Trade Update - April 2013

  • Date Added: 5 Apr 2013 from BusinessNZ

  • TPP : What Does Possible Japanese Entry Mean?

    While business groups such as the NZ/US Council and International Business Forum have been quick to welcome Japan’s announcement that it wishes to join the TPP negotiation, the decision is not without its downside. 

    The positives are that:

    TPP might help achieve some or all of the liberalisation of Japanese import restrictions that New Zealand has been seeking for many years;

    Japanese entry will increase the value of TPP to the US economy and increase the chances of Congress granting the Obama Administration a better negotiating authority (one that would avoid clause by clause voting at time of ratification);

    It will increase the appeal of TPP membership amongst non-participants; and

    It will be good for the Japanese economy.

    But there are complications.  Japan is going to fight hard to have much of agriculture, forestry and fisheries excluded from the negotiations.  It is going to be very suspicious of US intentions on topics such as state owned enterprises.  It may also increase concerns in the US in industries such as automobiles.  This all suggests that Japan might slow the process.

    It is still a little unclear when Japan will join the negotiations.  Japan is currently talking bilaterally to all the existing participants about the negotiation and about how it might join.  Some members might suggest that Japan should wait until the framework rules are finalised and join the negotiations at that time.  Others (including the US) seem to be wanting Japan to have the chance to influence the shape of the overall rules by joining the negotiation quickly.

    We understand that very good progress was made by those participating in the TPP negotiating round recently completed in Singapore.  This has positioned the negotiation to be completed by the October timing target set by TPP leaders.  We have been told that so long as the momentum established at Singapore is maintained, an October completion is realistic.  Japanese entry now, will almost certainly make an October completion impossible.  One negotiator about to go off on a three year posting suggested that she will now be able to come back in three years to pick the negotiation up where she left off!  We think that there is some exaggeration in this reaction, but it was a telling comment.

    So why is the US so comfortable with Japanese entry when this will mean the missing of the October deadline?

    No one is certain about the answer, but it has been suggested that the US might not be able to meet the October deadline (which it essentially set) for internal reasons.  It might therefore suit the US to have an excuse for delay.

    We cannot confirm this reason, but as we write Minister Groser is en route to Washington DC.  No doubt this issue will be high on the agenda for his discussions with the US administration.