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CPTPP 'levels the playing field' in Japan

The long-awaited signing of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) in Santiago in just a week will be a watershed moment for New Zealand businesses, particularly our exporters.

New Zealand has been a leading advocate of the CPTPP even back when it was the TPP, and even after the withdrawal of major player the United States.

The CPTPP brings together 11 countries whose economies still account for 13.5 per cent of the world's GDP – a total of US$10 trillion.

​Our fellow 10 CPTPP members are the destination for nearly a third of our overall exports, so partnering with them is a huge opportunity opening up for New Zealand exporters.

Even following the withdrawal of the US, the CPTPP is estimated to add between $1.2 billion and $4b to annual GDP growth once the overall impact of the deal is fully realised.

Having New Zealand businesses succeed internationally will grow jobs and opportunities locally, so the CPTPP is set to have benefits across the country, says Kirk Hope

And it is worth remembering that while the tariff savings from the FTA with China were initially estimated at $115m a year, and trade growth since then has seen annual exports to China quadruple.

For New Zealand, the CPTPP includes access to four countries we have never had a free trade agreement with, but export over $5b of goods and services to – Japan, Canada, Mexico and Peru.

Tariffs will be eliminated on 92 per cent of exports to those markets, which cost nearly $300m last year and put New Zealand exporters on the back foot competing in a global market place.

Exports of frozen beef to Japan plummeted in 2017 after the country lifted tariff rates from 38.5 per cent to 50 per cent following high sales of imported beef.

Japan is our fifth largest export market, but it was also the market with the single highest tariff burden for the sheep and beef sector, with $73m paid in tariffs in 2016.

Australia has been one of our biggest rivals in the Japanese market, holding a major tariff advantage for frozen beef, with its tariff sitting at 27.2 per cent under its bilateral trade agreement with Japan.

The reduction of tariffs for beef – down to 9 per cent over 16 years – allows our exporters to finally be competitive in these markets while extracting a premium price for their products.

This preferential access into the Japanese market will level the playing field where others have previously enjoyed lower tariff rates.

The CPTPP will help diversify New Zealand's trading relationships, with many of the benefits from the agreement set to go to the regions where our primary sector farmers and growers are based.

Fears that jobs will go offshore are likely to remain unfounded – as New Zealand has very few tariffs our industries, and therefore our jobs, aren't affected by tariff reductions.

More than 620,000 New Zealanders already have jobs that depend on exports, and getting access to the markets of Japan, Canada, Mexico and Peru will provide new export destinations for both small and large businesses.

And countries like Colombia, Korea, Thailand and the Philippines may yet join the agreement, which has been constructed to allow others to come on board in the future.

Having New Zealand businesses succeed internationally will grow jobs and opportunities locally, so the CPTPP is set to have benefits across the country.

Source: Stuff Business Day

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