Podcast: Two Cents' Worth

Two Cents’ Worth: The secret battle of the CPTPP

C and P are the two letters which sum up the highs and lows, the years of toil and the last minute sprint of the successful trade negotiation.

They mark the beginning of a new trade agreement for a new government.

The Comprehensive and Progressive agreement for Trans-Pacific Partnership - CPTPP.

The CPTPP was originally the TPSEP or P4. This was a trade deal between Brunei, Chile, New Zealand and Singapore that came into effect in 2005.

In 2008, negotiations began to bring eight other countries, including America, Canada, Japan and Australia, into the deal. This was called the TPP.

Then in 2017, just when it looked like the deal would be ratified, Donald Trump became President of the United States and he pulled his country out of the agreement.

This was a setback, but the remaining 11 countries continued negotiating and late last year the deal was ratified.

But it had a few changes, including two new letters in the acronym - CPTPP.

David Parker became Minister of Trade in 2017 just as it looked like the whole deal was going to fall apart.

"We sent our officials back into the room with a new mandate at the last minute. They literally got shouted at by the other countries in the room," he said.

"They stuck to their guns. We had ambassadors working bilaterally in all the separate countries and it all came together on the day." 

"These things can be surprisingly dramatic."

There were a few changes New Zealand wanted. And one of them was two little letters to be tacked on the front of the name. C and P. 

So why were those two letters so important?

Former chief trade negotiator Charles Finny said negotiations used to be a distinct art which the general public and wider bureaucracy didn't understand.

"In recent years it has become front page news, a hot topic. You sit on the bus and people are talking about CPTPP."

Finny said this means trade negotiators have now got to sell the end result to the public.

Protesters outside the hui. Photo: RNZ / Shannon Haunui-Thompson

Parker agrees the change was partly for branding purposes, but he said it was a new deal compared to the old one.

It was a tough sell. A few of the countries still refuse to call it the CPTPP, instead referring to it as the TPP-11.

"There was considerable resistance in the room, But in the end because it seemed to be the final sticking point, we got that across the line too," he said.

But how?

Parker is clear that credit doesn’t go to one person, especially when deals area played out over such a long time and through successive governments as the CPTPP did.

"We take advice from officials as to which cards are played when. It is a tactical game because every country is trying to look after their own self interest as well as do something that has enough in it for all the other countries in order to conclude a deal because it's really got to work on a reciprocal basis for everyone."

He said Ministers have a bit more latitude to take decisions on the fly, so they're often called in to try to push things forward.

"And in the end, like a lot of negotiations, like if you're purchasing a house, there's sort of a nail-biting finish where people really don't know if it's going to come together or fail."

Finny said there's a lot of hard detailed work on pulling off a trade deal. He believes in being patient and prepared.

"Even the most straightforward negotiations can take multi-years and there will come points when you're up against those really tough issues."

"You have to understand exactly what New Zealand wants to achieve. You have to have a very clear understanding about what is politically saleable to the other side and you have to ideally know as much, if not more, about the other side's politics and position than they do," said Finny.

"Most of what we see is be prepared over a very long period of time in excruciating detail."

And he said you have to be willing to walk away if the deal just isn't good enough.

Parker believes New Zealand is unique in its negotiating skills.

"New Zealand is a slightly unusual country in that we don't really have much to give. We already have very low tariffs. But what we do have is a reputation for honesty and trade and capability when it comes to drafting agreements. We play a role in the room that isn't just about ourselves we are actually trying to broker an agreement between different countries including ourselves to the advantage of everyone," he said.

"Our negotiators who can be quite tough can also speak the honest truth. When we suggest walking away from a deal it's not a threat because we don't have the power to threat, we're such a small economy. We're listened to - some times."

"But that's on the shoulders of generations of trade negotiators and ministers."

You have to have stamina to last in this arena. Finny described negotiations which involved several all night sessions. 

"Basically the Ministers and senior officials were locked in rooms over night, through the next day and into the next night."

He said there was one occasion where he had been working for five or six days without much sleep.

"I turned up at Kuala Lumpur airport and the person looking at my passport said 'Happy Birthday'. I'd forgotten completely. That shows how tired you can be. And there's a team of people in exactly the same state."

He said the life of a trade negotiator is a different world.

"But it's a wonderful feeling when there's a handshake over the table and the deal is done."

We have a few trade negotiations lined up, including with the European Union.

"We're reasonably hopeful it will come off. But we have no certainty in that regard. So these negotiations just have to be taken one step at a time," said Parker

Charles Finny agrees.

"When I hear politicians from the EU saying we should get this wrapped up by the end of the year, I laugh to myself knowing how unlikely that is going to be. One should to be realistic and expect this to take quite some time."

About Two Cents' Worth

Two Cents' Worth has been launched by Newsroom in a co-production with RNZ. It is the country's first weekly business podcast and will be broadcast just after the midday news on Sundays on RNZ National, will be available on both RNZ and Newsroom's websites and can also be found on iTunes and other podcast apps.

Each week we will examine one issue in depth and then convene a panel discussion. Here is this week's version on RNZ as well. 

Two Cents' Worth - the business week and the business outlook. Previous episodes are below.

Episode 1: Sunday November 4: The rise of double cab utes, the TAB's big profit and a threat to small electricity retailers.

Episode 2: Sunday November 11: Why your first job is crucial, why interest rates are so low and why wholesale power prices are so high

Episode 3: Sunday November 18: Inside a zombie town as its mill faces a closure decision, how a New Zealand company won big in Singles day and the future of Vector after the departure of chairman Michael Stiassny.

Episode 4: Sunday November 26: The rule of 8s and Trade Me’s big buyer

Episode 5: Sunday December 2: Why we don't buy cheap petrol

Episode 6: Sunday December 9:  Inside open banking

Episode 7: Sunday December 16: A ride sharing revolution

Episode 8: Friday January 25:  Salmon set to surpass dairy, save the planet

Episode 9: Friday, February 1: The wedding economy: a love story  

Episode 10: Friday, February 8: Our place in the space race

Episode 11: Friday, February 15: How NZ changed world economies  

Episode 12: Friday, February 23: The Park Mews effect 

Episode 13: Friday, March 1: Refashioning NZ's rag trade 

Episode 14: Friday, March 8: Recycling plastic won't save the world 

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