THE TTALK QUOTES 

On Global Trade & Investment

 

Published Three Times a Week By

The Global Business Dialogue, Inc.

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No. 70 of  2015

TUESDAY, OCTOBER 13, 2015

Filed from Portland, Oregon

Click here  for last Thursday's quote from Roberto Azev�do
TPP: A BIG DEAL FOR SMALL COUNTRY

"TPP is New Zealand's biggest ever trade deal and will deliver significant benefits for our country."

John Key, Tim Groser
October 7, 2016
CONTEXT
On the 6th of October the 12 TPP trade ministers announced that the deal was done.  The next day - or given the time differences, possibly the same day-New Zealand's Prime Minister, John Key, and her trade minister, Tim Groser, put out a statement praising the agreement and highlighting some of its benefits for New Zealand.  One, for example, is the fact that "tariffs will be eliminated on 93 percent of New Zealand's exports to the United States, Japan, Canada, Mexico, and Peru."

The statement is relatively short and well worth reading in its entirety.  Today's featured quote is followed by this paragraph:

"It [the TPP agreement] involves 12 Asia Pacific countries, which together account for 36 per cent of the world's economy. 
It means New Zealand will now have Free Trade Agreements covering our top five trading partners - Australia, China, the United States, Japan and Korea."

***

When the topic is the global economy and slices thereof, the numbers are big, and no one should be surprised if the estimates vary slightly from one source to another.  One possible starting point for these kinds of estimates is the International Monetary Fund, and its GDP estimates for 2014.  Those figures put world GDP at $77.3 trillion and suggest that the combined gross domestic products of the 12 TPP countries was about $28 trillion or, as in the New Zealand statement, 36 percent of the total.   Those figures are worth another look, as in these pictures, first as a list:

 
The GDP of TPP countries, from the largest to the smallest.
GBD from IMF data.

Then, as a pie chart:



 GBD from IMF data.


COMMENT
The U.S. economy accounts for more than 22 percent of world GDP and almost 62 percent of the TPP pie.  This is not to suggest that TPP doesn't include significant new opportunities for the United States; it does.  But those 36 and 40 percent numbers one hears are not all new markets for the U.S.  For New Zealand, they almost are.
 
Yes, New Zealand already has FTAs with several TPP countries, starting with the other three in the first TPP - Brunei Darussalam, Chile, and Singapore - and including agreements with Australia and Malaysia.  But with TPP, New Zealand adds several big economies, including the United States and Japan, to her list of FTAs.  That's a major achievement for a small country that is heavily dependent on trade.  The Kiwis are not that different from every other member of the TPP 12.  They have their TPP critics, and they are likely to have a lively debate over the final agreement. 

Indeed, Trade Minister Groser is already feeling some heat over his failure to release certain TPP documents in response to an earlier request.  Still, our guess is that the country will in the end agree with the government; this was a major achievement, notwithstanding the fact that the TPP package on dairy was not as much as New Zealand's negotiators had hoped for.  We are not alone in this view.   One UK commentator, Harriet Maltby, wrote with a touch of envy about New Zealand's success in TPP.  "New Zealand has just negotiated herself into the markets of the future," she said, while in Europe, "we're still arguing over the markets of the past."

****

The world has been promised the text of the TPP agreement within a few weeks but it is not out yet.  Some of it is, thanks to the cascade of leaks, but we shall all have to wait a bit longer for the official version.   Once the text is available, there will be an enormous amount of analysis to be done and argument to be made and digested - both pro and con - before it is time for Members of the U.S. Congress to vote on the deal.   At the end of the day, we hope and expect to be strong supporters of the Trans-Pacific Partnership Agreement and the implementing legislation.  (That is a personal comment. The Global Business Dialogue does not express collective positions.)  

Again, though, any final decision on TPP - at least in the United States - is at a minimum many months away.  In the meantime, we will look at a number of TPP provision, to try to understand how they will work, and who is likely to benefit from them.

***

Yesterday was Columbus Day, and, here on TTALK, this is Kiwi Day, sort of.  That is, our focus today is on New Zealand and New Zealand's assessment of TPP.  It is a good time to note our impression that New Zealand's trade minister, Tim Groser, has been one of the most widely quoted, if not the most widely quoted official throughout this exercise.  And surely none of his comments have gotten more play than the one that appeared in the New Zealand Herald on October 3, just before the deal was done in Atlanta.  In that report, Audrey Young, the paper's political editor, quoted Mr. Groser on what lay ahead.  He said:

"There are some ugly compromises out there.  And when I say ugly, we mean ugly from each perspective. 
It doesn't mean 'I've got to swallow a dead rat and you're swallowing foie gras.'  It means both of us are swallowing dead rats on three or four issues to get this deal across the line."

As a metaphor those unappealing rodents simply will not die.  How could they? Virtually every TPP opponent is working to give them new life.  As we have said, they are not likely to be a problem for New Zealand, at least not an unmanageable one.  The potential benefits of TPP are simply too large.  For the United States and perhaps some others, however, there are indeed going to be hard things to swallow.  A cooperative spoon full of sugar from the Administration might help.  Let's hope it is not too late for that.   

SOURCES & LINKS
From New Zealand is a link to the October 7 statement on TPP from Prime John Key and Trade Minister Tim Groser.

GDP by Country is a Wikipedia page that includes national GDP data from several sources, including the IMF.  It was the IMF listing for nominal GDP that was used in the preparation of the charts above.

New Zealand FTAs takes you to a listing of these on a New Zealand government website.

Ugly Compromises takes you to the New Zealand Herald article quoted in the Comment Section above.

Why Can't We is a link the referenced Telegraph article on TPP by Harriet Maltby.

 

 

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