New Zealand has welcomed the United Kingdom into one of its most treasured trade deals, the Comprehensive and Progressive Trans Pacific Partnership (CPTPP).
And it hopes the agreement with Britain will provide a template for dealing with other more problematic applicants for membership, such as China.
However, China’s accession and that of other states could be stuck at a stop sign if those countries fail to meet the standards required and if there are delays to a pending review of the CPTPP rules.
That review is supposed to look at things like developments in digital technology that have advanced since the CPTPP was negotiated in the years leading up to its signing in 2018.
The CPTPP is being chaired by New Zealand this year and trade ministers from all 11 member states gathered in Auckland this weekend, along with Britain’s Secretary for Business and Trade, Kemi Badenoch.
New Zealand values the CPPTP highly.
CPTPP member states account for approximately 13% of world GDP, which is worth US$10.6 trillion.
That is expected to grow significantly with the accession of Britain, the world’s sixth largest economy.
Member states are currently the destination for 26% of New Zealand’s goods exports, which are worth $17 billion and 31% of New Zealand’s services exports, worth $4.5 billion.
They include huge export markets for New Zealand such as Australia and Japan and cover four economies that do not have a tree trade agreement with New Zealand: Japan, Canada, Mexico and Peru.
The weekend’s meeting was hosted by the Trade and Export Growth Minister Damien O’Connor. Prime Minister Chris Hipkins was also there.
The signing of Britain’s accession agreement was a colourful affair, even though the Trade and Export Growth Minister Damien O’Connor admits it will have a limited immediate impact on this country.
That is because the recently signed Free Trade Agreement (FTA) with the UK is a state-of-the-art deal which has little room for improvement.
But O’Connor says having Britain on board is still worthwhile.
“This brings them into a comprehensive and open trade agreement which is the biggest open plurilateral agreement in the globe and it brings the UK back down to our part of the world.”
O’Connor also concedes the accession of the UK is a useful kind of training ground for dealing with other applications.
“There are number of lessons we have learnt from the accession of the UK – those are lessons we have to take on board.”
China’s application turns history on its head. The pact’s previous incarnation, the TPP, was originally supposed to be a counter to China’s trading clout and had the United States at the heart of the deal.
But President Donald Trump pulled out of the agreement, leaving the remaining parties renegotiating the deal and coming up with the reworked CPTPP.
It is not clear how far the Chinese application will proceed, and a further complication is the application from Taiwan, which would infuriate China if it were to make progress.
China is currently working its way through a list of questions regarding its internal social and economic standards to see if it is suitable for CPTPP membership.
It is not known how far through that list China has got.
But even if it meets the standards required, China’s accession has to be approved by consensus, which gives any one of 11 countries the opportunity to block it or even to delay it by inaction.
And O’Connor says the review of the CPTPP could delay China even further.
“There is a commitment to a review of the CPTPP before any decisions are made about further aspirant economies.”
O’Connor says this review is needed.
“While it is only five years old, what we have (with CPTPP) are commitments to sustainability, commitments to inclusiveness and commitments to digital trade that can be better improved so that the CPTPP continues to be the gold standard for trade agreements,” he says.
“The issues around digital trade are evolving all the time, so we have to ensure that opportunities for small and medium enterprises, opportunities for women and opportunities for indigenous people in all member states are improving all the time.”
The CPTPP was signed by Trade Ministers in March 2018, in Chile, and entered into force on 30 December 2018.
Besides China, Taiwan, Ecuador, Costa Rica, Uruguay and Ukraine would like to join.
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