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TPP countries gang up on US, talk 'TPP-minus-1'

PLUS: Key's 'Trump Pacific Partnership' quip.

Pattrick Smellie & Chris Keall
Sun, 20 Nov 2016

Leaders of Asia-Pacific countries gathering in the Peruvian capital, Lima, for an annual summit are talking up the potential to complete the Trans-Pacific Partnership trade and investment agreement "minus one": the US.

Prime Minister John Key arrived in Lima on Friday, to attend what he said was "one of the most important" annual summits of the Asia-Pacific Economic Cooperation (Apec) grouping in his eight years in power. The Apec summit immediately follows the election as US president of Donald Trump, who campaigned against the TPP as a bad deal for American businesses and jobs. The summit represents a rare chance for all TPP's signatory country leaders to meet in one place.

Mr Trump will not be in Lima – sitting president Barack Obama will make one of his last international appearances at the Apec summit – but the mood among TPP signatory leaders this weekend is to send a strong message to the incoming US administration that the rest of the region is not giving up on trade liberalisation, even if American political appetite is lacking.

"It might go ahead without the US," said Mr Key, although that was not New Zealand's preferred position.

'Trump Pacific Partnership
Our PM got global attention not for that line, however, but his light-hearted quip that a different concession could boost the trade deal's chances with the White House. "Maybe a name change or something. We could call it something different. It could be the Trump Pacific Partnership," he joked. 

Although a throwaway line, it could put the NZ-US relationship off to an awkward start in the Trump era. The President-elect is famously thin-skinned about any criticism, even that made in jest (this weekend has again seen him taking to Twitter to complain about a Saturday Night Live sketch).

'TPP minus one'
International media are reporting that Japanese Prime Minister Shinzo Abe is willing to consider a "TPP-minus-one" formula, where the US is cut from the deal, with the potential to re-enter at a later date, while the Australian trade minister, Steven Ciobo, has vocally backed an alternative Apec and China-supported initiative, known as the Free Trade Area of the Asia-Pacific (FTAAP).

Mr Key said the feeling among TPP leaders, who will meet formally in Lima on Saturday local time in the margins of the Apec summit, is that "they would rather go it alone than not get there at all."

While New Zealand would support that outcome if it was the only one on offer, the country had pursued TPP because it offered the prospect of open trade with both Japan and the US, two of the world's largest economies, with which New Zealand has never been able to negotiate a free trade agreement.

"But if we couldn't get there with the US, Japan would still be worth it," said Key of the TPP, which covers 12 Asia-Pacific countries, including Canada, Mexico, Australia, Malaysia, Singapore, Brunei, Vietnam, Peru and Chile.

However, the US was the "home of big-spending consumers" and New Zealand would continue to seek liberalised access to that market, even if it couldn't be achieved through TPP.

Also in the mix is the Regional Comprehensive Economic Partnership, a so-called 'low ambition' trade pact currently under negotiation that involves China, India and Korea – none of which are in TPP – and includes Australia and New Zealand and the Asean member countries but excludes the US. New Zealand already has bilateral FTAs with China and Korea but is struggling for progress with India.

A TPP-minus-one scenario would not necessarily be straightforward as the agreement includes negotiated trade-offs in areas that the US demanded and which the remaining signatory countries may seek to exclude, opening the potential for a renegotiation of other contentious trade among remaining TPP countries.

Mr Key said it remained to be seen whether there might be a way to tweak the existing TPP to be "good enough to give a better deal" to satisfy president-elect Trump's political requirements without opening up a full renegotiation.

US pharmaceutical companies were particularly unhappy with the level of patent protection granted under TPP – an issue that Australia and New Zealand fought hard to protect, in New Zealand's case, the Pharmac government drug-buying agency model. As a result of that hard line, New Zealand gained less dairy industry access than it had hoped for under TPP. Any renegotiation would open up a range of issues similar to that between many of the signatories.


Pattrick Smellie & Chris Keall
Sun, 20 Nov 2016
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TPP countries gang up on US, talk 'TPP-minus-1'