Key sets Japan straight on free trade rationale
New Zealand Herald | 12 November 2010
Key sets Japan straight on free trade rationale
By John Armstrong
He said it was nothing personal. But the Prime Minister had barely got off the plane at Narita Airport on Wednesday before he was laying down John’s Law to his Japanese hosts.
And yesterday the Prime Minister reiterated that New Zealand would not accept any free trade deal spanning Asia-Pacific nations which was watered down to secure the inclusion of Japan.
He emphasised that a high-quality free trade pact had to be the end result of negotiations under the umbrella of the Trans Pacific Partnership (TPP). Otherwise, there would be no agreement.
New Zealand is worried that Japanese participation in the nine-member grouping could slow negotiations and lead to compromises, particularly when it came to the thorny question of agricultural products.
Mr Key said "so far" the nine partners in the TPP had agreed to "hold tough" on the terms and conditions under which new members would be accepted.
"My view is that we shouldn’t change that. If we do we are essentially signing up to a much weaker agreement that won’t deliver the results for New Zealand.
"If we were prepared to sign a low-quality agreement, I could do that this afternoon."
The New Zealand Government seems very much in two minds about Japan putting out its feelers to the TPP which is negotiating a free trade pact covering its nine members.
On the one hand, the Government is delighted that Japan’s mountain-high tariffs - a staggering 360 per cent on butter and an even more mind-blowing 778 per cent on imported rice - look like finally coming down.
On the other hand, it is clearly worried that Japan’s participation in the TPP would undermine the whole rationale for its existence - that tariffs are reduced to a zero in all sectors, including agriculture.
New Zealand helped to nurture the TPP from its humble beginnings as a free trade arrangement with three like-minded countries - Chile, Singapore and Brunei.
There was excitement mixed with relief when the United States came on board at last year’s Apec summit. That went a long way towards making up for the lack of a separate Wellington-Washington deal.
Key’s remarks at this year’s Apec speak like a proud parent suddenly discovering his or her wonderful child is fast turning into a stroppy teenager. Except in Japan and the US you are dealing with two very large stroppy teenagers.
The question is how wedded are the Americans to the TPP’s founding principle? Or are New Zealand’s interests to be trampled in a rush by the US to strike a deal to get its exports into Japan, even if on less favourable terms than the TPP is mandated to reach?
Hence Key’s pre-emptive strike as Apec gets down to business with tomorrow’s sessions involving the leaders of the 21-member economic grouping.
Key said New Zealand wanted Japan to join the TPP "but only on our terms".
New Zealand was only interested in a "high-quality, comprehensive" TPP deal.
If agriculture was off the table as far as Japan was concerned, then New Zealand did not want to see Japan around the negotiating table. "It’s as simple as that."
Billions of trade dollars were at stake as far as New Zealand was concerned. The Prime Minister did not want Japan to become the "sea anchor" which slowed negotiations down. When it came to Japan’s readiness to join the TPP, however, it was only "inching along". And so on.
Just for good measure, Key used exactly the same sort of direct language yesterday.
All this is in advance of a scheduled meeting of the TPP partners over the weekend.
Other genuine free-traders in the TPP may not be being so direct, but they will be quietly empathising with what Key is saying.
Key does not have a formal bilateral with Barack Obama, but no doubt he will chat to the American President on the fringes of the leaders’ meeting.
And it is pretty clear what he will be wanting to know.
