NZ helps push CPTPP across the line
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has a lengthy name, and it was a lengthy process to get the rejigged deal across the line. What role did New Zealand play in convincing others to sign on, and what comes next?
There have been false dawns before, but it seems at last the TPP (now the CPTPP) is going to make it across the finish line.
After a stalled effort at last November’s Apec summit in Vietnam, two days of talks in Tokyo this week have resulted in agreement between the 11 members of the CPTPP, with a signing set for early March.
Going into the talks, that was no guarantee. Canada — a no-show at the TPP leaders’ summit during Apec, angering the other members — was still digging in its heels over some parts of the deal, while there were three other countries with concerns to be addressed.
Yet negotiators managed to reach agreement, news welcomed by exporters and politicians in Aotearoa but regarded with scepticism by some longstanding TPP critics.
While Japan has been credited with encouraging Canada to come back to the table, New Zealand also played an important role in getting the deal across the line: Prime Minister Jacinda Ardern worked the phones to persuade Justin Trudeau of the CPTPP’s merits.
Lending a helping hand
Kiwi officials are also understood to have helped their Canadian counterparts with the drafting of a side letter, addressing their outstanding concerns about its ability to provide government subsidies for French-language programming and other cultural initiatives.
There were fears at the start of the Tokyo talks regarding Canada’s commitment, but as talks progressed it became clearer they were going to sign on — though not without some attempts to wring out further concessions.
Late in the piece, the Canadians approached New Zealand and others with a proposal to change some of the provisions for market access, such as the sensitive dairy sector — a gambit that was flatly rebuffed.
There has been debate between the Government and the National opposition over how much the former has managed to change from the original TPP.
While the suspension of 20 provisions, removing controversial clauses like increased costs for Pharmac and an extension of copyright terms, were not finalised before the Labour-led coalition took power, the process was already well underway.
However, it’s true that the change of government led to a stronger focus on watering down the Investor State Dispute Settlement Scheme — a subject of criticism from all three government parties.
As Ardern has said, the deal is not perfect but it was the best the Government could hope for without withdrawing entirely.
So what happens next?
The official signing has reportedly been set down for March 8 in Chile, allowing the country’s president Michelle Bachelet to put pen to paper before the end of her term.
After that, it’s up to each CPTPP member to ratify the deal through their respective political processes.
The new text includes an amended enactment clause, requiring a simple majority — or six out of 11 countries — to approve the deal before it comes into effect.
While the Nikkei Asian Review has suggested the deal may not come into effect until sometime in 2019, Kiwi politicians and officials are more hopeful it can be done by the end of the year, with the streamlined processes of countries like Vietnam and Brunei providing some assistance.
Closer to home, the Government is in a tricky position.
“David Parker is acting like a minister who has a majority on trade issues, and he doesn’t."
While New Zealand First has backed Labour, the Greens’ opposition means the Government is reliant on National to get the CPTPP legislation through the House.
Although the party’s trade spokesman Todd McClay pledged its support last year ahead of the Apec summit in Vietnam, there appears to be a sense of anger amongst the caucus about Labour’s lack of bipartisanship.
Calling for a “full and detailed briefing in confidence” on the agreement, McClay warned in an interview with Newsroom that National’s support could not be taken for granted.
“David Parker is acting like a minister who has a majority on trade issues, and he doesn’t...
“We haven’t seen the new agreement or the changes they’re touting — the undertakings we gave to support the TPP were as we knew it then.”
Parker has sought to downplay the lack of new information, telling RNZ’s Morning Report the delay was “out of deference” to the other countries as they made translations, while the original text still formed the bulk of the deal.
“Most of the final text is already out there, and in well-published documents that are about as thick as a two- or three-inch book ... so by far and away all of the provisions that people are concerned about are out there.”
Realistically, National will not want to be responsible for pulling New Zealand out of the CPTPP. However, it has already shown it can make life difficult for the Government in the House if it so chooses.
US back into the fold?
After ratification, there is also the possibility of other countries joining the CPTPP — or rejoining, as the case may be.
Intriguingly, US President Donald Trump — who withdrew from the original deal on his first day his office — told CNBC in Davos he was willing to reconsider his position if it were revised to be more favourable to his country.
“I’m only saying this, I would do TPP if we were able to do a substantially better deal. The deal was terrible, the way it was structured was terrible, if we did a substantially better deal I would be open to TPP.”
While the CPTPP has been set up in a way to allow the US to rejoin, that would bring new headaches for New Zealand and the other members.
Some of the most controversial provisions from the TPP, including changes to Pharmac, copyright and patent laws, were only suspended after the US withdrew, and could be lifted upon its return.
American re-entry would lead to new negotiations over the lifting of suspensions, with consensus required across all countries before they were brought back into force — a scenario which could lead to unwanted domestic pressure on the Labour government.
More palatable would be the UK joining the CPTPP, an idea mooted by International Trade Secretary Liam Fox as the country prepares for its post-Brexit future.
While it seems an odd fit, given the UK borders neither the Pacific Ocean nor South China Sea, its status as the world’s fifth-largest economy make it appealing both in its own right and as a means of luring in other countries like China or India.
However, any talks between the CPTPP countries and the UK would be some time away: it cannot even begin negotiations until it leaves the European Union in March next year, while the mooted transition period could also present some obstacles for trade talks.
New Zealand and others will only be looking as far ahead as March 8, hoping there are no late spanners in the works before the signing takes place.