The only catch is the estimated impact of the deal on NZ’s economy might be more modest than that of the original TPP, which included the United States.
NIA estimates the overall impact of CPTPP on the NZ economy once fully implemented to be a rise in real GDP of at least 0.3% or $1.2b and up to 1% or $4b. The estimate for the original TPP with the US included was a GDP rise of at least 0.9% or $2.7b a year by 2030.
The 11 nations in the CPTPP create just under 14% of the world’s gross domestic product, the NIA said.
That $10 trillion engine includes four of NZ’s top 10 trading partners: Australia, Japan, Singapore and Malaysia.
They are also the destination for 30% of NZ’s goods exports worth $15b and 31% of NZ’s services exports worth $6.8b annually.
Four of the signatories, Japan, Canada, Mexico and Peru, do not have free-trade agreements with NZ.
The NIA published by the Labour-led coalition said the same group of nations were the source of 64% of direct foreign investment, $66b, in NZ in 2017.
“Partnering with these countries represents a significant opportunity for NZ exporters, opening up markets with a combined population of 480 million people that already consume nearly a third of our overall exports,” the paper said.
Gaining preferential access to Japan, the world’s third-largest economy, as well as Canada, Mexico and Peru for the first time, would open new export destinations for our small and larger businesses, create jobs to add to the more than 620,000 New Zealanders whose jobs already depend on exports and help generate a better standard of living for all New Zealanders.
Economic modelling estimated the overall impact of CPTPP on the NZ economy once fully implemented would be a rise in real GDP of at least 0.3% or $1.2b and up to 1% or $4b.
“If CPTPP goes ahead without NZ the modelling estimates a $183m decline in our GDP as NZ’s place in regional supply chains would be eroded, exports from competitors would be favoured and comparably cheaper than NZ’s and investment would likely be diverted away from NZ to other CPTPP countries,” it said.
The CPTPP will provide significant benefits for NZ goods exporters across a range of sectors.
Tariffs will be eliminated on all NZ exports to CPTPP economies within 16 years, except for beef into Japan where the duty would be cut significantly and a number of dairy products into Japan, Canada and Mexico where access would still be improved through partial tariff reductions and duty-free quotas.
The CPTPP has the potential to deliver an estimated $222.4m of tariff savings annually once fully implemented with $95.1m of those savings starting as soon as the deal takes effect. The annual tariff savings from NZ’s free-trade agreement with China were estimated to be $115m, though since then trade growth has seen NZ’s annual exports to China quadruple, with consequent significant tariff savings.
Crucially, CPTPP will mean exporters are not disadvantaged in important markets like Japan compared with competitors such as Australia, Chile, and soon with the 28 Europoean Union states, which have secured free-trade agreements with Japan.
The NIA said major outcomes for NZ goods exporters throughout the CPTPP region include:
• All tariffs for kiwifruit will be eliminated immediately and existing duty-free access will be locked in. That includes duty-ree access to Japan, NZ’s largest kiwifruit market, representing tariff-related savings of more than $26m;
• All tariffs on wine will be eliminated, including immediate duty-free access to Canada, NZ’s fourth-largest wine market;
• Nearly all tariffs on sheep meat will be eliminated immediaterly, including locking in preferential rates to Canada, NZ’s seventh-largest sheep meat market;
• All tariffs on forestry and forestry products will be eliminated as part of CPTPP, including in Japan, NZ’s fourth-largest export market, and Vietnam, its ninth-largest market;
• All tariffs on apples will be eliminated within 11 years. That would level the playing field with Australian apple exporters, who already enjoy preferential access into Japan;
• Tariffs on beef exports to Japan will reduce from 38.5% to 9% over 16 years. That would immediately remove Australian beef exporters’ tariff advantage in that market through the Japan-Australia Economic Partnership Agreement;
• CPTPP includes useful improvements for dairy exporters, who will benefit from an estimated $88.5m in overall tariff savings as a result of preferential access to new quotas into Japan, Canada and Mexico in addition to tariff elimination on a number of products and;
• All of NZ’s fish and fish products sent to Japan now face tariffs but 99% of them will be eliminated within 11 years and the rest within 16 years.
The CPTPP also protects the unique status of the Treaty of Waitangi and preserves the Government’s right to regulate for legitimate public policy purposes in areas including public health, public education, social welfare, the environment and taxes.
“The CPTPP reaffirms the participating countries’ commitment not to deliberately misuse regulations that are not for legitimate public purposes but are unjustified, disguised or discriminatory barriers to trade,” it said.
