Tuesday 14th January 2014
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The final shape of the Trans-Pacific Partnership Agreement should emerge "in the next couple of months", although how far the new trade pact will go in "new generation" issues such as intellectual property remains to be seen, says the executive director of APEC, Alan Bollard.
In an interview with BusinessDesk, the former Reserve Bank of New Zealand governor said TPP was now "very advanced" but contested the view that negotiations had been any more secret than for other trade pacts.
The difference was that TPP is trying to include a wider range of new trade issues than most free trade agreements.
"Trade negotiations are always carried out confidentially," said Bollard, who stressed he had no inside running on the TPP negotiations, which are not part of his APEC role. "Were they not, that would be an open invitation for a heap of lobbying interest groups" to press for special deals to favour their sectors, he said.
As a result, the final shape of the TPP deal would require heavy scrutiny to determine its quality, and there was likely to be "quite a noisy process" as governments individually considered whether and how to ratify the agreement.
"There will be a TPP, but we will have to wait to judge its quality," Bollard said, who was in Hong Kong to address the annual Asian Financial Forum on APEC's increasing focus on cross-border trade in services and trade facilitation rather than traditional trade barriers, such as import tariffs.
The Australian Trade Minister, Andrew Robb, was reported yesterday as saying the TPP pact was close to being "sealed" and that intellectual property issues were no longer a sticking point. Rather, long-standing Japanese and American objections to lower agricultural trade barriers in areas such as the sugar trade were among the remaining issues.
The TPP agreement seeks a trade agreement spanning the Pacific Rim and currently involves 12 countries: New Zealand, Australia, the United States, Canada, Japan, Singapore, Malaysia, Brunei, Vietnam, Chile, Peru, and Mexico.
South Korea this week expressed interest in joining, but only after concluding a bi-lateral FTA with China first. China is eyeing the TPP and promoting a less comprehensive Regional Comprehensive Economic Partnership.
There was "potential for divergence on the new generation stuff" between TPP and RCEP, said Bollard, with "really important issues" including IP, protection of state-owned enterprises, and government procurement more difficult to tackle in RCEP than TPP negotiations.
"RCEP is likely to be much less comprehensive and have a much longer term horizon to reduce even traditional barriers," said Bollard. "Economies at different stages of development need different approaches to trade integration."
Critics of TPP claim it has become a creature of US corporate and political agendas to enforce harsh IP rules globally, with potential impacts on such initiatives as New Zealand's low-cost generic drugs-buying agency PHARMAC, and to try and limit Chinese influence in the Asia-Pacific region.
The US Congress is currently wrangling over "fast-track" legislation which would almost certainly be required to secure American support for TPP.
China's ambitions for its role as chair in 2014 of the non-binding APEC grouping of Asia-Pacific trading nations has yet to emerge fully, said Bollard.
"China and other economies have used APEC as a testing place, for getting things on the table, and watching others test ideas. That means that economies like China can be more comfortable about their place at the table and seeing things happen that they might not find digestible themselves."
A key consideration for the year ahead was whether APEC could be both an incubator for new initiatives and an integrator of such initiatives.
"That's yet to crystallise," said Bollard. "They (China) are keeping an open mind on that. They're watching Korea particularly. No economies want to be isolated."
Commenting on New Zealand's economic prospects in 2014, Bollard said the downturn in hard commodity prices affecting Australia's economy was unlikely to be replicated in the soft commodities - food and fibre - that dominate New Zealand's exports to slowing Asian economies.
However, it remained to be seen how New Zealand would extract greater margins from its low value, relatively unprocessed commodity exports at a time when improved supply chain efficiencies are the key to many industries' improved outlook.
"How does the originator of those biological processes fit into those quite complex supply chains where the efficiency gains are in the supply chain rather than on-farm or in-forest?"
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