TPP deal gives limited win for NZ dairy, US gives way on drug patents

Deal finally reached but New Zealand has barely prised open the door for dairy exports to the highly-protected markets of the US, Canada, and Japan.   NZ International Business Forum executive director Stephen Jacobi talks about the TPP agreement on NBR Radio and on demand on MyNBR Radio.

Twelve Pacific Rim nations have reached a deal on the controversial Trans-Pacific Partnership in the American city of Atlanta, ending more than five years of negotiations to create the largest trade and investment pact since the Uruguay Round of the GATT trade agreement 20 years ago.

However, New Zealand has barely prised open the door for dairy exports to the highly-protected markets of the US, Canada, and Japan, with tariffs on some products proving too hard to overturn.

Fonterra 'very disappointed'
Fonterra chairman John Wilson told media, "While I am very disappointed that the deal falls far short of TPP's original ambition to eliminate all tariffs, there will be some useful gains for New Zealand dairy exporters in key TPP markets such as the US, Canada and Japan. Greater benefits will be seen in future years as tariffs on some product lines are eliminated."

Two exceptions
"This establishes complete elimination of all tariffs on everything New Zealand exports, except in two areas," New Zealand Trade Minister Tim Groser told the post-talks press conference. The exceptions were beef exports to Japan and some areas of the dairy trade, although details were not immediately available from negotiations that had continued until 5am Monday, local US time, on New Zealand's outstanding issues.

"On dairy, some (products) will achieve tariff elimination, on others it has been too difficult," said Mr Groser. "We started from a high level of ambition. We haven't been able to achieve that today but it's established a direction of travel. This will open space for future generations of trade ministers.

"If you think you shouldn't do something because you can't achieve perfection, remember the old phrase that the excellent is almost always the enemy of the good.

"This is unquestionably good for our dairy industry."

A full text is still being prepared for public release.

The TPP conclusion emerged after five days of intense and late night wrangling, producing a deal full of compromises at a press conference at 9am Atlanta time, 2am NZT.

The last issues to be resolved were market access for automobiles and the dairy industry – both highly protected in major TPP economies – and the patent life for new generation 'biologics' pharmaceuticals.

Mr Groser said one of New Zealand's TPP negotiators needed medical attention due to fatigue because the non-stop talks were so "brutal."

Drug fears unfounded
Early fears that the TPP would require New Zealand to dismantle its Pharmac drug-buying agency appear to be unfounded.

US Trade Representative Mike Froman made clear that while the US will keep its 12-year patent on biologics, the TPP will establish a five-year minimum patent period, with the US accepting that other countries' drug approval processes could take "another seven or eight years," effectively meaning biologics manufacturers would have longer than five years before facing competition from generic replicas.

Australia reportedly dug in its toes on the drug patent issue, taking the lead but supported by New Zealand negotiators.

With the final text not published, the exact situation is not clear. Labour TPP spokeswoman Annette King says new patent extension provisions could see patents extended to 18 years.

Ms King described this morning's press conference as "fluffy," saying "New Zealanders want detail."

40% of global economy
"We have come to an agreement that will support jobs, drive sustainable growth, foster inclusive development, and promote innovation across the Asia-Pacific region," the formal ministerial announcement said. "Most importantly, the agreement achieves the goal we set forth of an ambitious, comprehensive, high standard and balanced agreement that will benefit our nation's citizens."

The TPP knits together some 40% of the global economy, having begun nearly a decade ago as a four-way negotiation involving just New Zealand, Singapore, Brunei, and Chile. Since then, the US, Japan, Canada, Mexico, Australia, Vietnam, Malaysia, and Peru have joined, with the initiative now widely described as a legacy project for outgoing US president Barack Obama.

US Senate ratification still required
President Obama has expended huge political capital on the TPP's success, bulldozing the US Congress and Senate into approving so-called 'fast track' authority that means a deal cannot be amended by US politicians, but only voted 'up' or 'down'.

TPP was part of Obama's so-called 'pivot' strategy to engage the US more deeply in Asia and assumed geo-political dimensions as a counter to the rising influence of China and part of a wider effort to have the US at the centre of a new generation of trade and investment rules that critics say involve too great a loss of sovereignty to justify the economic benefits of improved trade and investment access.

The US is also negotiating a similar deal with the European Union, known as TTIP, and a new international agreement on services, known as TISA.

ABOVE: A replay of the TPP press conference. The full agreement has yet to be made public.

Ministers repeatedly referred to TPP as writing the rules for 21st century trade and emphasised that other countries, including China, could join it if they wished.

The parliaments of all signatory countries will need to pass legislation to bring the newly minted agreement to fruition, a process that could take two or more years and is likely to spark impassioned debate in many countries. Significant opposition to the deal has emerged, in part because of the secrecy under which it was negotiated.

While negotiating texts have been leaked, giving some hint of the detail in the TPP, no more than a general outline of countries' positions has been revealed by governments, prompting criticism that the traditional secrecy of trade negotiations requires updating for a more transparent era.

RAW DATA: Ministry of Foreign Affairs and Trade's summary of the Trans-Pacific Partnership (PDF here)

(Click to zoom)


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