Big Year Ahead for Trade

by | Jan 16, 2014 | Uncategorized


News broke recently that China may have become the world’s largest trading nation, but it should be remembered that a significant percentage of Chinese exports are generated by foreign companies established in China. Chinese and Asian export growth is itself dependent on recovering economies in North America and Europe. This highlights the increasingly integrated and inter-dependent nature of the global economy. Trade negotiations seek to build economic growth and employment by promoting integration and making it easier, faster and cheaper to do business across borders.

As China continues its seemingly inexorable rise, the twelve parties in the Trans Pacific Partnership (TPP) continue work to find a way to bring the negotiation to a successful conclusion. At this stage the key issue is whether the United States is serious about making changes to its import regimes for agricultural products, textiles and other products. Without this it’s hard to see the other parties addressing issues the US considers important. A positive step has been the introduction of a bill in the Congress which would give the Administration the authority to conclude deals like TPP without them being unraveled in the ratification process. It will be a major test of President Obama’s political skill to get this bill through a fractious Congress.

Recent leaks about the TPP environment chapter show how difficult it is to negotiate environment issues in an FTA. TPP isn’t about lowering environmental standards. The place for environmental negotiations is in multilateral environmental agreements but FTAs like TPP need to ensure they do not undermine agreements made elsewhere. Hence the need for an environment chapter in TPP that encourages parties to observe their own laws and encourages them to expand their environmental protections.

While TPP is close to conclusion success is not a foregone conclusion. New Zealand needs to work hard in 2014 on other key negotiations including the Regional Comprehensive Economic Partnership (RCEP) and bilateral deals with Korea, India and the Customs Union of Russia, Belarus and Kazakhstan.


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