New Zealand Embassy Washington, United States of America
The Trans Pacific Agreement
Background to the Trans-Pacific Agreement
The Trans-Pacific Strategic Economic Partnership Agreement (or “Trans-Pacific Agreement”) is a model free trade agreement. As the first trade agreement with a membership spanning Asia, Oceania and the Americas, the Trans-Pacific Agreement bridges the Asia-Pacific Region.
The Trans-Pacific Agreement achieves a benchmark equalled by few bilateral trade agreements in having a commitment by all members to eliminate tariffs on all traded goods, and at the same time adopts a high-quality approach to trade in services and other sectors. US participation reinforces the Trans-Pacific Agreement as a possible pathway to advancing broader Asia-Pacific regional economic integration objectives pioneered by like-minded countries committed to high-standard agreements. These objectives align with the APEC goal of promoting free and open trade and investment in the Asia-Pacific region. Membership of the Trans-Pacific Agreement provides an opportunity to support and influence the evolving regional trade and economic architecture.
At the same time, New Zealand remains committed to other regional trade initiatives – in particular to full participation in current discussions within APEC on a Free Trade Area of the Asia-Pacific (FTAAP) and on a FTA covering the 16 member countries in the East Asia Summit process. These initiatives offer exciting prospects in the longer term, involving greater numbers of countries of the Asia Pacific region. They will also build on the ASEAN/Australia/New Zealand FTA just concluded, and several bilateral FTAs either in force or being explored – China, Thailand, Singapore, Malaysia, South Korea, India and Japan.
USTR Ambassador Susan Schwab announced in February 2008 that the United States would join negotiations on investment and financial services set to begin in March 2008 among New Zealand, Chile, Singapore and Brunei. These four countries are the signatories and founding members of the Trans-Pacific Agreement, which entered into force for all countries in 2006. The Agreement’s Investment and Financial Services chapters were left to be negotiated separately, with agreement that negotiations on these chapters would commence within two years.
USTR Ambassador Schwab also announced that alongside the investment and financial services negotiations with Trans-Pacific partners, the United States would begin a detailed exploratory process to determine whether it should participate in the full Trans-Pacific Agreement.
Two meetings between Trans-Pacific partners and the US to discuss the Investment and Financial Services (IFS) chapters of the Trans-Pacific Agreement were held in the first half of 2008, the first in Santiago, Chile, and the second hosted by New Zealand. A third round took place in San Francisco in mid-September.
On 22 September, the United States, New Zealand, Chile, Singapore and Brunei announced the launch of negotiations for the United States to join the comprehensive Trans-Pacific Agreement. Ministers emphasised the importance of the Trans-Pacific Partnership as a vehicle for Asia-Pacific-wide economic integration, indicating that the first round of negotiations between Trans-Pacific partners and the US would be held early in 2009.
Strategic benefits of Trans-Pacific engagement
The Asia-Pacific region is a key driver of global economic growth, representing nearly 60% of global GDP and roughly 50% of international trade. The average GDP growth rate in the rapidly growing and dynamic countries in this region was 5.1% in 2006, compared with the world average of 3.9%. Since 1990, total goods trade by the Asia-Pacific economies has increased by 300%, while global investment in the region has increased by over 400%.
The United States is the world’s largest economy, with over 270 million consumers with a very high average income. The US is New Zealand's second largest individual export destination, third largest source of imports, and a major source of foreign direct investment and inbound tourism.
Significant commercial and strategic benefits will accrue to members of the Trans-Pacific Partnership, both in the shorter term through the elimination of trade barriers, and exponentially well into the future through the increased productivity and growth that will result from regional liberalisation. The Trans-Pacific Partnership promotes the APEC goal of free and open trade and investment in the Asia-Pacific region. The Trans-Pacific Agreement is one potential way to build towards the Free Trade Area of the Asia Pacific (FTAAP).
Liberalisation of trade through the WTO is New Zealand’s most important international trade policy priority, and the US is an important partner in that process. The Trans-Pacific Agreement is a high-standard, comprehensive agreement and is WTO consistent. The promotion of increased trade liberalisation supports continued ambition in the Doha Round. The “Doha plus” gains from a high quality regional trade liberalisation initiative such as the Trans-Pacific Partnership accrue in addition to the positive results being sought through the WTO Doha Round.