.”

The presence of Johanna Shelton of Google on the panel highlighted the realities of our digital age. In a time where the Internet plays an integral role in all facets of business, we need to modify trade policy to affect this changing global reality. Information and human capital is rapidly replacing traditional resources in levels of importance and complexity.

Mr Power left us with a reminder of the significant role that trade plays in our domestic economy. “NZ is a trading nation. That is how we derive our income, and that is how we fundamentally derive our wealth.” New Zealand can be a leader in partnership agreements and global trade. “Let’s get the train moving, rather than sitting and waiting for everyone else to get on.”

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