China is established as our main market and the TPP's nearly a done deal, but there's plenty more work to do

News that China may have become the world's largest trading nation had an air of inevitability about it. Towards the end of last year, China pipped Australia as New Zealand's largest export market.

China's continuing rise is good news not just for New Zealand exporters, but for our country as a whole as the benefits of increased export returns pulse through the economy.

Yet even as we learn to ride the Chinese wave, we need to keep our options open and develop greater understanding about the increasingly integrated and inter-dependent nature of links between economies. A significant percentage of Chinese exports is generated by foreign companies established in China. Chinese and Asian export growth is itself dependent on recovering economies in North America and Europe.

A range of other trade initiatives this year should help advance regional integration and ensure New Zealand's export eggs aren't all in one basket.


Chief among these initiatives is the Trans Pacific Partnership (TPP), a comprehensive trade and economic negotiation that brings together 12 partners including those with which we don't have free trade agreements - the United States and Japan, as well as Canada, Mexico and Peru. After five years of negotiation, the TPP is in the "end game" but the length of the game owes more to cricket than rugby or netball.

At this stage the key issue is whether the United States is serious about making changes to its import regulations for agricultural products, textiles and other products. Without this it's hard to see the other parties addressing issues the US considers important.

The TPP is attracting its share of controversy as complex issues related to pharmaceuticals, intellectual property, use of the internet, investment and now the environment are under negotiation.

The New Zealand Government has been clear that no major changes will be made to Pharmac's role as a purchaser of medicine, and the US appears to be moderating some of its requests in this area.

The TPP may provide additional rights for foreign investors, but in much the same way as has been done with our existing agreements with China and Asean. New Zealand's environment protection policies won't change one iota.

The issue is the extent to which other countries should have to be held liable for environmental agreements to which they are not a party. In all these areas the heat is on negotiators to find a basis for consensus to present to ministers.

There is understandable concern about the transparency of this negotiation. Once it is concluded the Government would be wise to allow time for extensive consideration of the text by public stakeholders and a vote in Parliament before proceeding to ratification.

While the TPP is close to conclusion, success is not a foregone conclusion. An alternative is provided by the Regional Comprehensive Economic Partnership (RCEP), which links the Asian economies plus India, Australia and New Zealand but does not include the United States or other countries in the Americas.

RCEP is just starting. Its ambition is not as great as TPP but the challenges of securing agreement are no less significant.

New Zealand is pursuing three other negotiations - with Korea, India and the Customs Union of Russia, Belarus and Kazakhstan. All have made rather slow progress. Korea is perhaps the most critical because just before Christmas, Australia concluded a free trade agreement with Korea. That puts dairy, beef and kiwifruit industries on the back foot in an important market.

An opportunity to influence these developments arises next month when Auckland hosts more than 200 business leaders and officials during the first annual meeting of the Apec Business Advisory Council (ABAC).

Apec is being hosted by China this year and the invitation to New Zealand reflects the strength of the NZ-China relationship and the leading role New Zealand plays in Apec.

Achieving regional economic integration and building the foundations for growth in the Asia Pacific will be top of the agenda for ABAC in what will be a busy year.

Stephen Jacobi is executive director of the NZ-US Council and NZ International Business Forum.