Stephen Jacobi: Trade talks about clear rules, investment - jobs

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Stephen Jacobi is executive director of the NZ-US Council.

Outdated ideas about protecting local industry and tired old arguments about sovereignty are giving way to a new dialogue about competitiveness and skills. Photo / Supplied
Outdated ideas about protecting local industry and tired old arguments about sovereignty are giving way to a new dialogue about competitiveness and skills. Photo / Supplied

TPP negotiators meet in Auckland this week to further a plan to create jobs and growth. Everyone agrees - an unemployment rate of 7.2 per cent is unacceptably high.

What is less clear is what can be done about it. New Zealand is not alone in this problem - the International Labour Organisation has forecast that in 2013 about 7 million people will become unemployed around the world in addition to the 200 million already without a job, including a large proportion of youth.

Jobs matter and trade has a role to play in providing employment to two out of every three New Zealanders.

The problem is that global job supply is failing to keep up with demand.

Markets are depressed, governments mostly broke and consumers reticent. The World Trade Organisation has revised downwards its forecast for volume growth in trade for 2012 from 3.7 per cent to 2.5 per cent.

This is the background against which officials from the eleven economies negotiating the Trans Pacific Partnership will meet in Auckland this week.

That they are meeting at all is because their governments know the value in terms of jobs and growth that can be created by eliminating trade barriers, putting in place better trade rules and reducing the time and cost in doing business. OECD modelling shows that if G20 economies cut their tariff and non-tariff barriers by 50 per cent, it would create 34,400 semi-skilled jobs and 18,400 skilled jobs in New Zealand.

An open letter to the Prime Minister has been co-signed by 50 New Zealand business representatives. The letter makes clear the support that exists for the TPP negotiating process on the part of New Zealand's largest and most successful companies from a range of sectors, traditional such as agriculture, forestry and fishing and non-traditional such as manufacturing, services and technology.

These business leaders acknowledge the complexity of the negotiation and the high stakes of getting it right.

Nonetheless they see "great advantages from a future agreement that is high quality, comprehensive and ambitious ... [one that] meets business and wider needs and reflects the way business is being done today and will be done in the future".

It's time to get real. Jobs do not create themselves - jobs are created when businesses take risks and invest their money to make a return.

Investment happens when the environment is right, when the rules are clear and there is a degree of certainty about the future.

The more uncertain the outlook, the harder the investment process, the less investment and fewer jobs there will be.

This week TPP negotiators will come together to further the work started over two years ago to improve the environment for investment and business growth in the region. Collectively they represent 650 million people with a total GDP of US$21 trillion ($25.6 trillion). Credible research suggests the gains from TPP could be in the order of $500 billion for the region's economy by 2025. New Zealand's share could be $2.1 billion or just under 1 per cent of GDP.

The matters under discussion this week will cover the 29 draft chapters of the future agreement, including market access and rules of origin, services, investment, intellectual property, labour and the environment and technical barriers to trade.

Bilateral meetings between TPP participants will take place every day during the round. The TPP economies include four of New Zealand's top 10 trading partners and represent 38 per cent of our exports.

Imagine the outcry if New Zealanders were to be woken up one morning and told that a new trade agreement had been signed with this group but New Zealand was excluded. Yet not everyone this week will be happy to see the TPP team in town.

A range of opinions both for and against TPP will be aired at the Stakeholder Forum on Friday and there will be inevitable and alarmist criticism about negotiators meeting behind closed doors, the absolute certainty that TPP will lead to more expensive medicine, multinationals suing the Government and - this one is the best of all - bringing down the internet.

It's right that there is robust public debate about TPP but this is a negotiation - an attempt in a structured process to find scope for consensus.

Those opposed to TPP are right in one respect - more needs to be done to explain the benefits of free and open trade and investment to New Zealanders.

That's why the letter from chief executives has been published today and why a range of business organisations have come together to launch a new website - www.tradeworks.org.nz - which contains a wealth of information about trade and international business and resources related to the TPP negotiations.

Without more trade and business it's hard to see how the jobs dilemma can be effectively addressed. Those who oppose TPP on ideological grounds need to come up with an alternative vision.

Outdated ideas about protecting local industry and tired old arguments about sovereignty are giving way to a new dialogue about competitiveness and skills and the benefits of interdependence in the global economy. New Zealand is leading that dialogue in Auckland this week.

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