TPP benefits but bottom lines needed

Labour’s Foreign Affairs and Trade spokesperson, Phil Goff, has today given a speech to the New Zealand United State Council 10th Anniversary Conference.

Emphasising the benefits of a TPP and the success of negotiations so far, he also said that where New Zealand had legitimate interests there should be bottom lines.

This included a refusal to surrender the right to regulate in the public interest and to resolutely fight for New Zealand to continue to negotiate fair prices for pharmaceuticals through Pharmac.

The full text of the speech follows:

Speech to NZ US Council – 10th Anniversary Conference

Congratulations on the Council’s tenth anniversary, and on your efforts over the last decade to advance New Zealand’s economic and trading relationship with the United States.

I appreciate the positive working relationship I enjoyed with you over my three terms as Minister of Foreign Affairs and of Trade.

Can I acknowledge here today Hon Clayton Cosgrove, Labour Spokesperson on Trade, who has just returned from the US and high level meetings there.

Clayton has responsibility within Labour for trade negotiations and I welcome the competent, committed approach I know he will bring to that role.

While there will be some areas of disagreement, Labour is committed to working on a bipartisan basis to promote New Zealand’s trading relationships as a core area where we can help build this country’s economic strength and living standards.

I became Minister of Trade shortly before the Trans-Pacific Partnership with Chile, Brunei and Singapore came into effect, and I acknowledge my predecessor, Jim Sutton’s role in that achievement.

It was a high quality agreement, providing for the elimination of tariffs on almost all goods within ten years.

But right from the start the intention was always that it would be a building block towards a wider Asia Pacific trade grouping committed to high standards for ensuring trade access among participating countries.

One of the targets for drawing into the agreement was the United States with whom we have no free trade agreement. Clearly the involvement of the US would give the TPP the critical mass and the momentum to make it an effective mechanism to move towards achieving APEC’s goal of a Free Trade Agreement for Asia-Pacific.

A top down negotiation to achieve the Bogor goals across the whole of APEC seemed unlikely to happen in the foreseeable future, but by acting as a pathfinder group we could create the impetus to move APEC closer to its goal of an Asia-Pacific Free Trade Area.

Countries where vested interest groups were a barrier to free trade would have the incentive to overcome those barriers in order not to be left outside of a free trade area which was strong and growing, with the costs that might entail to the wider good in those countries.

I began raising the idea of US involvement with USTR Susan Schwab with whom I had a good working relationship when we attended together meetings at APEC, Asean Regional Forum and the WTO.

New Zealand’s first priority, has always been a successful and high quality outcome from the WTO.

We believe in a multilateral rules based trading system where the rights of small countries have to be respected by the more powerful We were also rigorously pursuing bilateral free trade agreements with China and Asean.

But if the WTO round was not able to be concluded, the TPP as a plurilateral agreement was a positive way of going forward.

With Asean plus three and Asean plus six discussions going on we also pointed out to the US that it needed a way of being included in free trade discussions in the Asia-Pacific rather than being left out of regional agreements in an area that is the engine of world economic growth.

Susan Schwab saw the merits of those arguments and in September 2008 Ministers representing the four TPP partners and the US agreed in New York to the US negotiating to join the TPP. Following our earlier wins in signing a Free Trade Agreement with China and concluding negotiations for an Australia New Zealand Asean free trade negotiation, we achieved a trifecta with a valuable return for New Zealand. The benefits of a successful TPP negotiation are very real.

While we have free trade agreements with eight of the nine partners now negotiating the TPP, it allows us to achieve an FTA with the US.

That’s been a goal for many years which we haven’t been able to achieve. We’re a small country with an already open market, and free entry for our agriculture exports was and continues to be resisted by powerful farming, in particular dairy, groups. This is despite the fact that our agriculture is unsubsidized and not on a scale that could in any way threaten the US dairy industry. A multilateral agreement in which the US has strong potential gains to make in other protected agricultural markets is our best way of ensuring a quality agreement allowing tariff free and quota free access for our goods.

The complete phase out of tariffs on dairy and other agricultural exports is a bottom line in our negotiations. A TPP will also give us greater access to the high value United States Government procurement market and better access for our service exporters.

But the TPP, as intended, has also attracted other large, potential partners, in the form of Japan, Canada and Mexico.

All three have strong agricultural protectionist interests that have stood in the way of New Zealand’s export opportunities, notwithstanding our good relationships with each country.

My hope is that each of the prospective countries will join the TPP, though my strong belief is that this should not be allowed either to slow the completion of the negotiations, nor to dilute the prospect of a high quality outcome.

As in any trade negotiation, New Zealand has defensive as well as offensive interests.

Undoubtedly we will be called on to compromise in some areas, but there are bottom lines that we will need to negotiate in a tough and resolute manner.

There is some public concern that this agreement could prevent our right to regulate for public good, and in particular health, outcomes. That must not and will not be allowed to happen. I anticipate that National will share Labour’s commitment on that.

Tobacco companies will just have to accept that no responsible and sovereign country will be deterred from regulating to stop the promotion of a product, unique in killing half its consumers when used in the way that the manufacturer suggests.

The core role of Pharmac in purchasing pharmaceuticals for the lowest price it can negotiate to ensure access to free or heavily subsidised drugs by New Zealand’s consumers must be protected. There is no way we will go back to paying the inflated prices as a small country before Pharmac enabled us to negotiate on a fairer basis.

On intellectual property, there are strong US interests in negotiating to enhance the rights of property right holders. New Zealand respects intellectual property and its protection but this needs to be balanced against the interests of consumers and innovators. My preference is for a regime based around WTO and TRIPs disciplines.

In terms of process followed in the negotiations I understand the need for negotiations to be conducted in good faith and with a degree of confidentiality. But within these constraints governments should ensure that interested groups are consulted as fully as possible as the negotiations develop.

In conclusion, I welcome the progress that the Trans-Pacific Partnership negotiation is making. As the only trade initiative so far launched by the Obama Administration, we need to take advantage of the opportunities it offers while working hard to protect our own legitimate interests.

Once again my congratulations to the NZ US Council for its achievements over the last decade and for the hard work and commitment of its executive staff and its Board as you seek to strengthen our trading relationship with the US.

ends

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