As we noted yesterday, Phil O'Reilly is the chief executive officer of BusinessNZ, New Zealand's largest business organization, and he was one of five presenters at last week's GBD colloquium on TPA and the Observer Effect.  But he wears another hat as well. Mr. O'Reilly is the chairman of the Business Industry Advisory Committee (BIAC) to the OECD in Paris.  Like its labor counterpart, TUAC, the Trade Union Advisory Committee, BIAC is an officially recognized source of advice for the OECD. 

The OECD and its economic research - especially its work on trade in value added products - were very much on Mr. O'Reilly's mind last week.  Like the WTO's "Made in the World" project, the OECD's trade in value added work focuses on global value chains.  Global value chains have dramatically changed the way many people - not everyone, but many - look at global trade.  Where, in the past, the key question was, what does this or that country produce?  Now the question is, how does it fit into global production processes?    It was in discussing the OECD's work on global value chains that Mr. O'Reilly made the observation highlighted above.

His presentation was both wider and more focused than today's quote suggests.  Yet never strayed far from twin topics of Trade Promotion Authority and the Trans-Pacific Partnership.  Those two are now twisted together in a DNA-like double helix.  Briefly, his remarks consisted of short elaborations on seven themes. Here is a compressed version.

1.    Patience is the watch word for TPP.  It has been going on for a long time, longer than the six years the U.S. counts.

2.    A High Quality TPP. Yes, TPP needs to be a high-quality, comprehensive agreement.   "The new glue of trade is investment," Mr. O'Reilly said, which means TPP needs to address behind-the-border issues.  Of course it needs to tackle tariffs and other market access issues that are still out there, but if that is all it does, it will have failed.

3.    The Pivot. Mr. O'Reilly spoke positively about the Obama Administration's "pivot" toward the Asia Pacific region, but trade needs to be a big part of it.  "From a U.S. perspective," he said, "you're not going to get the kind of influence you seek ... in the Asia Pacific ... just through sending aircraft carriers.  In fact, most of the engagement with Asia Pacific will be through trade and people contacts."

In today's world, that means TPP.  Mr. O'Reilly was clear on two points.  He hopes that TPP will get done, but it is not a foregone conclusion.  "If America doesn't do TPP for some reason," he said, "then it will be America that loses face and presence."

4.    Other forces at work in the region.  Beyond TPP, the other big one is RCEP, the Regional Comprehensive Economic Partnership.  This large, FTA-like agreement is being negotiated by the ten countries of ASEAN and their FTA partners, including Australia, China, Japan, Korea, and New Zealand. 

It was China, Mr. O'Reilly focused on especially.  New Zealand has an FTA with mainland China.  It also has FTAs with Hong Kong and Taiwan.  New Zealand is not a big market for China; so why did China do it? Mr. O'Reilly speculated that China took on the FTA with New Zealand mainly to demonstrate its commitment to the region.  As for the effects of the agreement on the New Zealand business community, Mr. O'Reilly said, yes, the tariff reductions are important, but the larger impact of the deal was to change attitudes in New Zealand about doing business in China.  It made it seem "safer and friendlier."

And the experience of dealing with business counterparts in China has been positive.  "They [the Chinese] are very good to deal with on the whole," he said, and New Zealand business is now more focused on China.  That development, he said, "has been somewhat at the expense of the New Zealand-U.S. business relationship."

5.    The U.S. is back, Mr. O'Reilly said.   And that's a good thing.

6.    The target is out there.  Mr. O'Reilly acknowledged that there should be some solid trade gaines from TPP to the countries participating in it.  Both the United States and New Zealand, for example, hope and expect to see improved market access into Japan from the TPP negotiations.  And yet, he told the group, the real target is out there, beyond TPP.  To illustrate the point, he mentioned that, even though lamb is very much a niche product in China, New Zealand now sells more lamb to China than it does to the U.K.  He conclusion:

7.    On Trade Promotion Authority.  Mr. O'Reilly did discuss TPA in his prepared remarks, but we found these comment he made in the Question-and-Answer session even more compelling. 

There will be more TTALK quotes from GBD's January 29 colloquium, but some of its themes are more likely to be picked up from other sources and later developments.  For example, Virginia Foote of Bay Global strategies asked if the U.S. is willing to pay for what it wants in TPP with some of the market openings that Vietnam and others are asking for.  That issue will come back.  For the time being, however, everything is on hold.  Congress seems reluctant to move forward on TPA and the President, for now, isn't pressing the issue.

Not long ago, we highlighted in these pages a challenge U.S. apple growers face in the European Union.  We stole the title of that piece from a Robert Frost poem, "After Apple-Picking."   We said that, beyond the title product, the poem wasn't really relevant to the entry.  It is to this one.  It deals with an utterly exhausted farmer drifting off to a sleep of unknown character, and it includes the lines:

Collectively, that seems to be America's attitude toward trade these days.  Oh, it will change.  The questions are:  How long will it be before that change comes about?  How many different arrangements (like RCEP perhaps) will come into being in the interim?  How much opportunity will have been lost?