RCEP deal by November still achievable - O'Connor

Trade and Export Growth Minister Damien O'Connor talking about biosecurity. Photograph by John Borren

New Zealand's minister of state for trade and export growth heads to Bangkok this week for an additional round of talks on the Regional Comprehensive Economic Partnership and said a deal by November is still achievable.

"It's achievable but only if urgency and momentum build between now and the end of the year," Minister Damien O'Connor said in an emailed response to questions.

Sixteen countries are involved in the RCEP talks: the 10 members of ASEAN and the six nations that have free-trade agreements with the regional bloc.

Those 16 states have a total population of more than 3.5 billion and account for about 28 percent of global trade. In the year to March 2018, they took about 59 percent of New Zealand goods exports and 52.1 percent of New Zealand's services exports – a combined value of over $45 billion, according to the Ministry of Foreign Affairs and Trade.

For New Zealand, major benefits could include the elimination of tariffs into India on products of key export interest and better market access for New Zealand businesses in a range of key Asian countries. Negotiations have been underway since 2012.

Participants decided on an additional round of talks last month, with leaders aiming to announce the conclusion of negotiations in November.

"An accommodation between the big economies will be key. New Zealand is confident that all 16 participants are committed to realising the value of RCEP this year," O'Connor said.

In addition to the direct commercial benefits, a successful RCEP would have significant strategic value, he said.

ASEAN comprises Brunei-Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The other countries involved are Australia, China, India, Japan, Korea, and New Zealand.

At a time of considerable turbulence in international trade policy – the sharpest rise in protectionism since 1995, erosion of support for the multilateral trading system, increasing unilateralism – regional integration initiatives such as RCEP become increasingly valuable, O'Connor said.

New Zealand is seeking the removal of barriers to trade in goods across all sectors under RCEP.

"We're seeking market access for all of New Zealand's key export interest across all sectors. It is critical for all New Zealand exporters that we are part of these types of regional arrangements," he said.

A key issue – for India in particular – has been the dairy sector.

While India is the largest producer of dairy in the world, dairy is politically important and sensitive for India, said O'Connor.

However, demand for dairy products in India is growing faster than domestic supply. This trend is expected to continue, even with increases in domestic production, and will compound the existing pressure on food price inflation, he said.

Last month, RS Sodhi, managing director of Amul, India's biggest dairy cooperative, accused Australia and New Zealand of trying to "destroy" the local industry. Having already wrecked Sri Lanka's dairy market, the pair had a "hidden agenda" to end India's self-reliance in milk production, New Delhi-based DownToEarth quoted him as saying.

O'Connor said New Zealand seeks to complement India's local supply to meet demand growth from premium food importers in India's "organised" or commercial dairy sector. New Zealand's annual dairy production is less than 13 percent of India's with New Zealand producing around 21.3 million tonnes versus India's 167 million tonnes.

"New Zealand has been emphasising that we could only ever supply a small share of the total Indian dairy market," he said.