Tag Archives: trade agreements

Benefits of CPTPP to New Zealand.

On 23 January 2018, in Tokyo, the negotiations for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) were concluded. Its inception came from the TPP Agreement but that could not come into force until it was ratified by four other signatories, including the United States. After the election of Donald Trump the US made it clear that it did not intend to become a party to the Agreement. However the remaining eleven countries continued negotiations.

The eleven countries in the CPTPP are: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The economies  account for 13.5 percent of world GDP – worth a total of US$10 trillion. These are economically significant for New Zealand. The 10 economies:

• Are the destination for 31 percent of New Zealand’s goods exports (NZ$15.2 billion) and 31 percent of New Zealand’s services exports (NZ$6.9 billion) annually (year to the end of June 2017).

• Include four of New Zealand’s top 10 trading partners (Australia, Japan, Singapore, and Malaysia).

• Include four countries with which New Zealand has never had a free trade agreement (Japan, Canada, Mexico and Peru). We export over NZ$5.5 billion of goods and services to these four countries.

• Are the source of 65 percent of total foreign direct investment in New Zealand (as of March 2017).

The CPTPP will provide significant benefits for New Zealand goods exporters across a range of sectors. Tariffs will be eliminated on all New Zealand’s exports to CPTPP economies, with the exception of beef into Japan; and a number of dairy products into Japan, Canada, and Mexico, where access will still be improved through partial tariff reductions and duty-free quotas.

Source: New Zealand Foreign Affairs and Trade.

Global Trade graphic

Below is a very informative graphic from The Economist outlining global trade. Interesting to note the dependence on trade of Singapore and Hong Kong.

They make the point that the number of regional trade agreements has risen from 70 in 1990 to just under 300 today. The Trans-Pacific Partnership (TPP) would link 11 economies of the Pacific rim—including Japan and Singapore—with America. These 12 countries together account for 40% of world GDP and one-third of trade. Meanwhile, the Transatlantic Trade and Investment Partnership (TTIP) is an ambitious planned trade deal between America and the EU.

Trade Flows 2014

Pacific Free Trade Agreements – TTP, RCEP, FTAAP – what next?

NZ Trade Agreements - PacificNew Zealand are involved in the formation of 3 trade agreements with unwieldy acronyms – see graphic from The Economist.

TPP – Trans-Pacific Partnership
This is an evolving agreement between twelve member economies, aimed at bringing down barriers to trade and investment. TPP will put in place a new set of rules making the way we trade with member economies simpler and fairer and making it easier and cheaper to do business with each other.

RCEP – Regional Comprehensive Economic Partnership
The Regional Comprehensive Economic Partnership (RCEP) is a FTA negotiation that has been developed among 16 countries: the 10 members of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Viet Nam) and the six countries with which ASEAN has existing Free Trade Agreements (FTAs) – Australia, China, India, Japan, Korea, and New Zealand. In relation to RCEP these six non-ASEAN countries are known as the ASEAN Free Trade Partners (AFPs). The challenge here is bringing both China and Japan to the negotiation table.

FTAAP – Free-Trade Area of the Asia-Pacific

This is still a long way off before any formal agreement can been signed. What is unique compared to the other two is that includes both China and the USA and parts of TTP and RCEP. China pushed for the FTAAP at the APEC summit in Beijing last month.