Wednesday, April 24, 2024

NZ braces for complexity after Japan’s TPP entry

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An October target to close an Asia-Pacific free trade deal looks in doubt after the world’s third biggest economy, Japan, was granted entry to the negotiations. Prime Minister John Key yesterday shied off speculating on whether there would now be an agreement by the end of the year after noting how Japan’s inclusion would make the talks more complex. The 11 members of the Trans-Pacific Partnership talks agreed at the weekend to let Japan join the talks after each gauging its commitment to a shared ambition for a high-quality, comprehensive deal – code for no or virtually no exemptions.
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The countries also have informal understandings that Japan’s participation would not mean reopening previously settled parts of the negotiations, according to Trade Minister Tim Groser.

New Zealand and Singapore forged talks for expanding their FTA to other countries eight years ago, and the group has steadily grown to include the United States and most recently Canada and Mexico.

US President Obama last year set a target for an October conclusion.

Key said the Government would have to wait and see on whether that deadline could be met, but a TPP including Japan would be very significant to the New Zealand economy “if we can get it concluded”.

The TPP was estimated to be worth $2.1 billion to New Zealand even without Japan.

“It’s very positive in the sense that Japan are a very large economy and so having a free trade agreement with them, as with the United States, would be tremendous for economic gains for the New Zealand economy,” he said.

“It adds another complicating factor but I think everyone is aware of that implication,” he added.

Trade Minister Tim Groser describes Japan as the end piece of the puzzle but said the trade-off for access to a bigger market was the increased complexity of the talks and the risk of them dragging on.

New Zealand has made dairy access a bottom line in the talks thus far but Japan has a highly protected agriculture sector.

Canada was the last of the 11 countries to give the green light to Japan’s potential involvement in what would be the world’s biggest free trading bloc, covering nearly 40% of the world’s economy.

The US agreed to Japan’s entry in February after the two countries reaffirmed that all goods would be subject to negotiation if Japan joined the talks.

Their carefully worded statement was interpreted by some as leaving open the possibility for Japan to continue to protect its rice sector while the US could keep duties on Japanese cars.

However, Mr Groser told Radio NZ this morning there would be no exclusions, including for rice.

“The moment you have one exception for something because it’s politically convenient for you and the other party you start a process of unravelling the whole deal, so we will not have exclusions. We have made this abundantly clear both in public and private.”

The New Zealand red meat industry especially has welcomed the entry of Japan, where it faces stiff protection measures.

It estimates that the sector’s $338 million of exports there last year incurred $93 million of tariffs, mainly on beef which can be hit with tariffs of up to 50%.

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