US withdrawal from TPP expected to impact NZ economy, businesses
The withdrawal of the United States from the Trans-Pacific Partnership Agreement (TPPA) will have longer term implications for domestic businesses and the economy.
But at the same time, New Zealand International Business Forum executive director Stephen Jacobi said it would not have any immediate impact on consumers in New Zealand.
On Tuesday morning (NZ time) US President Donald Trump signed an executive order, withdrawing the US from the TPPA.
Trump had been vocal in his opposition of TPPA, and other free-trade deals, throughout his campaign, and in November said he would withdraw from the deal on his first day in office.
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But he also believed bilateral trade deals were preferable, and indicated the other 11 countries in the TPPA would be approached to negotiate such deals.
Jacobi said the US withdrawal would not have any impact on consumers in New Zealand, because US goods had very few barriers to entry here as it was.
The TPPA was more about New Zealand's ability to do business with the rest of the world, he said, and as such it was businesses and the economy overall which would be affected in the longer term.
"It's the only reason we do these things.
"But the key plank has been taken away."
Jacobi said bilateral trade talks with the US would be a case of "back to the future", as the country had unsuccessfully tried for such a deal for a long period of time before the TPPA.
This had failed because New Zealand was seen as being too small, and because of "unfinished business" with security and political relationships.
"I think it will be difficult to interest them in a deal with us," Jacobi said.
"It's no easier bilaterally than it is with TPPA, the US will ask us for a lot in a bilateral agreement."
Jacobi said a TPPA without the US, something which Prime Minister Bill English said he would look to keep alive, would be possible.
The remaining signatories to the deal were Brunei, Chile, Singapore, Australia, Canada, Japan, Malaysia, Mexico, Peru and Vietnam.
Of those, the biggest advantage would be Japan's involvement, Jacobi said, because New Zealand had no individual agreement with that country.
The question would then be how much of the original TPPA should be left in, which Jacobi hoped would happen with an eye to the US maybe joining again later.
"They will have to work it out for themselves."
New Zealand, Brunei and Vietnam have the lowest GDPs of the 12 countries involved in the TPP.
Brunei, has a total GDP of US$16.11 billion (NZ$22.3b), Vietnam has a total GDP of US$171.4b (NZ$237.4b), and New Zealand's GDP is $185.8b.
Trump said any one-on-one trade deal with the US would likely contain a 30-day "out clause".
Speaking to unionists after formally withdrawing from the 12-nation Trans-Pacific Partnership trade deal, which included New Zealand, Trump said "we are going to have trade, but we are going to have one on one".
"And if somebody misbehaves, we are going to send them a letter of termination, 30 days, and they will either straighten it out or we're gone, not one of these deals where you can't get out of them and it is a disaster."
Trump said the TPPA was not the right way to conduct trade deals
"So we are going back to those countries one on one and that will be beautiful."