Trade

Parker praises CPTPP ‘insurance’ as deal set to take effect

The long-running CPTPP trade deal will take effect before the end of the year, with Trade and Export Growth Minister David Parker saying the agreement will provide “great insurance” for New Zealand given wider uncertainties about the state of the international order.

Australia has become the sixth of the 11 CPTPP members to formally confirm it had ratified the agreement, reaching the threshold required to start the 60-day countdown until the deal can take effect.

The deal, which comes into force on December 30, gives New Zealand and the other countries two bites of the tariff cherry, with a second round of tariff cuts coming on April 1 next year for Japan and January 1 for all other countries.

After receiving formal notice of ratification from Australian High Commissioner Ewen McDonald, Parker said confirmation that the CPTPP deal would come into effect was a “momentous day not just for New Zealand ... but for world trade”, with the 11 member countries making up a combined 13 percent of the world’s GDP.

The deal provided “great insurance” for New Zealand if international bodies like the World Trade Organisation continued to degrade and made it impossible for countries to enforce international trade laws.

“The protective benefits of this agreement and the signal that it sends to the rest of the world, that there’s a new rules-based order out there in the world that they can buy into if they want, is an incredibly powerful signal at this particular time.”

Benefits 'reach every part of NZ'

Parker said the benefits of the deal would “reach every part of New Zealand”, highlighting exporters of fish, buttercup squash, and radish and carrot seeds among those who would prosper from lower tariffs and improved market access.

“It has benefits that will spread throughout the economy to every person in New Zealand from the factory floor to the farm owner to all of the other service industries that rely upon our export industries.”

Beef exports into Japan, which had “plummeted” as a result of the high tariffs Kiwi companies faced, would do particularly well from the CPTPP’s entry into force.

About $200 million in tariffs would be saved each year once the deal was in full effect across all 11 countries, but Parker said there would be a wider economic benefit from improved market access, with the benefit to New Zealand’s GDP estimated at $3 billion a year.

“It’s a high-quality agreement and if there were other agreements that were this high quality we’d be in them in a flash.”

Parker once rated the CPTPP as about a seven out of 10 but said he was “up to an eight or a nine now, because the relative degradation of over things means it’s so much more important now than it was”.

“It’s a high-quality agreement and if there were other agreements that were this high quality we’d be in them in a flash.”

Kiwi trade negotiators David Walker and Vangelis Vitalis deserved particular credit for their work on the CPTPP, he said, joining with other countries to improve our negotiating position.

“They thought for a small country like New Zealand we needed better trading relationships with a number of bigger countries and we could never seem to achieve that on a bilateral basis.”

While there has been talk about a number of countries joining the deal, Parker said Colombia was the only country to have formally expressed an interest in joining the CPTPP, although a change of president meant it was unclear whether it still wished to enter the fold.

South Korea, Indonesia, Thailand and the United Kingdom were also weighing up whether to join the deal according to media reports, Parker said.

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