Mood of the Boardroom: Boardroom backing for the TPP

Tim Groser from New Zealand raises his hands as he speaks during a press conference at the Trans-Pacific Partnership meeting in Sydney, Australia, Monday, Oct. 27, 2014. (AP Photo/Rob Griffith) NZ

Public sentiment is staunchly divided on whether the Trans-Pacific Partnership (TPP) will be positive for New Zealand, but our boardrooms remain assertive in their support for an Asia-Pacific agreement, writes Alexander Speirs

NZ's TPP negotiators are working through some tough issues on dairy and biologics protections which -- along with the stalement on auto issues -- led to the recent ministerial talks in Maui stalling.

Some 53 per cent of CEOs responding to the Herald survey were confident that TPP (if successfully negotiated) would hold significant net benefits for the New Zealand economy and business.

One-third remained on the fence and 13 per cent were not confident.

Said Don Brash "I have no doubt that if the negotiations can be brought to a successful conclusion -- by which I mean a situation where New Zealand actually signs the TPP -- as a country, we would gain greatly."

Brash, who is chairman of ICBC NZ added a caveat, "but of course, the negotiations may lead nowhere unfortunately."

The Warehouse chief executive Mark Powell explained, "such a negotiation always involves trade-offs, so it is hard to answer such questions. Bottom lines are not easy to be clear on without deeper insight as to what exactly is on the table."

Labour has put strict bottom lines on how much NZ should trade off to get a deal. Leader Andrew Little says while Labour supports free trade, it's concerned about about any situation which could undermine national sovereignty.

Two of Labour's conditions are inherently complex. Little wants the NZ Government to retain the ability to restrict the sales of farm land and housing to non-resident foreign buyers and ensure that corporations should not be able to successfully sue Governments for regulating in the public interest.

The TPP -- as currently framed -- is understood to place difficulties in the way of Governments attempting either measure. But the Mood of the Boardroom survey indicated broad CEO support for both measures.

Protecting Pharmac as a going concern, particularly the ability to purchase generic drugs, did not resonate so strongly. Just 37 per cent saw it as a potential deal-breaker and one-third did not agree the condition.

Said a banker: "Pharmac is not a binary issue -- there are a range of possible outcomes such as allowing appeals from Pharmac decisions, moderate extensions to patent terms, etc which are not materially adverse to NZ's interests. Dog whistle politics is not helpful in trade negotiation."

A health firm chief executive comenting on a not-for-attribution basis gave a detailed insight into why the Pharmac issue was so complex. "I hope that they will encourage global industry healthy partners, pharmaceutical companies for example, to put innovation funds back into New Zealand to fund innovation and R&D initiatives which can be taken global."

"Right now our customers funding is offshore because Pharmac are buying the lower possible medicine, rather than buying the most cost effective health outcomes. Medicines are only worthwhile if people actually take them and are supported to use them safely."

Negotiating lines

When it comes to NZ's negotiating lines, nearly half of CEOs agree dairy access should have been the top priority for the Ministry of Foreign Affairs and Trade's negotiators.

Trade Tim Groser has been working overtime to cinch a worthwhole deal on dairy but getting the US, Canada and Japan to agree to meaningful concessions has been a hard sell.

Sir Graeme Harrison, chairman of ANZCO Foods said, "The outcomes will not be as great as earlier hoped for but the long drought since the end of the Uruguay Round for a plurilateral settlement involving more than one leading global economy will finally be realised."

"It's not just a dairy deal," stressed Phil O'Reilly, chief executive at Business NZ. "TPP will benefit the new economy as well. Investment is the new glue of trade. That will increase as a result of TPP."

When asked if there were other areas, including rules to benefit the development of New Zealand's high-technology sector, which could have taken precedence -- 51 per cent of our chief executives were unsure.

Said John Barnett, chairman of South Pacific Pictures, "dairy is currently our most significant export, but the TPP will frame our trade for years to come, and if we are to build a resilient economy where our ideas and IP headline our future, we need to ensure that we aren't restrained from creating, developing and exploiting the ideas of that future."