New Zealand And 11 Others Sign TPP Deal

Publish Date
Tuesday, 6 October 2015, 7:12AM
Trade Minister Tim Groser is positive about the overall result, but less so on dairy. Photo / Getty Images

Trade Minister Tim Groser is positive about the overall result, but less so on dairy. Photo / Getty Images

The 12 countries negotiating the Trans Pacific Partnership have struck a deal after five years of intense negotiation.

The deal was announced just after 2am this morning NZ time after a marathon session in Atlanta, where talks on dairy continued right up to the wire, Trade Minister Tim Groser told the Herald from Atlanta this morning.

Groser was very upbeat about the overall result but less so on dairy.

"You'd have to say from a New Zealand point of view, it just reflects the view that finally, against the combined might of Canada, Japan and the United States they just couldn't bring themselves to more fully liberalise their dairy sectors."

One surprising element that should please critics is that tobacco companies will be specifically banned from taking cases under the Investor State Disputes Procedures.

There would be no change on the current patents for biologic medicines, although an extension on copyright by 20 years will be phased in.

Groser said Pharmac's decision-making would become more transparent and the measures would cost $4.5 million in the first year, then an added $2.2 million annually.

But the Pharmac model would remain the same.

Prime Minister John Key welcomed the deal.

"This agreement will give our exporters much better access to a market of more than 800 million customers in 11 countries across Asia and the Pacific, and help Kiwi firms do business overseas," Key said. "In particular, TPP represents New Zealand's first FTA relationship with the largest and third-largest economies in the world - the United States and Japan.

Successive New Zealand governments have been working to achieve this for 25 years. "He said TPP would eliminate tariffs on 93 per cent of New Zealand's exports to new free trade partners the United States, Japan, Canada, Mexico, and Peru. "We're disappointed there wasn't agreement to eliminate all dairy tariffs but overall it's a very good deal for New Zealand," Key said.

"We've seen with China how a free trade agreement can boost exports of goods and services and deepen trade and investment links," he said."The overall benefit of TPP to New Zealand is estimated to be at least $2.7 billion a year by 2030.

"Many concerns raised previously about TPP are not reflected in the final agreement. For example, consumers will not pay more for subsidised medicines as a result of TPP and the Pharmac model will not change."

Key said the Government was negotiating with several other countries and actively pursuing a free trade agreement with the European Union.

The tariff elimination scheduled as part of the deal would save exporters $259 million a year once fully implemented.

New Zealand in turn would have to remove $20 million a year in tariffs on imports from TPP countries.

Officials estimate the benefit of TPP to New Zealand to be at least $2.7 billion a year after 15 years.

Groser said the deal would show that opposition to the deal was "a massive hot air balloon which will be punctured by the facts."

He also said the "TPP bus" as he likes to call it, would be carrying on and picking up more countries, with South Korea already in line to join the others.

The Trans Pacific Partnership would deliver New Zealand its long sought-after free-trade deal with the United States, the largest economy in the world, and Japan, the third largest economy, as well as Canada, Mexico and Peru.

Other TPP players are Australia, Singapore, Brunei, Chile, Vietnam, and Malaysia, all of which New Zealand has deals with.

New Zealand already had a free trade agreement with the world's second largest economy, China, which was not part of TPP.

While the dairy deal was less than hoped for, Mr Groser believed that within a few years, once the deal had settled in, there might be a political climate to accelerate some tariff elimination.

But there were some gains. In the United States, for example, tariffs would go within 10 years on infant formula and on some cheese.

NZ Herald