World trade now 'a lot more complicated'

By Patrick O'Sullivan -
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Special trade envoy Mike Petersen's TPP efforts may come to nothing if the TPP is not ratified by all 12 nations in June.
Special trade envoy Mike Petersen's TPP efforts may come to nothing if the TPP is not ratified by all 12 nations in June.

Thanks to Brexit and Donald Trump's successful presidential election "the whole world has got a lot more complicated", says special trade envoy Mike Petersen.

"I'll probably end up spending a bit of time helping to decipher it," the Waipukurau farmer and former Beef + Lamb chairman said.

He said the Trans-Pacific Trade agreement was "98 per cent dead" ahead of a ratification deadline of June 17 for all 12 countries.

"There is certainly no chance it will go through in the [United States'] lame duck session," he said.

"The glimmer of hope is, with a Republican-majority congress that is traditionally pro-business and pro-trade, there is a chance it is not dead in the water if the party and Trump can reconcile their various positions. I'd suggest there is still a bit of work to do in that area."

New Zealand exported $8.4 billion of goods and services to the US in 2015 and it is the biggest market for meat through long-standing World Trade Organisation agreements.

During his campaign Mr Trump called TPP a "disaster" and "a rape of our country" that would send more jobs overseas.

Mr Trump's anti-free-trade message and promise to restore jobs by stemming imported goods from China and Mexico won over support from blue-collar workers.

Mr Petersen said dairy access to the US was "a real loss" but of greater concern was the possible "contagion" of tariffs spreading internationally.

The prospect of TPP proceeding without the United States - the world's largest economy - was possible, but "unlikely". "Technically it can, but practically you would have to say it is going to be tough."
New Zealand was still in a strong trading position, he said.

"We don't lose anything by Trump being elected at this stage and we are not one of the countries targeted by Trump for cheap manufacturing or anything like that.

"The lost opportunity for NZ is the lost opportunity for dairy access into the US - that's a real loss. Otherwise we will continue to trade on our current terms.

"The problem now will be it is probably going to take until June for the new Administration to get settled in, appoint their key people and decide their policies and actually what they want to do in these areas."

ExportNZ executive director Catherine Beard said it was unclear what Mr Trump's specific objections to TPP were.

"It remains to be seen how much these statements were merely political rhetoric," she said.

"We hope that in reality, common sense prevails and there will be a return to a more orthodox position on international affairs. This would include the US taking a leadership role on trade in the TPPA region."

Beef + Lamb chairman James Parsons said New Zealand would lose market share in Japan if TPP did not go ahead.

"This is because of Australia's FTA with Japan which entered into force last year gives them an increasing tariff advantage over NZ beef exports," he said.

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