Mike Chapman NZKGI Chief Executive

Finding an independent and authoritative analysis of the Trans Pacific Partnership or TPPA is not easy. However, there is one commentary from the US-based Peterson Institute for International Economics that can be relied upon.  

Their assessment is that New Zealand, along with the other TPPA signatories, will get substantial benefits from the TPPA particularly from the removal of trade barriers which will advance growth in trade.

The Peterson Institute assesses that the TPPA will increase annual real incomes in New Zealand by $US6 billion, which is 2.2 per cent of our gross domestic product. The TPPA will increase our annual exports by $US9 billion or 10.2 per cent of our exports over baseline projections by 2030.  

This is because the TPPA will eliminate 75 per cent of tariffs when it comes into force and 99 per cent of tariffs when it is fully in force.

The Peterson Institute also assesses that the reduction in trade barriers through the TPPA will facilitate reallocations of labour and capital to the more efficient exporters. Therefore small to medium sized enterprises are likely to benefit from the provisions of the TPPA.

High standards
This is because its sets common and high standards across the TPPA countries on all aspects of trading, including access to the digital economy, importation requirements, and country of origin rules. This will create a level playing field and reduce the advantages that large companies currently have.

Environmental reforms are also included in the TPPA. It deals with issues such as wildlife trafficking, illegal logging and illegal fishing. Labour reform will see countries such as Vietnam allowing independent unions and giving the unions freedom to operate. This will ultimately result in better standards for workers in all TPPA countries.

For horticulture there are real trade benefits totalling around $26 million per annum due directly to reduced tariffs. New Zealand apples, kiwifruit, buttercup squash and onions are the big winners when TPPA comes into force.  

Open doors
For kiwifruit growers this is worth around $6,000 for each grower. However, the liberalisation of trade access rules to all the TPPA countries will progressively benefit other products as well. Often the difficulties associated with exporting to a new country take many years to overcome and even then changes in these rules can make continued exporting difficult. The TPPA will open the door for existing and new exporters no matter how big or small their company is.

Country of origin labelling in each of the TPPA countries will also become a requirement.  New Zealand law does not currently require goods, fruit, or vegetables to be labelled with the product’s country of origin. Furthermore, there is no requirement for supermarkets to ensure the fruit and vegetables they are selling are labelled with the correct country of origin.  

This change in labelling requirements will be a significant advance for New Zealand and will allow consumers to make informed decisions when purchasing fruit and vegetables.

In summary, there are significant advantages for exporters and horticultural exporters from the TPPA that will translate to increased real earnings for New Zealand as a country.

The comments are those of the authors.