01 June, 2017
Remaining TPP Members Must Not Miss The Bus On China
INSIGHTS ABOUT THE NEWS – After US President Donald Trump withdrew the US from the TPP trade deal, the other 11 countries pursuing it decided to forge ahead on their own. But an editorial in The Main Report Business Alert says it is another Superpower they should now consider working with – China.
Describing how the deal could be improved by axing some of the US centric aspects of the former deal, the editorial says “the elephant in the room is China. The TPP 11 should act quickly to make it a TPP 12 again…with China replacing the US.”
It says “it is probably just as well the US is out – it was a bully in the negotiations and got its way on too much… It should be a deal which frees up trade – not a deal which makes corporate litigation and monopoly protection of US interests easier.”
In the same issue of The Main Report Business Alert, Trade Minister Todd McClay says the “TPP is a high-quality set or rules for the Asia-Pacific which will increase market access for our exporters and benefits our wider economy.” He says it represents tariff savings of $222m each year. Japan’s National Graduate Institute of Policy Studies has estimated TPP11 will increase NZ’s GDP by 3.45 and is worth an additional $2.5bn to the economy after 10 years.
But it could be even better with China’s involvement. China is the largest trading nation in the world, the largest exporter and the second largest importer (after the US). It is the world’s second largest economy by nominal GDP (after the US) and the largest economy by purchasing power parity, according to the IMF. And the Middle Kingdom has increasingly become involved in trade organisations and treaties.
Its One Belt, One Road Initiative has resulted in massive Chinese investment for almost a decade. It covers 75 overseas economic and trade co-operation zones in 35 countries, and has a $US1.3 trillion investment in projects already underway. The Chinese are playing a long game, linking their commercial and strategic objectives over long timeframes that Western politicians can’t hope to comprehend because of elections.
The initiative is akin to the US Marshall Plan, which helped Western Europe get back on its feet after World War II. The plan generated goodwill, a post-war international market for US consumer goods and spurred economic growth.
NZ signed on to One Belt, One Road during Chinese Premier Li Keqiang’s in March. Why would NZ, the first developed country to enter into a free trade agreement with China in 2008, ignore the potential of getting alongside China in the TPP?
Trans Tasman’s sister publication, The Main Report Business Alert, is a weekly source of new ideas, trends and forecasts for executives wanting to supercharge their businesses and careers.