Only dairy exports and beef for Japan will not be tariff free to 11 trade partners.
NZ International Business Forum executive director Stephen Jacobi talks about the TPP agreement on NBR Radio and on demand on MyNBR Radio.
The agreement of the Trans-Pacific Partnership in Atlanta, Georgia, this morning will deliver significant benefits to New Zealand, Trade Minister Tim Groser says.
Agreement among 12 Asia-Pacific nations representing 40% of the world’s economies was reached after a marathon round of talks, including an all-night session.
Mr Groser says once fully implemented the TPP will remove 93% of all tariffs with new free trade agreement partners, including the US, Japan, Mexico and Peru.
However, it will be a couple of years before the agreement comes into full effect.
Mr Groser says while it is not possible to quantify the benefits, some estimates put it at $2.7 billion by 2020.
Beef exports to Japan will still have a tariff while dairy gains preferential new quotas to markets in North and Central America as well as Japan.
“As a result, New Zealand will now have FTAs covering our top five trading partners – Australia, China, the United States, Japan and Korea,” Mr Groser says.
“We’ve seen from previous FTAs, including the China FTA, how positive they have been for New Zealand trade and investment, and therefore in supporting jobs and growth for New Zealanders.”
Mr Groser says the removal of tariffs alone will ultimately represent savings of $259 million a year – around twice the savings initially forecast for the China FTA.
"That proved to be a vast understatement. It will take five years before we know the real benefits [of the TPP].”
Other TPP gains:
TPP also reduces non-tariff barriers to trade and ensures fair access for New Zealand firms doing business in TPP countries.
“TPP sets high standards in many areas,” Mr Groser says. “New Zealand is already an open, transparent and trade-friendly country, which means only a fraction of TPP’s obligations will require changes to our current practices.”
The most significant change is an extension of New Zealand’s copyright period from 50 years to 70 years. The cost of this to consumers and businesses will be small to begin with and increases gradually over a 20-year period, Mr Groser says.
“Other potentially far-reaching or costly proposals raised earlier in the negotiations were not included in the final agreement,” Mr Groser says.
Medicines and investor-state disputes
“Consumers will not pay more for subsidised medicines as a result of TPP and few additional costs are expected for the government in the area of pharmaceuticals. There will also be no change to the Pharmac model.”
He says existing policy settings and practices will be adequate to meet the provisions agreed on for data protection for biologic medicines.
Investor-state dispute settlement provisions have been included in TPP, as they have in previous FTAs.
Intellectual property protection for medicines and sovereignty issues were among the main reasons for widespread opposition to the TPP from anti-trade activists.
“TPP also contains a provision that allows the government to rule out ISDS challenges over tobacco control measures,” Mr Groser says.
The full text of the agreement will be released before it is signed by TPP governments but these arrangements have yet to be finalised.
“TPP, like any free trade agreement, will go through New Zealand’s parliamentary processes,” Mr Groser says. “We expect it to come into force within two years.”
RAW DATA: Ministry of Foreign Affairs and Trade's summary of the Trans-Pacific Partnership (PDF here)
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