Revised TPP signatories organise their out-clauses
By Pattrick Smellie
Feb. 21 (BusinessDesk) - The New Zealand government is in negotiations with other signatories to the 11-nation Comprehensive and Progressive Trans-Pacific Partnership Agreement over an unknown number of so-called 'side letters' that effectively remove countries' obligations to specific elements of the pact that they object to.
The content of the letters and the countries with whom New Zealand is negotiating are secret until the signing ceremony for the updated TPP agreement in Chile, scheduled for March 8, assuming no further hiccups in the life of the troubled trade and investment agreement.
New Zealand has already negotiated a side letter with Australia to exempt investors from either country invoking the controversial investor-state dispute settlement (ISDS) provisions, which the Labour-led government elected last September vowed to roll back before throwing its support behind the deal.
International Trade Minister David Parker confirmed similar side letters are being sought with an unspecified number of the other CPTPP signatories: Japan, Canada, Mexico, Singapore, Brunei, Chile, Peru, Viet Nam, and Malaysia.
He revealed also that other countries are seeking side letters "on non-ISDS issues", with New Zealand and other countries on other aspects of the CPTPP, although none were seeking exemptions "in a way that is materially adverse to our interests".
The number and content of those side letters would not be announced before the Chile signing, Parker said.
However, it is well-known that other countries have objected to the difficulties posed by a variety of advances in the CPTPP, including on protections for environmental and labour standards.
Already built into the agreement are 22 suspensions of the original TPPA, reflecting the fact that US President Donald Trump's first action on taking office last year was to withdraw the world's largest economy from the deal in favour of bilateral trade deals.
While Trump indicated at last month's annual meeting of the World Economic Forum in Davos that the US might be interested in rejoining if offered a better deal, Parker said today there was "unlikely in the next few years".
The US withdrawal does reduce the economic value to New Zealand of the CPTPP, according to the National Interest Analysis released by the government today. The NIA suggests CPTPP could add between $1.2 billion and $4 billion a year to the size of the New Zealand economy, making it "in New Zealand's national interest to ratify the agreement," said Parker.
He was confident that legislation required to bring the agreement into force would have a parliamentary majority because the National Party had indicated it would support it. New Zealand First trade spokesman Fletcher Tabuteau confirmed his party would now support CPTPP, having earlier opposed TPP.
The Green Party leader, James Shaw, said the ongoing existence of ISDS clauses, even if watered down as claimed by Parker, meant the Greens could not support the agreement.
Parker said the government could give itself "4.5 out of 5" for its efforts to improve the deal in New Zealand's sovereign interests, even though it had not succeeded in stripping ISDS from the agreement altogether.
Its lobbying on the issue had helped shift the mood against ISDS, which New Zealand would oppose in future trade agreements, while its move to legislate against the purchase of existing New Zealand homes by foreign buyers had preserved a right that would have been lost, had the original TPP gone forward.