The CPTPP and the new world trade order

Hort Talk
with Mike Chapman
HorticultureNZ CEO

Before the United States withdrew from this trade agreement it was called the Trans-Pacific Partnership Agreement and involved 12 countries, including the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

Everyone thought the deal would die with the withdrawal of the US. But it didn’t; full credit goes to both the National and Labour Coalition New Zealand Governments for being among the key instigators for keeping the deal alive, and for making changes to accommodate the concerns of the New Zealand public. The Treaty of Waitangi, and the Government’s right to regulate for policy purposes, have both been preserved under the CPTPP; our signature will not lead to any loss of sovereignty.

In the process it got a new name: the Comprehensive Progressive Trans-Pacific Partnership (CPTPP). The bottom line is that it opens up 10 markets to New Zealand, with a combined population of 480 million people. Opportunities are boundless and, with the growth of Asia as one of New Zealand’s most important markets, the CPTPP could not come at a better time, particularly with Japan, Singapore, and Malaysia – three of our top 10 trading partners – as signatories.

In addition to addressing social issues and non-tariff barriers, the CPTPP aims to reduce tariffs in economies that together account for 13.5 per cent of global Gross Domestic Product – equivalent to a total of US$10 trillion.  

Japan a big win

Horticulture gains preferential access to Japan – the world’s third largest economy – for the first time, as well as Canada, Mexico, and Peru. Japan in particular is a big win for horticulture, with immediate kiwifruit tariff reductions worth $26m from eliminating the Japanese tariff. This is important to New Zealand, as the European Union is about to gain access to Japan, and Australia already it. Apples do not do as well, but will still be eliminated in 11 years. This will put us on a level playing field with Australia.

For New Zealand, the CPTPP is expected to deliver between $1.2b and $4b in GDP when fully implemented. For Japan alone, this is $200m off existing tariffs; it will create jobs, growth, and economic development for New Zealand.

This will come into force when six of the CPTPP nations ratify it. For New Zealand to ratify it, Parliament needs to enact empowering legislation. Our Minister for Trade, David Parker, has said the aim is to bring this in by the end of the year. Before that can happen, however, there will be a pubic consultation process and submissions will be called for by the Government. The CPTPP brings significant economic benefits to NZ, and for those reasons alone needs our support.

The CPTPP is, however, not just about addressing tariff reductions; it also covers the issues that are challenging the world today. The aim of the CPTPP is to raise labour and environmental standards in the Pacific, reduce the impact of unfair practices, and promote sustainable development.

Most comprehensive

As the Ministry for Foreign Affairs and Trade notes, these outcomes are the most comprehensive NZ has ever achieved in a free trade agreement, with the standards being made legally enforceable for the first time. It will ensure that signatory countries have laws and practices in place governing minimum wages, hours of work, and occupational health and safety. These additional measures are new in trade agreements, and are likely to have a significant impact on all business and commercial operations in NZ.

The CPTPP is a very far reaching trade agreement that will benefit NZ and the other signatory countries economically, environmentally, and socially. It is creating a new world trade order.


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