TPP a big stimulus for Hawke's Bay

As shown by other Free Trade Agreements, Hawke's Bay will reap big gains through TPP says Trade Minister Tim Groser. Photo / Warren Buckland

A million new apple trees are being planted thanks to confidence from existing free trade agreements (FTAs), all a lot smaller than the recently-signed TPP agreement says Trade Minister Tim Groser.

Speaking to a Westpac International Export Breakfast Series on Friday, the flu-ridden minister whispered into the microphone but spoke large.

Grand homesteads throughout Hawke's Bay were evidence of the wealth New Zealand derived from its favoured trade status with Great Britain.

"Some say New Zealand was the wealthiest country in the world at that time," he said.

Britain's joining of the European Economic Community in 1973 "was like a dagger in the heart of our economy".

Free trade agreements had burgeoned both in volume and prices returned to growers, solving the problem of losing unfettered access to Britain.

New Zealand had been unsuccessfully trying for decades to get a FTA with the United States, which was now successful with the Trans Pacific Partnership (TPP).

It gave FTAs with New Zealand's top five trading partners " Australia, China, the United States, Japan and Korea.

Dairy was the only exception and the United States dairy industry had made a "dreadful" mistake with a "defence rather than offence strategy" because it already had strong efficiencies.

He said negotiations were tough, as he texted to Deputy Prime Minister Bill English who enquired on its progress.

"We've got everything we want except on dairy and it's like this, Bill.

"I'm on the New Zealand bicycle, driving down the TPP highway, and there are four Mac trucks bearing down on me, one called the US, the others Canada, Japan and Mexico in a giant game of chicken between us, sir."

Mr English replied: "Don't hang on too long mate."

Ironically the largest gain to all New Zealand industries through TPP was the dairy agreement, due to dairy's dominance in the New Zealand economy.

"Because of the distortions in dairy are so large, even a moderate deal like this produces very significant gains."

While Japan had not agreed to put its final beef tariff to zero, lowering it to 9 per cent from 39 per cent was of more gain to New Zealand than a string of other tariff reductions "and our meat industry is over the moon with this result".

He said Japanese agriculture had significant challenges. During a tour of the "world's best cheese factory" he asked if he could observe some actual cheese being made.

After a embarrassed silence the response was: "We only get allocated enough milk to meet one eight-hour shift every two days."

Previous FTAs were very positive for the New Zealand economy and not being party to TPP would have disadvantaged New Zealand and undermined existing FTAs.

Tariffs will be eliminated on 93 per cent of New Zealand's trade with its new FTA partners when fully phased in, assuming respective legislatures pass the agreement.

Existing tariff savings of $259 million a year are forecast - about twice the savings initially forecast for the China FTA.

NZ had a unilateral right to withdraw from the agreement and he had always told media New Zealand would not sign up it harmed the public health system or Pharmac's bulk-buying of drugs.

TPP had the potential "to put serious holes in the New Zealand and Australian health budgets" but New Zealand worked "hand-in-glove with Australia" to stand its ground.

Opposition to TPP was led by "digitally-empowered.

Politically savvy intelligent people with a fundamentally different world view to mine".

They received very good publicity which magnified legitimate concerns, he said.