Saturday, March 30, 2024

US veto puts kybosh on Asia deals

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New Zealand will struggle to gain trade deal with Japan in the medium to long term as a result of the United States’ withdrawal from the Trans Pacific Partnership, Beef + Lamb NZ chairman James Parsons says.
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Ironically, the lost opportunity from President Donald Trump’s veto of the TPP lay mostly outside the US, where cattle farmers were NZ’s allies in its push for free trade.

That veto was disappointing for sheep and beef farmers because without the US the TPP as drafted could not take effect, which was a significant blow for trade liberalisation in the Asia-Pacific region in the short term.

Trump’s executive order also prohibited the US from participating in any further negotiation of TPP and required that the US pull away from multilateral negotiations in favour of bilateral agreements.

“This effectively puts paid to hopes that the US might re-commit to TPP if it could secure more favourable terms through further TPP talks,” Parsons said.

”Ironically, the lost opportunity to our sector from President Trump’s decision mostly lies outside of the US.

“TPP would have had only a relatively minor, positive impact on our trade with the US due to existing low tariff rates faced by NZ beef and lamb in that market.

“The real value of TPP to our sector was in reducing tariffs and creating a level playing field in high-value Asia Pacific markets, Japan in particular.”

The Japan-Australia free-trade agreement meant Australian beef entering Japan enjoyed a tariff rate 10 percentage points lower than that faced by competitors such as NZ and the US so in 2015 and 2016 Australian beef exports to Japan increased by 13% while those from NZ and the US fell by 10% and 11% respectively.

“The reality is that in the short to medium term NZ will struggle to complete a bilateral free-trade agreement with Japan to achieve a level playing field on beef.

“Our competitiveness in that market and our resulting market share will continue to be affected for some time,” he said.

While that was a major setback there remained a number of possibilities for multilateral free-trade agreements in the Asia-Pacific area.

“The remaining TPP parties may revise their agreement to remove US concessions and press on with an agreement as a way to show trade leadership in the region.

“The Regional Comprehensive Economic Partnership, which is under negotiation and includes, among others, NZ alongside ASEAN countries China, India and Japan, also provides an opportunity to free up access and establish common trading rules in the Asian region.”

Over the coming weeks and months B+LNZ would continue to work alongside the Government and other industry groups as they came to terms with the setback and worked through continuing to press for trade liberalisation.

“Decisions in the US and Europe over the past 12 months have added a lot of uncertainty to how to progress this agenda, but it is critical that we as an export sector continue to keep the pressure up,” Parsons said.

In the next fortnight B+LNZ directors Andrew Morrison and George Tatham would go to the US on previously-arranged visits as part of ongoing work to maintain the very strong producer relationships the industry-good body had in that key market.

“This will provide an opportunity to hear directly from US ranchers their take on President Trump’s decision and where the US is likely to head next.

Parsons said NZ was fortunate US beef producers were allies on free trade and quoted National Cattlemen’s Beef Association president Tracy Brunner who said “The fact remains that 96% of the world’s consumers live outside the US and expanding access to those consumers is the single best thing we can do to help American cattle-producing families be more successful.”

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