Sunday 22 September, 2013

Trade Minister Tim Groser is adamant that the Trans-Pacific Partnership (TPP) will be a good for the country.

“I am absolutely certain that this will be a great deal for New Zealand along the lines we’re negotiating.”

Tim Groser is confident the TPP will have a marginal impact on public institutions like Pharmac.

“It certainly won’t result in higher prices for pharmaceutical products for New Zealanders.  This is really about protecting the model of Pharmac to ensure that they’re in a tough negotiating position with international pharmaceutical companies, and we’ve got some very good negotiators who are doing just that.”              

Groser says parallel importing will continue as long as it’s consistent with intellectual property law.

“There’s some complicated issues about the interface of this with copyright and that’s a legitimate concern, and our negotiators will work their way through those issues.”

He concedes that this negotiation is the ‘most complicated negotiation’ that he has ever seen.

He denies concerns that Fonterra will have to be broken up.

“Fonterra is not at risk.  This is a negotiating tactic used by those people who want to restrict New Zealand’s access into their market because this is something New Zealand’s deeply competitive, but we will work our way through those issues.”

Groser says the TPP will create thousands of jobs for New Zealanders and open up huge opportunities for our export industries.

“The crucial element …is that our principle export items are not excluded from comprehensive liberalisation.  That’s the real red line.  I think in terms of concerns around Pharmac, we’ve already made it abundantly clear that we will defend those public institutions, and we will ensure that there is policy space for future governments.“

He is defending the need for secrecy around the agreement.

“You have to understand this that if you put out texts into the public with different and conflicting negotiating positions, lobbies who are opposed to change will seize on that
text, will try to stop the negotiators showing any compromise. “

He says that we have already lowered the barriers to competitive imports in this country, almost more than any country in this negotiation and haven’t got much to lose.

“Frankly, we haven’t.  If we were talking about where we were in the mid-‘80s, my goodness me, I remember when I was involved first in the Treasury and then in Foreign Affairs in the CER negotiations, where we had, you know, massive import licensing, high, high tariffs. “

Tim Groser hopes to have the TPP signed by the end of the year.

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SUSAN          Good morning, Trade Minister Tim Groser.

TIM GROSER – Trade Minister
Good morning.                    

SUSAN          How are your nerves this morning?

TIM                 Oh, like everyone’s.  Just want this damn uncertainty to end and hopefully in the right way.

SUSAN          Absolutely the right way.  All right, Pharmac – does the TPP, if we sign it, mean an end to Pharmac?

TIM                 Oh, of course not.  Absolutely not.  Look, I think there’s support right across the New Zealand Parliament for Pharmac.  It’s an outstanding public institution.  We’re defending it in this negotiation, and we’ll continue to do that.

SUSAN          So what impact will it have on Pharmac, if any?

TIM                 I think it’ll have a very marginal impact, at the end of the day.  It certainly won’t result in higher prices for pharmaceutical products for New Zealanders.  This is really about protecting the model of Pharmac to ensure that they’re in a tough negotiating position with international pharmaceutical companies, and we’ve got some very good negotiators who are doing just that.              

SUSAN          So generic medicines – they’ll still be available here for Pharmac?   We’d still be able to get those?

TIM                 Of course.  Provided they’re not breaking patents, yes, and copyright, absolutely.

SUSAN          What about parallel importing?  How is it good for consumers not to have parallel importing – more expensive books, as we saw in Dita’s track, more expensive consumer goods?

TIM                 I think parallel importing, providing, again, it’s consistent with intellectual property law, is absolutely a good thing for New Zealand, and it will continue.

SUSAN          So that’s something that they will not be getting their way on that?  You’re standing your ground on that?

TIM                 There’s some complicated issues about the interface of this with copyright and that’s a legitimate concern, and our negotiators will work their way through those issues.           
SUSAN          Just how complicated is that?  Because we know how hot the Americans are on copyright.

TIM                 It’s unbelievable complicated.  This negotiation is the most complicated negotiation that I have ever seen, and these extreme statements that we’ve just heard – look, wait until we get to the final result.  I am absolutely certain that this will be a great deal for New Zealand along the lines we’re negotiating.

SUSAN          If it is that complex, the most you’ve been involved with, and I know you’ve done one or two, how can you be certain that the end result will be the right thing for New Zealand?  How can you be certain that— you know, as they say, the devil is in the detail.    
TIM                 Exactly right, and all we’ve got to do is look at past experience, in which similarly dramatic negative statements have been made.  None of them have come to pass, and it won’t happen again this time. The objectives we’ve agreed on in this agreement are truly extraordinary for New Zealand if we can achieve them and will bring great benefits to this country, so I’m quite excited about it.  I’m going off, in fact, to Japan first, which will be totally about TPP, because TPP’s a huge issue up there in Japan at the moment.  And then we’ve got this very important meeting on the 8th of October, which will be chaired by President Obama and involve Prime Minister Key, in which, well, we’re trying to take some quite tough decisions to move it forward.

SUSAN          Fonterra – is it at risk?  Would it have to be broken up?

TIM                 No, no, it won’t have to be broken up.  Fonterra is not at risk.  This is a negotiating tactic used by those people who want to restrict New Zealand’s access into their market because this is something New Zealand’s deeply competitive, but we will work our way through those issues.

SUSAN          So, what are your sticking points?  What are your not-negotiable things that you are really stuck on in this agreement at the moment?

TIM                 Well, for us, the crucial element, because we think this will create thousands of jobs in New Zealand, open up huge opportunities for our export industries, is that our principle export items are not excluded from comprehensive liberalisation.  That’s the real red line.  I think in terms of concerns around Pharmac, we’ve already made it abundantly clear that we will defend those public institutions, and we will ensure that there is policy space for future governments.  So I’m not worried at all about any downside from this agreement.  I can only see real upside.

SUSAN          So if it’s so good, if it’s such good upside for New Zealand, why so much secrecy?

TIM                 Because you can’t do anything in the real world that’s worthwhile without discretion around it.  That’s why we have confidentiality about Cabinets.  We discuss this amongst trade ministers in Brunei about three or four weeks ago.  There’s absolutely no support for putting these texts out in the public.  You have to understand this that if you put out texts into the public with different and conflicting negotiating positions, lobbies who are opposed to change will seize on that text, will try to stop their negotiators showing any compromise.

SUSAN          I do understand that.

TIM                 It’s a recipe for a failure.

SUSAN          I do understand that, but the reality is this will be signed, and then it will be sent to select committee.  There is no democratic oversight of this at all.  We just have to trust you and your negotiators and your officials.

TIM                 And we will do a very good job for New Zealand, I can assure you.  We have in the past, and we’ll do it this time.  There will be a very full debate on this. This is not as if, you know, we’re doing this in a vacuum. We’ve got the most extensive stakeholder contact that I’ve seen in any trade negotiation underpinning this negotiation.  We have a very clear idea of where people’s views, where people’s interests are, but the final negotiation is done on a confidential basis that’s been agreed by all 12 countries, and it has to be done that way.

SUSAN          All right.  Big wins for us, you’re telling me sitting here today, but to get something, you’ve usually got to give something up.  What do we have to give up?

TIM                 Well, to be truthful about the situation, the reason why New Zealand is in such a comfortable position is precisely because we’ve already lowered the barriers to competitive imports in this country, almost more than any country in this negotiation.

SUSAN          So you’re saying we haven’t got much to lose?

TIM                 Frankly, we haven’t.  If we were talking about where we were in the mid-‘80s, my goodness me, I remember when I was involved first in the Treasury and then in Foreign Affairs in the CER negotiations, where we had, you know, massive import licensing, high, high tariffs.  All of our focus was on defence.  Now our focus is on offence.

SUSAN          Is it naïve, as Jane Kelsey was saying, to think we can play in the same sandpit with the Americans and the Chinese?  Would we get I think her line was sand in our eyes?

TIM                 Well, Jane Kelsey has opposed every single trade agreement New Zealand’s been involved in in the last 25 years.  And if either Labour-led or National-led governments had been influenced by her, we would be in a shocking position as a country, so I never listen to anything Jane Kelsey says.  It’s always the same deal.  Now, the reality is that New Zealand has got an excellent relationship with China and a very, very good relationship with the United States, and I don’t see any reason why we should buy into this binary concept that we have to choose. The reality is New Zealand’s the only country in the world with a comprehensive FTA with China, and we’ve added Hong Kong, and we’re about to add a comprehensive economic deal with Taiwan to that, and at the same time we’re moving with the Americans and others in TPP.  So I think it’s a win-win situation.           

SUSAN          All right, you talked about the jobs and benefits – where will they be once this thing is signed in hopefully December?

TIM                 Oh, there will be overwhelmingly in the export-oriented goods and services companies of New Zealand, and it’s always very difficult to pick winners, because people respond to opportunities.   But I see, look, since the addition of Japan, this negotiation’s become bigger than King Kong, and while it’s become a little complicated, the benefits to New Zealand companies in the export sector are very real.  And what this country needs above all is to shift resources into the export sector, because as the PM has said in his sort of simple terms, you know, we’ve proven that we can spend like a First World country; we now have to prove we can earn like a First World country.

SUSAN          But we are, to some extent, still stuck in the commodity market.  You know, Fonterra’s shipping off billions of tonnes of essentially a commodity product.

TIM                 And there’s a huge market for that, but there’s also a huge market for processed food products.  The compound average growth rate of our processed food products – think of it as the more sophisticated end of this – has been growing in the last 10 years by about 15 per cent on an average base.  That is outstanding.  I tell you, we are seeing little gems come through – nutraceuticals.  All this high-end stuff is also going along at the same time as this high-quality Fonterra product is going into the mass markets of China.  It’s a win-win.    

SUSAN          TPP, when you sign it off, you’re confident it will be done by the end of this year?  I mean, the Americans want it done, don’t they?

TIM                 There are two different questions.  Can it be done realistically, given the progress that’s been made, by the end of the year?  Will it be done?  The answer to the first is, yes, it can be done.  Will it be done?  We’ll see.  We’ll see.  Trade negotiators have a very long record of not meeting deadlines, but I know this can be done.  Frankly, the political decisions have to be made for some of these countries who are taking steps into the unknown, not New Zealand.  They’ve got to do things they’ve not been prepared to do for 70 years.  Can they do it?  Yes.  Will they do it?  We’ll see.

SUSAN          And if despite your very best efforts and those of all your officials, a couple of years down the track we find there’s things in there that really do hurt us, we’re stuck with it, aren’t we?  We can’t get out of it?

TIM                 Well, I don’t see any serious downsides to this negotiation.  I think we’ve adjusted to international competition over the last 25 years.  No, no, if this doesn’t work, what we will see is a huge opportunity missed.                       

SUSAN          Very good.  Thank you for your time, Trade Minister Tim Groser.

ENDS

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