Executive Director Stephen Jacobi offers his annual end of year round up. Amidst some challenging times, he reports some light in the tunnel.
Submission to the Ministry of Foreign Affairs and Trade
CPTPP Accession – April 2021
Introduction and Summary
- This submission is made on behalf of the New Zealand International Business Forum (NZIBF) whose members are listed at Annex A. NZIBF is a forum of senior business leaders working together to promote New Zealand’s engagement in the global economy.
- The NZIBF supports the continuing expansion of the Comprehensive and Progressive Agreement on Trans Pacific Partnership (CPTPP, the “Agreement”) and accession of new members able to meet the Agreement’s high standards and New Zealand’s priorities for comprehensive market access.
- NZIBF provides a voice to articulate the needs and priorities of New Zealand’s international business community, and in particular the importance of open markets, to the New Zealand Government and public stakeholders. The NZIBF Board brings together leaders from amongst New Zealand’s largest internationally oriented companies and peak business organisations representing many exporters of all sizes. (A list of Board Members is in Annex A.)
- Incorporated in May 2007, NZIBF works with companies, business organisations and government agencies to implement projects in the international trade and economic sphere, including working to develop New Zealand’s key international business relationships and conducting activities to promote New Zealand’s competitiveness. NZIBF receives no direct government funding for its operating budget but from time to time receives funding for jointly funded projects. Funding in respect to the policy advice and support which NZIBF provides to the New Zealand members of the APEC Business Advisory Council (ABAC) is provided by both NZIBF and the Ministry of Foreign Affairs and Trade (MFAT).
NZIBF Supports the Expansion of CPTPP
- Having been closely associated with the Agreement’s negotiation, NZIBF welcomed the signing of CPTPP in March 2018. As we noted at that time, the signing of CPTPP marks a bright moment in a world where trade was under threat from inward-looking protectionism. That threat has increased markedly in recent years and most particularly as a result of the pandemic and associated economic crisis. CPTPP continues to stand out from other more recently concluded agreements, including the Regional Comprehensive Economic Partnership (RCEP), for its ambition, high quality and comprehensiveness, It has led as predicted to significant gains in trade for New Zealand particularly in Japan, despite ongoing and disappointing problems with tariff quota administration in Japan as well as Canada and Mexico. NZIBF is however disappointed that several original signatories have failed to rartify the agreement including Brunei, Chile, Malaysia and Peru.
- NZIBF notes the relatively slow expansion of the Agreement to new members and therefore welcomes the adoption of processes for accession which were announced in January 2019. NZIBF agrees that a candidate’s suitability for accession should be determined by an assessment of ability to comply with existing CPTPP rules and the high standards for market access, temporary entry of natural business persons and government procurement. In NZIBF’s view “high standard market access” means comprehensive coverage of all goods and services in market access schedules, a commitment to moving to tariff elimination on all products of export interest to New Zealand, including agricultural products, within a reasonable timeframe and a commitment to processes aimed at eliminating non tariff barriers.
- In assessing candidates’ suitability for admission NZIBF believes the experience of negotiating CPTPP and its predecessor agreement, the Trans Pacific Partnership, are salutary. During this process New Zealand readily welcomed late-comers Japan, Canada and Mexico to the negotiation. While the addition of these partners increased the attractiveness of the negotiation from an economic perspective, and NZIBF was pleased to welcome the conclusion of the Agreement, it is also true that the market access outcome was not as comprehensive as NZIBF might have wished. Ongoing problems with implementation have been experienced as noted above. When it comes to considering suitability for candidates for accession to the completed Agreement, NZIBF believes New Zealand needs to set a higher standard in terms of the expected market access outcome. Existing members should also be encouraged to improve existing market access conditions where these amount to less than complete liberalisation. New Zealand should also continue to look for new FTA partners both inside and outside CPTPP who are willing and able to conclude ambitious, high standard and comprehensive agreements. NZIBF is developing some ideas about future partners which it will would like to discuss with the Ministry in due course.
Comments on specific candidates
- NZIBF welcomes the United Kingdom’s formal request to accede to CPTPP. UK membership would give rise to a significant expansion of the agreement and increase its attractiveness to other economies, thereby spreading the aspiration for a more open, connected and rules-bound global economy. NZIBF believes, subject to further assessment, that the UK is well positioned to meet CPTPP’s rules and standards, but a question mark remains about the extent to which the UK is willing to open its market to New Zealand goods and services. Progress in agreeing an acceptable market access package for agricultural products in the context of the NZ/UK FTA negotiation has been slow. While progress continues to be made in the bilateral negotiation, a significant improvement in market access will need to be achieved before NZIBF could support whole-heartedly UK accession to CPTPP.
People’s Republic of China
- NZIBF welcomes the high level political expressions of support for China’s membership of CPTPP but notes no formal request has yet been made. New Zealand has recently completed the successful upgrade of the bilateral FTA with China which included new processes for addressing NTBs in China. Remaining safeguard tariffs applying to dairy products exports are due to be completely withdrawn from 1 January 2024. China is therefore well placed to meet New Zealand’s expectations of tariff and NTB elimination, but may face greater difficulty in meeting the high standards of other aspects of the Agreement, including in relation to competitive neutrality for state owned enterprises. NZIBF recommends that the New Zealand Government engage bilaterally with the Chinese Government to assist with developing greater understanding of CPTPP commitments and the outlook for further economic reform in China. NZIBF recalls that such engagement was valuable to China at the time of China’s WTO accession.
United States of America
- NZIBF was deeply disappointed when the United States withdrew from CPTPP’s predecessor agreement. The decision was all the more regrettable when the United States negotiated the US Mexico Canada Agreement (USMCA) which clearly drew on some of the former TPP’s provisions. NZIBF would welcome the US intention to accede to CPTPP. NZIBF understands that the US Administration is not yet ready to discuss future FTAs and recommends that the New Zealand Government engage with the US Administration about its future trade policy direction as soon as they are in a position to do so.
- NZIBF considers the Republic of Korea, the Kingdom of Thailand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (also known as Chinese Taipei) could all be good candidates for future CPTPP accession. New Zealand’s current FTAs with these economies provide useful starting points for future accession, although NZIBF would wish to see strengthened market access outcomes with both Korea (where New Zealand suffers tariff disadvantages with Australia) and Thailand.
- NZIBF notes that the accession process does not in any way change existing rules and commitments under CPTPP, including in relation to New Zealand’s Treaty of Waitangi commitments and the right to continue to regulate for legitimate public policy reasons.
- NZIBF would welcome a more pro-active approach on the part of exisiting members to developing future accessions to CPTPP on the basis of a commitment to the Agreement’s high standards, including in relation to market access.
Recommendations to the Ministry
NZIBF recommends that the Ministry:
- note NZIBF’s support for further accessions to CPTPP according to the objectives set by the Government and strong market access outcomes
- work to strengthen further CPTPP’s existing market access provisions and continue to seek new partners able and willing to negotiate ambitious, high quality and comprehensive FTAs
- consult further with the United Kingdom through the accession process about its ability to meet the high standards of CPTPP including in relation to market access
- engage bilaterally with China and other economies expressing interest concerning future intentions concerning CPTPP accession
- engage further with the United States concerning the future direction of US trade policy and future interest in CPTPP accession.
 The views in this submission are those of NZIBF as a whole. Individual members may make their own independent submissions on specific issues.
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