New Zealand inked the controversial 11-country Comprehensive and Progressive Agreement on Trans-Pacific Partnership in Chile on Friday (NZ time), to widespread business acclaim.
The CPTPP will come into force after six countries, including New Zealand, ratified the agreement, which is expected to reignite further public opposition, but National has already signalled its support for ratification.
The deal opens up potential trade gains between the 11-member countries, whose collective economies are worth $US10 trillion ($NZ13.7 T), but not entirely without the controversial catch whereby some corporates could still sue New Zealand.
Under both the National-led and Labour-led governments, the CPTPP negotiations sparked controversy and widespread demonstrations, primarily over the compulsory investor-state dispute settlement (ISDS) trigger within the deal; allowing corporates entities to sue New Zealand.
Minister for Trade and Export Growth David Parker signed the deal in Santiago, also revealing for the first time “side letter” agreements were signed between five nations.
“We haven't been able to get every country on board, but signing letters with this many CPTPP partners is a real achievement. The investor-state dispute settlement mechanism had been one of our main concerns about the agreement,” Parker said.
Following confirmation of the formal signing, a raft of business related entities welcomed the outcome, including BusinessNZ division New Zealand International Business Forum, NZ Winegrowers, The Latin America NZ Business Council, Beef + Lamb NZ and the Meat Industry Association.
Parker said the five side letters and Canada-Chile declarations narrowed the scope for investors to make ISDS claims under CPTPP.
“For example, private companies cannot make ISDS claims under the CPTPP relating to investment contracts they have entered into with governments.”
New Zealand Winegrowers chief executive Philip Gregan was one of the many business organisations lining up to welcome the CPTPP's signing, describing it as crucial to giving New Zealand “a fair crack” at international markets.
He said the CPTPP would be NZ's first trade agreement with Japan, Mexico, Canada and Peru. The deal would immediately make New Zealand wine more competitive in CPTPP markets such as Canada, Japan and Malaysia by reducing import tariffs.
New Zealand's total wine exports are up 5% to $1.67 billion, for the year to last November, of which $515 M exported to CPTPP member countries. The CPTPP deal was signed just hours before US President Donald Trump signed off controversial tariffs on imported steel and aluminium, of respectively 25% and 10%; with immediate exemptions for Canada and Mexico. (Weekend reports indicated Australia may be added to the exemption list).
ExportNZ executive director Catherine Beard said in the context of the US protectionist move and subsequent threats of global trade wars, the CPTPP was an example of countries working together for open and free trade.
“One thing the US actions has done is get the rest the world to focus on the benefits of trade, and the CPTPP is a concrete example of everyone moving forward together,” she said.
David Parker said terms of the side letters varied, with some excluding the use of ISDS between New Zealand and other countries entirely, while others allowed for arbitration to proceed only if the relevant government agrees.
“We have also made it clear that we will oppose including ISDS in any future free trade agreements involving New Zealand,” Parker said.
The NZ International Business Forum executive director Stephen Jacobi said the CPTPP signing was about securing sustainable growth and jobs.
“CPTPP is a good deal for New Zealand, requiring little change to existing policies, but the gains will come only if six economies ratify and the agreement enters into force,” he said.
Jacobi noted that under CPTPP the Treaty of Waitangi was fully protected, along with the Government's continuing right to regulate in the national interest in areas like the environment and public health.
“CPTPP also put in place new environmental and labour provisions, binding all parties,” he said.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.