NZ US Council at APEC - Stephen Jacobi Remarks

APEC HONOLULU, 10 NOVEMBER 2011

REMARKS TO TPP SEMINAR
STEPHEN JACOBI
EXECUTIVE DIRECTOR
NZ US COUNCIL

TPP - A NEW ZEALAND BUSINESS PERSPECTIVE

I’d like to begin by thanking Cal Cohen and the APEC Business Coalition for the arrangements for today’s seminar.

I’m speaking today on behalf of the NZ US Council a non-partisan organization which brings together major sectors of the New Zealand economy and which is the primary advocacy body for TPP.

I’d also like to reflecting on the significance of this meeting being held here in Honolulu, Hawaii, located in the middle of the Pacific.

TPP has the vision of linking both sides of this great ocean (not to mention the vibrant economies to the south!) – the symbolism of this location could not be more appropriate.

TPP is all about the power of a big idea.

It is not a new idea – it has been worked on by Ministers, officials and business leaders from around the region since the end of the Uruguay Round in the early 90s.

That idea is to create a freer, more coherent, seamless economic space in the region by starting with a group of open, outward looking economies and moving over time to extend this vision more widely in the region.

We hope to see the first fruits of TPP when the broad outlines are released here in Honolulu in the next few days but in fact this is really only the end of the beginning as far as our broader vision is concerned.

As we move forward to conclude this ground-breaking agreement in 2012 it is important to keep this broader vision in mind.

We New Zealanders also encourage others around the region who share this vision and are prepared to do what it takes in terms of policy reform , to join us and to do so as soon as possible.

TPP is strongly supported by business in New Zealand – let me spend a few moments explaining why.

First and foremost this is because New Zealand’s future is inextricably linked to global markets.

We are a small economy heavily dependent on trade and investment. 80 percent of our exports come to the Asia Pacific region.

We have been successful in negotiating a series of high quality agreements around the region – TPP provides a means of bringing some of these together and adding new partners especially the United States and Peru.

We have an open economy and believe that trade agreements can create both jobs and growth – that has been our experience since we signed CER with Australia in 1983 right through to our more recent agreements with China or ASEAN.

New Zealand is also keen for progress to be made on that rather elusive goal of a Free Trade Area of the Asia Pacific.

We know all about the consequences of proliferating FTAs and the noodle bowl they can create – like others we would have preferred to negotiate freer and fairer trade in the context of the WTO if only that were possible.

TPP provides an opportunity for convergence – to bring together existing arrangements, to continue to refine them and to build on our experience of promoting regional integration in APEC.

If APEC is of unquestionable value as a laboratory for economic policy reform, then TPP is the place to put those reforms into practice, particularly in the areas of structural reform, regulatory coherence and ease of doing business.

TPP therefore is not just business as usual.

To deliver on TPP’s promise as a new generation agreement, TPP must address issues of relevance to the way business is being done today.

This is particularly relevant to the operation of regional supply chains which today is the way supply is increasingly linked to demand.

This is how business today is transacted. This is how businesses meet customer demands.

To optimise regional supply chains TPP needs to create an environment that provides ease of market access, low compliance costs, simplicity of rules and transparent regulation that provides certainty and security for business.

TPP must start by finishing the old agenda of market access and achieve comprehensive liberalization over a reasonable timeframe.

Free trade need not happen overnight but lest there be any doubt business in New Zealand will not be happy unless all tariffs are eventually eliminated including on agricultural products – a ten year time frame for the most sensitive sectors seems right to us – if this cannot be achieved within a decade, when can it be achieved?

Flexible and cumulative rules of origin will be required to ensure new trade in previously protected areas actually takes place and to reflect the offshoring and outsourcing which is so much part of modern business models.

Beyond market access TPP will need a strong market integration agenda focused especially on services, investment, behind the border issues and regulatory coherence and co-operation.

We will need to find a way to promote innovation and protect intellectual property while safeguarding the interests of users and without stifling the creativity of new technologically-based industries.

The final agreement will need to be backed up by robust dispute settlement mechanisms between states.

In order to promote and protect foreign direct investment we are comfortable with the concept of investor-state dispute settlement.

We realize this is a contentious issue for some but we believe a lot has been learned about these mechanisms since they were introduced into NAFTA and they need not detract from governments’ need to regulate on grounds of human health, to protect the environment or to address other particular public policy needs (in New Zealand’s case this includes the responsibilities of the Government towards the Maori people, the indigenous population of New Zealand).

Business in New Zealand is also comfortable with provisions related to labour and the environment forming part of TPP although there remains a debate about whether it is practical to subject these provisions to dispute settlement.

Above all if it is to be successful TPP will need to help businesses meet the needs of our customers by making it easier to do business and reduce costs.

Business in New Zealand therefore supports TPP because it provides an opportunity to untangle those noodles, to adopt a more rational and forward-looking framework for expanding trade and investment.

We recognise of course that a number of stakeholders have other ideas about the value of TPP.

We need to reach out to them and explain the benefits we see – there is a legitimate public debate that needs to take place and we are prepared to play our part in it alongside academics, unions and other representatives of civil society who are claiming higher standards of transparency in trade negotiations.

It is clear that there remains much to be done to conclude TPP in 2012 and then to persuade our domestic stakeholders and constituencies that the agreement does provide benefits to our economies.

New Zealanders are eternal optimists when it comes to trade but this week here in Honolulu, in the heart of the Pacific, our leaders have the opportunity to take forward the big idea of TPP – the idea of a seamless economic space in the region creating value for business, customers and citizens alike.

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About The Trans Pacific Partnership
TPP is an existing trade agreement between Brunei, Chile, New Zealand and Singapore which Australia, Malaysia, Peru, the United States and Viet Nam wish to join. Nine rounds of negotiations have been held involving the nine partners. The economies of APEC account for 80% of New Zealand’s total merchandise trade. Trade with APEC economies has been growing at an average of 4.5% per annum over the last 20 years. The broad outlines of the future agreement are expected to be released at APEC Honolulu.

About the NZUS Council – www.nzuscouncil.com
The NZ US Council is a non-partisan body funded by both business and the Government to promote New Zealand’s broader relationship with the US. Two-way trade with the US is valued at over $8 billion and the US is a leading source of investment, innovation and business ideas. The NZ US Council is actively engaged in co-ordinating business and government efforts towards concluding a comprehensive, high quality result to the TPP negotiations.

ENDS

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