TPP mountain worth climbing By Graeme Harrison (KNZM) 1

by | Apr 7, 2014 | Trade Working Blog

Jane Kelsey’s ivory-tower diatribe against the Trans Pacific Partnership (TPP) in the New Zealand Farmers’ Weekly of 24 March needs a real-world response.

New Zealand’s merchandise exports are 70 percent land based. While export dependency ranges from 80 percent for beef to 96 percent of dairy production, never before has the agri-sector had such a diversity of major markets. Yet prior to the conclusion of the Uruguay Round in 1994, agriculture had been set apart from the global trade liberalisation process enjoyed by industrial goods and New Zealand had endured at least two very tough decades as our economic fortunes were impaired by the excesses of the European Common Agricultural Policy and the contradictions of US and Japanese trade policies.

After so much pain the multilateral Uruguay Round concluded 20 years ago has enabled New Zealand to operate in a global market where European Union (EU) export subsidies on dairy and beef exports have been capped, annual quota volumes for sheepmeat to the EU and beef to the US and Canada have been certain, and tariffs have replaced quotas on a number of products. Such changes, for example, enabled New Zealand to rapidly grow chilled lamb exports.

Bilateral agreements have followed, with the New Zealand/China FTA the most transformational. Our terms of trade have dramatically improved, with the price of exports now exceeding imports. At long last we have access to consumers paying more for what we produce best.

Yet the contradictions of US and Japanese agricultural trade policy persist. My Masters degree thesis was on the very subject of US trade policy and its impact on New Zealand agricultural exports. I submitted it 42 years ago and have subsequently spent over 30 years doing business in Japan, establishing the first foreign owned meat import and distribution company of scale in that country. I can categorically say that in all my years of business contact and investments in these two hugely important markets for New Zealand, never have we been closer to getting ground breaking market access changes made possible by the TPP negotiating process.

It is astonishing that Ms Kelsey can claim in the course of one op-ed that (a) no-one (except Ms Kelsey that is) knows what is going on inside TPP; (b) that TPP will lead to increased monopoly rights for pharmaceutical companies, increased costs for libraries and researchers and loss of democratic decision making at the local level. Next she will be blaming TPP for a repeat of the global financial crisis – oh she does, “TPP will prevent the finance sector from much needed reform”. Not that any of this will really matter as (c) TPP hasn’t a snow ball’s chance in hell of succeeding! In one voice Ms Kelsey suggests both that TPP will result in disaster for New Zealand and that it will not be able to be completed. If she is so convinced of the latter one wonders why she is worried about the former?

It’s an old tactic of the anti-globalisation movement to assign to TPP the worst possible scenarios in order to undermine support for the negotiation. Two questions need to be answered. Why would a New Zealand Government want to sign up to an agreement that raised the price of medicine, hampered innovation and allowed multinational corporations to ride roughshod over elected governments? The answer ? they wouldn’t. And they won’t and certainly not for a paltry amount of market access for dairy or beef. And if TPP is so bad, what is the alternative strategy for pursuing an environment which addresses the needs of business and fosters sustainable economic growth?

It’s no secret that TPP is complex and tortuously slow ? far too slow for business people. Trying to encourage American, Japanese and Canadian farmers to give up their absurdly high tariffs, other protections and subsidies is no easy matter. Nor is devising the rules that will take account of the changing business environment in the region. To do so requires a careful working through of the issues and showing willingness to address others’ concerns in areas that are important to them. That’s why things take time. New Zealand has a vital stake in this effort ? we can either help make the future rules for trade and investment or we can have others make them for us.

Trade negotiations are the art of the possible. They constantly teeter on the brink of failure and are subject to domestic political pressures. This is the stage we’re at with TPP at present. But the process is continuing TPP? I have been working with Japan for 40 years and we have never come as close as we are now.

It may well prove impossible for this mountain to be climbed and so TPP will fail. But it will not be for want of trying. New Zealand’s Government and trade negotiators need every ounce of support and encouragement farmers can give them to bring TPP home.

1. Graeme Harrison is Chairman of ANZCO Foods and the New Zealand International Business Forum. This article was published in the NZ Farmers’ Weekly on 7 April 2014.

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