Tim Groser's brinksmanship in the final brutal hours of the marathon Trans Pacific Partnership negotiations secured New Zealand a deal on dairy.
The Trade Minister had to swallow a "few dead rats". But there's still plenty of what Groser earlier termed "foie gras" to make for an tasty trade package estimated to be worth $2.7 billion a year for NZ by 2030.
Groser has not secured a gold-plated outcome - as far as NZ's prime export is concerned - but considerable gains have been made through controlled market access for dairy to major consumer markets like the US, Japan, Mexico and Canada.
But the Trade Minister is in a strong position to face down critics on other elements of the package.
Fonterra's John Wilson is on the button when he blames "entrenched protectionism demonstrated by the US dairy industry" for why the deal failed to reach its potential.
Groser had to apply direct pressure to USTR Mike Froman to get the much-needed movement on dairy. US farm lobbyists had ramped up pressure arguing that if NZ's efficient farmers get increased access to sell more dairy products that would threaten the livelihood of less competitive US dairy farmers. Groser confirmed from Atlanta that his own talks continued with a key player until 5am (Atlanta time) to get sufficient access on dairy nailed down so a final TPP agreement could be announced four hours later. Groser would not disclose the player but it was understood to have been the US The NZ dairy sector will "suck it up".
It has not achieved tariff-free access for their exports of milk powders, liquid milk and butter. But there is significant liberalisation of cheese and yoghurt exports.
Wilson reckons the TPP outcome was a small but significant step forward for the dairy sector.
"TPP has been an enormous undertaking," wilson says. "While the dairy outcome is far from perfect, we appreciate the significant effort made by Minister Groser and his negotiators to get some gains in market access for our farmers.
"Dairy has been very hard to resolve and New Zealand has managed to get some progress against the odds. Our team has done well to lift the deal from where it stood at the Ministerial meeting in Maui. While I am very disappointed that the deal falls far short of TPP's original ambition to eliminate all tariffs, there will be some useful gains for New Zealand dairy exporters in key TPP markets such as the US, Canada and Japan. Greater benefits will be seen in future years as tariffs on some product lines are eliminated."
Specifically, the TPP agreement provides for:
• Tariffs on NZ beef exports to TPP countries will be eliminated, with the exception of Japan where tariffs reduce from 38.5 per cent to 9 per cent.
• New Zealand dairy exporters will have preferential access to new quotas into the United States, Japan, Canada and Mexico, in addition to tariff elimination on a number of products.
• Tariffs on all other New Zealand exports to TPP countries - including fruit and vegetables, sheep meat, forestry products, seafood, wine and industrial products - will be eliminated Sources close to the negotiations say they have not only been "brutal" - but negotiators and trade ministers - were said to be "completed shagged.
Importantly, the United States also compromised with Australia over the extent of intellectual property protections for biologics which are derived from biological sources including vaccines, blood, anti-toxins, human cells, proteins and antibodies, to treat diseases including cancer and rheumatoid arthritis.
"Consumers will not pay more for subsidised medicines as a result of TPP and few additional costs are expected for the Government in the area of pharmaceuticals." Groser says. " There will also be no change to the Pharmac model.
"Regarding data protection for biologic medicines, New Zealand's existing policy settings and practices will be adequate to meet the provisions we have finally agreed on."
The compromise on biologics cleared the way for another roadblock to TPP to be removed following on from the autos issues which was solved earlier in the five day marathon negotiating session.
The major regional trade deal lowers trade barriers in two-fifths of world economy and set the commercial "rules of the road" for decades ahead.
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