The Government has released the full text of the controversial CPTPP trade deal, along with a national interest analysis touting its importance in fighting growing protectionism around the world.
However, an analysis of the deal’s economic benefit for New Zealand shows it is less significant than originally thought due to the withdrawal of the United States.
The release of the documents come after years of negotiations on what was originally the Trans-Pacific Partnership Agreement (TPP), now the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP).
The national interest analysis (NIA) for the CPTPP, released by Trade and Export Growth Minister David Parker, said the deal had been labelled comprehensive and progressive because it “goes beyond reducing costs for businesses” by including safeguards to protect and enforce environmental and labour standards across the Asia-Pacific region.
The NIA said the withdrawal of the US from the deal last year had allowed the suspension of a number of provisions that had originally concerned New Zealanders, including those related to intellectual property, pharmaceuticals and investment. It said the CPTPP’s relative importance has increased, given threats to the effectiveness of the WTO.
“As a small country reliant upon trade, New Zealand needs the international rules of trade law to assist us in maximising the value of our trade as to sustain the New Zealand economy, jobs and our standard of living.”
Benefits 'from the freezing work floor to farm owners'
At a press conference releasing the NIA, Parker said the deal was "clearly in the interests of New Zealand", with the 10 other countries included in the CPTPP accounting for 13.5 percent of world GDP, including four with which New Zealand did not currently have trade deals.
"The effects of this on the New Zealand economy will spread from the freezing work floor through to the owners of the processing companies and the owners of the farms."
The predicted benefits in tariff reductions for the CPTPP were markedly larger than those for the successful China FTA, Parker said.
However, the estimated impact of the CPTPP deal on New Zealand’s economy is more modest than that of the original TPP, which he said was due entirely to the withdrawal of the world's largest economy.
Whereas the NIA for the TPP estimated “at least” an additional one percent increase to GDP at full implementation ($2.7 billion), the CPTPP analysis estimated an increase of between 0.3 percent ($1.2b) and one percent ($4b).
If CPTPP went ahead without New Zealand, the document estimated there would be a $183 million decline in GDP due to the erosion of New Zealand’s place in regional supply chains, the favoured status of competitors’ exports, and the diversion of investment to other CPTPP countries.
New Zealand would also lose the ability to influence the ability of trade rules the deal would set for the region.
While the NIA was largely positive about the deal’s impact, it did highlight a number of disadvantages, including the Investor State Dispute Settlement (ISDS) mechanism which the coalition partners all opposed in opposition.
Although New Zealand has never been the subject of an ISDS case, the analysis says the CPTPP will increase the number of foreign investors "and therefore the risk that New Zealand may face an ISDS claim in the future."
Parker said the Government had managed to improve some aspects of the ISDS mechanism, preventing private companies from using the dispute process over a dispute regarding a government contract.
He said New Zealand was close to signing a number of side letters with CPTPP countries preventing the use of ISDS as it had with Australia - although he would not name the countries or how many there were.
The release of the CPTPP text and NIA was welcomed by free trade advocates, but appeared to have done little to persuade critics of the deal.
Council of Trade Unions economist Bill Rosenberg said many of the issues identified in the original deal were still present in the CPTPP, while its analysis was "deeply flawed."
"It assumes that working people will find new employment immediately when their jobs are displaced by the CPTPP. That assumption is simply not supported by international evidence and New Zealand’s history of job losses."
Auckland University law professor Jane Kelsey said the revised NIA "layers new spin onto old" and had failed to provide a genuinely independent analysis.
"Instead, we have a propaganda exercise, prepared by officials who negotiated the agreement for a government that has already nailed its colours to the mast. It patently fails to justify Labour and NZ First’s decision to sign a deal they have previously opposed."
Kelsey said the NIA treated the suspended provisions as if they were permanently removed, whereas the CPTPP countries would come under pressure to reinstate them if the US wanted to rejoin.
Parker has said Parliament will debate the deal before the signing in Chile on March 8, while it will also go through the normal select committee process.
The Greens remain opposed, but National is almost certain to join New Zealand First in giving the Government the support it needs to pass enabling legislation.