Editorial: Japan welcome to TPP trade

20:26, Apr 22 2013

The Trans Pacific Partnership is a big deal. Japan's entry into it, ditto. There's nary a southerner who lacks good reason to hope its arrival lives up to all that win-win rhetoric.

Aluminium, beef and dairy (ring any bells?) are right up there among our leading national exports to Japan.

It's already our fourth biggest trade partner, worth more than $3 billion; but it's also a fiercely protective economy. Some of the tariffs are eye-watering, particularly in meat and dairy.

Last year Japan took $338 million of our red meat, chiefly beef, and promptly whacked $93 million of tariff payments on it.

To put it more personally, those tariffs are reckoned to be costing each New Zealand sheep and beef farm $19,000 in lost income each year.

Japan had to persuade its way into the TPP. Suspicion arose that it might prove a sluggish, if not destructive, member, more prone to slowing progress than joining in it. Certainly Trade Minister Tim Groser makes no bones that he sought reassurances about the motivation of Prime Minister Shinzo Abe's government.


It's not hard to see why. Federated Farmers used that nicely coded word when it said the Japanese leaders had shown "genuine courage". In other words, they have bought into a fight with their own internal, protectionist, interests. Even the ruling Liberal Democratic Party's own taskforce subcommittee passed a resolution before the announcement that sensitive items, including beef and dairy products, must be prioritised. Things are liable to get sticky there.

Of course, Japan has plenty of its own, legitimate, self-interested motivation to make the TPP work. International Business Forum chairman Sir Graeme Harrison flourishes economic modelling suggesting that the greatest gains from lowering trade and investment barriers would likely be to Japan itself.

If Mr Abe has his work cut out convincing enough of his own people, and he does, our Feds are happy to give him a hand. They say our grass-fed beef fits into a niche that complements, rather than competes with, the grain-fed norm. Hard to see Japanese beef farmers seeing it quite that way. Then again, it doesn't hurt that our winter is their summer.

There is a measure of scepticism about the TTP, particularly since the entry of the United States led some to see this as a US takeover to ratchet up pressure on China, which is not in it. This is not altogether in the realms of conspiracy theory goofiness. President Barack Obama gave a speech emphasising that the US is a Pacific power taking measures, including "organising trade relations with countries other than China" to pressure China into other, non-trade behavioural improvements. Or, as he put it, "meeting basic international standards".

In some areas, TPP is now at risk of being seen as hijacked into becoming a club for the US to use against China - itself one of our major trading partners and potentially a massive one, with whom we have a shared, declared goal of doubling two-way merchandise trade to $20 billion by 2015

However New Zealand is being, shall we say, even-handed. We are simultaneously in Asia's rival trade deal, the Regional Comprehensive Economic Partnership, in which China looms large, alongside India, South Korea and Japan.

That's not unwise, nor hypocritical. We're a trading nation. Companionably so. We like China's money just as much as the States'. (If that's not quite true of each and every one of us, it is increasingly becoming so). Where we can strike deals to mutual, or common, advantage, we should. And will.

The Southland Times