Jamie Gray is a business reporter for the NZ Herald

Industry lobbyists set out benefits of trade deal in letter to John Key

Proponents say TPP will give NZ better access to globally significant markets to build on the $28 billion worth of goods and services exported to member countries in 2014. Photo / File Photo
Proponents say TPP will give NZ better access to globally significant markets to build on the $28 billion worth of goods and services exported to member countries in 2014. Photo / File Photo

Business and industry group leaders have lent their support to the Trans Pacific Partnership free trade agreement in an open letter to Prime Minister John Key.

The agreement, which is to be signed in Auckland on Thursday, is aimed at liberalising trade and investment between 12 Pacific-rim countries - New Zealand, Australia, Brunei, Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, the United States and Vietnam.

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Proponents say TPP will give New Zealand better access to globally significant markets to build on the $28 billion worth of goods and services exported to member countries in 2014.

The letter has been signed by a diverse group from Beef and Lamb's Scott Champion, NZ Winegrowers NZ's Philip Gregan through to the NZ Forest Owners Association's Paul Nicholls, and several business councils.

"Our major trade interests - meat, horticulture, wine, seafood, forest products, dairy and manufactured goods - will all benefit from the reduction and/or elimination of tariffs and non-tariff barriers especially in markets like Japan, the United States, Canada, Mexico and Peru," the letter said. It would be "inconceivable" to not be part of the agreement, the groups said.

For dairy - New Zealand's biggest export and a sector that attracts high levels of protection in many countries - TPP is seen as a step in the right direction but short of initial expectations.

Dairy Companies Association of New Zealand executive director Kimberley Crewther, who has lent her support, said she broadly agreed with TPP but it was less than the sector had hoped for.

"There are gains to be made for the dairy industry as result of the TPP outcome," she said.

"We are going to be better off in terms of market access within the region once TPP is implemented, and we also agreed that if New Zealand did not sign up with TPP and it went ahead with other exporters in the region, then we would be at a disadvantage."

Gains for dairy were split between reductions in tariffs on existing trade and new access for those sensitive products previously limited by quotas.

The association estimates the total volume of new dairy export quota resulting from TPP will about 80,000 tonnes initially, expanding to 180,000 tonnes after 15 years - small compared with Fonterra's export volumes, which hit 300,000 tonnes in December alone.

"We feel it is a step forward, but that there are other steps to be made after TPP," Crewther said.

"We have not reached the ultimate goal we have of reaching complete liberalisation of dairy markets, but we are moving in the right direction.

"In the US, there are many dairy products that they have not liberalised but where they have established quotas. Those quotas are perpetually growing," she said.

Butter quotas were continually expanding and there were going to be more sales opportunities for New Zealand dairy products.

"It will mean more market access and incremental expansion for the dairy market and we know the more liquidity that we can add to the dairy markets, the more that is going to help with price volatility," she said.

"It will not be easy to distinguish between other market dynamics, but all new access is good," she said.

Crewther said TPP would not see a change overnight, and the association had high ambitions for TPP.

"We would have liked more, but the focus now is on how we can make the most of what is in the deal and how we can work together with the Government to continue furthering trade liberalisation as well," she said.

One of the letter's organisers, Stephen Jacobi, said that as a collective opportunity, TPP is bigger than the NZ-China free trade agreement.

Catherine Beard, executive director for ManufacturingNZ and ExportNZ, said the primary sector exporters would be the winners. "For dairy it was not as good as they would have liked, but significantly better than no deal," she said.

Beef and Lamb New Zealand and the Meat Industry Association are supportive. The sheep and beef sector's exports to TPP countries were worth more than $2.4 billion in 2014, nearly one-third of the sector's total.

Kiwifruit marketer Zespri said the agreement would generate significant value, particularly in Japan, where the industry paid more than $15 million in tariffs in 2014. Zespri estimates it will equate to savings of over $1000 for every hectare of kiwifruit grown in New Zealand.

The wine sector is also expected to benefit, with member countries accounting for 60 per cent of wine exports.

See full letter here:

- NZ Herald

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