TPP decision disappoints but does not surprise Rotorua business leaders

Todd McClay at a TPP roadshow earlier this year. PHOTO/FILE

Donald Trump's announcement that the US will quit the Trans-Pacific Partnership (TPP) trade deal on his first day in office has been met with disappointment at lost opportunities. But it has come as no surprise to local business leaders and politicians.

Trade Minister Todd McClay, the MP for Rotorua, said the announcement was expected.

"But I'm starting to hear a lot of disappointment from a number of people in the export sector in the Bay - particularly the forestry sector, because TPP will bring tariffs down to zero - and from horticulture, kiwifruit and many, many others."

But New Zealand's position remained the same, New Zealand having just passed its own TPP-enabling legislation, said Mr McClay. He added that the sentiment at the recent Asia-Pacific Economic Co-operation meeting had been strongly supportive of continuing with the TPP process.

And there was no question of the US not continuing to trade with New Zealand, he said. One of New Zealand's key drivers for TPP had been to get an FTA with the US.

"We still just need to keep it moving forward and let it settle a bit. There are benefits to TPP that we will keep explaining."

However, Export NZ executive director Catherine Beard, responding on behalf of ExportNZ Bay of Plenty, noted the queue for a bilateral agreement was likely to consist of bigger economies that had more priority for the US.

Rotorua Chamber of Commerce president John McRae said many governments had worked hard to get the TPP in place.

"On the bright side, the whole of Rotorua's economy is at capacity. I don't think we're going to feel any impact in the immediate term. But for our local economy it's disappointing we're not going to be able to look forward to the positive impact of what the TPP could have brought for us, particularly for the forestry industry and big players like that."

Marty Verry, Red Stag chief executive, said the forestry tariff phase-out wasn't major and would have been slow. But the industry had hoped TPP would have encouraged economic growth longer term, and that in turn would have seen people build more and bigger houses.

However, one potential concern for forestry and other exporters was the possibility of a trade war kicking off between the US and China, resulting in a dramatic impact on China, and in turn on Australia, he said.

"Then two of our three biggest trading partners would have taken hits, which would definitely affect New Zealand's exports."

Mr McClay noted that US failure to support TPP could see China assuming a wider role in Asia Pacific trade policy. New Zealand has just announced an upgraded FTA with China.

"The very reason [the US originally] wanted to be involved in TPP was to have a big voice in the Asia Pacific. If they're choosing not to, there are many other countries that will decide to, and China is likely to be one of them. Certainly the new US administration is going to need to work out next year exactly what role it wants to play as far as leadership in Asia Pacific is concerned. It's still unclear to me what that is likely to be."

Marama Miekle, the chairwoman of Rotorua/Te Arawa TPPA Action Group, said she was not convinced that Mr Trump's announcement meant TPP was finished. Noting that his campaign statements had been inconsistent on various issues, she said TPP opponents would have to wait and see.

"It's the lame duck period now and anything could happen. We just can't really tell right now."

Trans-Pacific Partnership

Includes: Brunei, Chile, New Zealand, Singapore, Australia, Canada, Japan, Malaysia, Mexico, Peru, Vietnam and the US.

All 12 parties signed the negotiated agreement in February 2016, but President Elect Donald Trump has announced the US will not take part.

The TPP is currently awaiting ratification by each country to enter into force.