Japan, Canada and US are united in pushing NZ to ditch its demands for better dairy export access to their protected markets.

Tim Groser has been spruiking an interesting new line within senior business circles about the Trans-Pacific Partnership (TPP) being the "mother of all diversification".

Groser is coming under what he labels "intense pressure" to cave in on New Zealand's demands for better access for dairy exports to three heavily protected markets - Japan, Canada - and to a lesser extent the United States - so negotiators from all 12 TPP nations can quickly nail a deal.

In New Zealand - as was apparent with CEO responses to the 2015 Herald Mood of the Boardroom survey - business concern is strong that moves to diversify the economy should be accelerated to offset the dairy slump and a potential over-reliance on the slowing China market.

Groser reckons the CEOs are off-key: The services sector is a major driver for the New Zealand economy with, for instance, the drop in the exchange rate acting as a drawcard for more tourists. The over-reliance on the China market, which (to a degree) was sparked by the ground-breaking 2008 bilateral free trade agreement, will naturally reduce if the TPP is signed, giving NZ greater access to major markets such as Japan. Hence the ability for Kiwi exporters to more adequately spread risk through increasing their exports to major markets such as Mexico, Japan, and the United States under more favourable conditions.


That may be so. But to run that line successfully, New Zealand needs the TPP deal to be signed off.

Right now it looks as if Japan, Canada and the US have ganged up on New Zealand with some advance blame-storming singling out Groser in particular as the potential fall guy if agreement is not reached within the separate conversations that have been taking place on the remaining sticking points: cars and dairy.

Another sticking point - biologics - has now been solved, according to informed sources.

The big country gang-up - which is implied through news reports out of Japan and Canada and (more obliquely) through trade journals with strong access to the US Trade Representative's officials and major business and agricultural lobbies - must be strongly contested.

In Australia - where Trade Minister Andrew Robb is not averse to some full-on sledging in that country's interests - the rhetoric has been strongly in favour of getting Australia's negotiating lines fulfilled.

But Groser (so far) has resisted megaphone diplomacy. Pity. As there is a lot to trumpet on where NZ's negotiating lines are falling.

In Parliament this week, Groser took the battle to the anti-free trade bogeymen. He made it clear that the Government is not signing up to a TPP deal which includes an investor-state dispute settlement provision that does not protect the right of future Governments to regulate in the public interest. Nor will it sign a deal that allows non-transparent and unfair procedures to apply, or one that would encourage "frivolous claims by foreign corporations that would have no merit in the legal sense".

He also made the point to NBR that a TPP deal will create new opportunities for New Zealand services exporters, including the rapidly expanding ICT sector which already generates nearly $1 billion in exports: "It will help make it easier for online entrepreneurs to do business across borders by reducing barriers that require exporters to invest offshore in order to do business, and by making it easier to transfer information around the TPP region." In other forums Groser has dismissed concerns that NZ software and ICT entrepreneurs will find their ability to do business constrained by US-style IP protections.


So back to dairy. It is clear Groser reckons the Japanese and Canadians leaked NZ's position on dairy to fuel domestic concerns and help advance their own positions when talks resume. The point is that Japan, Canada and the US through their media advance their bottom lines.

In Australia, Robb acknowledged that multi-party agreements are hard: "Yet, with no WTO deal in two decades, in the modern era, as a country you've got to row your own boat in cutting bilateral trade deals, or risk your economy missing coming waves of growth. Waves can be caught, or if you leave your run too late, you can miss the cut."

It is time for Groser - and also John Key - to advance the arguments clearly and grab the news agenda instead of leaving it to the megaphones of the TPP protesters.

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