The Trans-Pacific Partnership ( TPP) is set to change the way New Zealand deals not just with the other 11 TPP member nations, but with other major trading partners such as China.
A brief issued by the New Zealand government Tuesday set out some of the claimed benefits and disadvantages of the TPP agreement, comparing many of them to the New Zealand-China Free Trade Agreement (FTA).
Some provisions in the TPP investment chapter would also flow through to New Zealand's bilateral FTAs with China, China's Taiwan and the Republic of Korea, in which there are "most favored nation " provisions.
These included the screening of overseas investment into New Zealand. The current threshold for overseas investment is 100 million NZ dollars (64.95 million U.S. dollars) before a proposal must be reviewed by the Overseas Investment Office and referred to the government for final approval.
Under the TPP, the threshold will be doubled to 200 million NZ dollars (129.84 U.S. dollars). The non-discrimination provisions would prevent the government banning TPP nationals from buying property in New Zealand, although it would retain the ability to impose some types of new, discriminatory taxes on property. The brief also referred to the New Zealand-China FTA to play down fears over the controversial investor state dispute settlement (ISDS) provisions that allow foreign companies to sue over regulatory changes that might affect their investments and profits.
"New Zealand has had ISDS provisions in international agreements, including the China FTA, going back 27 years and no case has ever been taken against it," it said. It said tariff savings on current export volumes to TPP states would amount to 259 million NZ dollars (168.53 million U.S. dollars) a year.
This compared with annual tariff savings from the New Zealand- China FTA estimated at 115 million NZ dollars (74.69 million U.S. dollars) at the time of signing in 2008. "Since then, however, New Zealand's annual exports to China have quadrupled to 10 billion NZ dollars (6.49 billion U.S. dollars) and China is one of New Zealand's most important trading partners," said the brief.
While the TPP provided the elimination of tariffs on exports including fruit and vegetables, sheep meat, forestry products, seafood, wine and industrial products, the exceptions for New Zealand were significant. Dairy New Zealand's biggest single export commodity would only have "preferential access to new quotas" into the United States, Japan, Canada and Mexico as well as tariff elimination on "a number of products."
Tariffs on beef exports to Japan would fall from 38.5 percent to 9 percent, although tariffs on beef exports to other TPP countries including the United States, New Zealand's largest beef market would be eliminated.
New Zealand, in turn, would have to remove 20 million NZ dollars (12.99 million U.S. dollars) a year of tariffs on imports from TPP countries. The full benefit of the TPP was estimated to be at least 2.7 billion NZ dollars (1.76 billion U.S. dollars) a year extra in New Zealand's GDP by 2030.
The only significant cost came from extending New Zealand's copyright period from 50 to 70 years, which was estimated at around 55 million NZ dollars (35.72 million U.S. dollars) a year " over the very long term."
Currently, the other 11 countries in the TPP accounted for more than 40 percent of New Zealand's overall exports: 20 billion NZ dollars (12.99 billion U.S. dollars) of goods exports and 8 billion NZ dollars (5.19 billion U.S. dollars) of services exports.
The TPP was also New Zealand's first FTA relationship with the United States, Japan, Canada, Mexico and Peru. More than 12 billion NZ dollars (7.79 billion U.S. dollars) of goods and services were currently exported to these five countries.
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