The 11 economies negotiating the Trans Pacific Partnership (TPP) are all doing so because they see benefits in a regional free trade agreement.
Collectively the 11 TPP economies represent about US$21 trillion in GDP. If these economies come together in the kind of relationship envisaged under TPP, New Zealand needs to be part of it. The Asia Pacific region is our home, and our economic future depends on strong trading relationships with Asia-Pacific countries. By negotiating free trade agreements, New Zealand ensures a level playing field for our exporters. If we are not involved in free trade agreements involving key trading partners, our exporters get left behind, and experience real economic disadvantages operating in offshore markets.
At the moment, New Zealand has eight trade agreements in force. Nearly 50 percent of New Zealand exports are now covered by FTAs; from our earliest with Australia through to the most recent FTA with Hong Kong.
TPP includes four of New Zealand’s top 10 trading partners (1st – Australia, 3rd – US, 6th – Singapore, and 9th – Malaysia). Collectively, the TPP economies take around 38 percent of all exports by value from New Zealand (and we source 37.8 percent of our imports from them).
A recently released study estimates that gains for New Zealand from a free trade agreement with the current 11 TPP economies could be as high as 1.4 percent of our gross domestic product, or US$2.9 billion.
Beyond the economic modelling, we know that free trade agreements help New Zealand exporters, because they have told us so. In 2009, MFAT and NZTE surveyed 854 New Zealand exporters to assess the impact of FTAs on their companies. More than 75 percent of respondents saw increases in profitability from the removal of trade barriers.
Specific benefits for New Zealand businesses from TPP are likely to include:
•Tariff elimination and reduced compliance costs for goods exporters;
- More opportunities to access government procurement contracts;
- Reduced barriers to services trade and investment.
Peter Petri, Michael Plummer and Fan Zhai, Asia-Pacific Trade,