NZ to 'play both super powers' in trade

Trade Negotiations Minister Tim Groser.
Trade Negotiations Minister Tim Groser.

New Zealand is walking a tightrope between the world's two super powers.

In Auckland this week, hundreds of international trade negotiators are about to open the 15th round of talks toward the establishment of an Asia Pacific free trade bloc that some see as part of a wider United States containment strategy against China.

For New Zealand, still the only country in the world to successfully negotiate a free trade negotiation with China, there are special sensitivities.

Anti Trans Pacific Partnership (TPP) activist Jane Kelsey says the Trans Pacific Partnership is America's push back against China's rising influence in the region.

"This is about neutralising China."

But Trade Negotiations Minister Tim Groser says New Zealand would not be at the table if the TPP put its special relationship with China at risk.

"We have a comprehensive free trade agreement with China that has been outstanding for New Zealand - our exports have grown well over 150 per cent since 2008. The idea we are going to go into some sort of agreement designed to marginalise China is a joke. How would you marginalise 24 per cent of the world's people?"

Besides, New Zealand can have its cake and eat it too, he suggests.

"We are going to play both super powers. We are going to deal with them both."

The TPP countries include the original Pacific Four trading countries - New Zealand, Chile, Brunei and Singapore - plus the US, Malaysia, Vietnam, Peru and Australia. Latecomers include Canada and Mexico. But Groser says the current talks are only a building block toward an Asia Pacific-wide trade and investment zone.

"That would include Japan and actually has to include China, otherwise it won't be real."

The Government argues that the benefits of TPP are obvious for an export reliant country like New Zealand - it would eventually remove punitive tariffs and quotas that make it difficult to compete with farmers in countries like the US. It also opens up investment and the trade in services. But some of the benefits may be slow to realise - it could take a decade to phase out US tariffs.

Anti-TPP activists say the price is too high - they warn that investor provisions strip away sovereignty, and say American pharmaceutical companies are throwing their weight around with demands that will push up the cost of medicines, and neuter New Zealand's highly successful drug buying agency, Pharmac.

Prime Minister John Key insists that for New Zealand to do a deal on TPP "it's got to be on our terms and benefit New Zealand".

"Everyone has to give a little bit. But if we had to give away Pharmac that wouldn't work for New Zealand either."

But the anti-TPP lobby says pharmaceutical company demands for tighter patent protection will push up the costs of drugs, because that would prevent cheaper generic drugs from entering the market early. Demands for greater transparency in Pharmac's decision-making, meanwhile, would open it up to legal challenge.

The high levels of secrecy surrounding the TPP, and the scope of its negotiations, have also sparked criticism - and not just among the usual anti free-trade activists.

Earlier this year, 61 New Zealand lawyers and legal academics - among them a retired appeal court judge, present and former MPs including NZ First leader Winston Peters and former Labour cabinet minister Margaret Wilson - signed an open letter urging the government to reject controversial "investor state" provisions which allow corporates to sue governments directly over alleged breaches. The Australian government has lined up against the proposal, but our government supports it.

American-based Lori Wallach, director of the Public Citizen's Global Trade Watch, said the recent US election revealed a rising groundswell against deals like the TPP. And that was going to make it difficult to get the deal through the US Congress, which had final say.

"Our election actually had an unprecedented focus in paid campaign ads on the effects of our past trade agreements.

"It was a veritable smorgasbord of bipartisan paid TV ads talking about the offshoring of jobs, unfair trade agreements - and interestingly, including by many of those who voted for [trade deals] in the past."

Sunday Star Times