Financial Review | Jul 27 2015
Trans-Pacific Partnership trade deal threatened by dairy wrangle
by Greg Earl
A complex stand-off over dairy exports could be the key determinant of whether trade ministers seal an agreement on the world’s largest regional trade zone this week or it dissolves into further delays.
Canada, the US, New Zealand and Japan are all circling each other over the old-style trade issue of dairy export access, despite the fact the Trans-Pacific Partnership is being promoted as a 21st century-style trade agreement that will set the pace for other such deals.
New Zealand special agriculture trade envoy Mike Petersen told Radio New Zealand on Monday: "There will have to be hard political calls made here in some of the countries that have very protected dairy markets, and those calls may not be able to be made by ministers this week.
"But our expectation is they can be made and we could do this deal quite quickly if the will was there to do so."
Mr Petersen’s comments were echoed by Australian Trade Minister Andrew Robb, who said: "Some market access issues are still in the discussion stage. Sugar is in that category, and some of dairy. Again, depending on the country there are different issues, but we are close.
"People do seem to have come with a mind to try to conclude it, and I’m quite hopeful that by the end of the week we will have achieved an outcome which is going to be really the best trade deal since the Uruguay Round 20 years ago," Mr Robb told ABC Radio.
But Canadian Trade Minister Ed Fast was more cautious last week, saying there was a "lot of hard work to be done before this agreement is put to bed".
TPP analyst Richard Katz, editor of The Oriental Economist, said at the weekend that New Zealand could join Canada in not signing up to a deal because of conflict over dairy access.
If Canada and Japan did not open up to the US or New Zealand, the US might not open up to NZ dairy exports, he said.
"The US dairy industry has argued that the US should not open its dairy market to New Zealand and others unless that is counterbalanced by a Japanese and Canadian opening," he said.
"New Zealand, in turn, has warned it might obstruct TPP agreement on certain intellectual property rules that are of great interest to the US unless it gets significant liberalisation for dairy imports in the US, Japan, Canada and elsewhere. It might not even sign on to TPP in such a case."
Trade officials are meeting in Hawaii before a ministerial meeting on Friday that could wrap up the five-year-old talks on the trade zone, which would cover 40 per cent of the world economy and cover a wide range of new issues, including government procurement and intellectual property.
Mr Petersen said New Zealand was still waiting on new offers from Canada, the US and Japan. "If we don’t get this wrapped up this week, we only have a very narrow window where we could close off any outstanding issues," he said.
Mr Robb warned that full details of the complex agreement would not be known at the end of the week even if the talks were successful but would be delayed until the official signing.