THE TTALK QUOTES 

On Global Trade & Investment

 

Published Three a Week By

The Global Business Dialogue, Inc.

Washington, DC   Tel: 202-463-5074

Email: [email protected]

 

No. 40  of 2014 

TUESDAY, MAY 27, 2014     

 

   

Filed from Portland, Oregon  

     

Click here for yesterday's quote on from George Pocock on competitive rowing.
TPP: IS NEW ZEALAND HAVING SECOND THOUGHTS?

"The obvious question for New Zealand would be 'If we couldn't get access to dairy, would we even sign up for a deal like that?'"

John Key
May 27, 2014
CONTEXT
New Zealand regards her own trade diplomacy as the seed from which the full blown Trans-Pacific Partnership has grown.  So, when New Zealand's Prime Minister, John Key, publicly suggests that, as things are going, the final TPP agreement may not merit a New Zealand signature, one pays attention.  It may not be a man-bites-dog story, but it is getting there.

New Zealand's trade minister, Tim Groser, walked through the history of TPP for a Japanese audience last Friday.  Speaking at the Nikkei Forum in Tokyo, Mr. Groser explained:

"TPP has deep roots. It started with a bilateral FTA between Singapore and NZ. We then invited Chile into the negotiation. The vision of the earlier Singapore-NZ FTA was to be a bridge to what we called 'P5', or 'Pacific Five'. For that, we needed a Latin American economy in the hope of capturing the interest of the United States. Eventually, Brunei asked to be included and we negotiated not P5, but P4 - four small APEC Economies. And then we waited."

He also explained that New Zealand "is the legal administrator, or 'Depository' of P4, [and] we continue to be the Administrator to TPP."
  
The more immediate history, the history of last week, may be more relevant here.  On Monday and Tuesday, June 19 and 20, TPP negotiators met in Singapore, and apparently the results were not encouraging, at least not for New Zealand, which alone accounts "for close to 30 percent of dairy products traded globally."  

New Zealand is counting on TPP to open up dairy markets in Japan, Canada, and the United States.  If we are reading the press reports correctly, Prime Minister Key is concerned that, in the end, Japan in particular may not be willing to open its market for dairy products -- at least not in any meaningful way -- with potentially disappointing consequences for the larger dairy discussion. He expressed that concern in comments to reporters earlier today.

COMMENT
We may well feature more quotes on dairy between now and the 5th of June.  That is when GBD will host a discussion on TPP dairy at the U.S. Chamber of Commerce (See below.)  For the intervening week, however, there won't be any comments from us on dairy per se.

In watching this drama unfold, however, a broader Japan-China comparison comes to mind.  Japan forged its post-War greatness by giving the world a series of attractive, mostly hi-tech products, from the Sony Walkman to the Lexus.  Building a better mousetrap does lead to a certain kind of power, and it is power Japan understands well.

China too forged its economic greatness with production - more with low cost production than innovative products - but production nonetheless.  And China too understands mousetrap power.

But now, with a burgeoning middle class, China is giving more and more countries opportunities to sell products in China and gaining more and more experience with buying power.  (Discovering that paying the piper really does mean getting to call the tune can be quite exhilarating.)  It may be that Japan, a country of 160 million, can never rival the buying power of China with its more than 1.3 billion.  Still, it seems to us Japan may be making a big mistake in putting such a low value on market opening.  Maybe it is time for her to reconsider the potential that is locked-up in closed sectors, starting with dairy.
RELATED EVENT
On June 5, from 9 to 10:30 a.m. - GBD and the U.S. Chamber of Commerce will co-host The TPP Milk Shake: Perspectives on Dairy and the Trans-Pacific Partnership.  This session to be held at the Chamber of Commerce will feature experts from the U.S., Canada, and New Zealand.  Click the link for registration options and other details.   

SOURCES & LINKS
The PM Reacts is a link to a page on interest.co.nz and the Rural News story with the quote from Prime Minister Key's featured above.

Groser in Tokyo takes you to the text of Minister Tim Groser's speech to the Nikkei Forum in Tokyo last Friday.
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� 2014 The Global Business Dialogue, Inc.

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Washington, DC   20036

Tel: (202) 463-5074

R. K. Morris, Editor

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