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TPP deal finally done; PM says deal eliminates tariffs for 93% of NZ exports to US, Japan, Canada, Mexico and Peru; Dairy companies disappointed with deal; Beef tariffs removed; drug costs to rise

TPP deal finally done; PM says deal eliminates tariffs for 93% of NZ exports to US, Japan, Canada, Mexico and Peru; Dairy companies disappointed with deal; Beef tariffs removed; drug costs to rise

By Bernard Hickey

A Trans-Pacific Partnership Agreement (TPPA) between 11 countries covering 40% of global GDP has finally been agreed after 25 years of talks that were initially led by New Zealand.

Prime Minister John Key hailed the deal has New Zealand's biggest ever trade agreement which would give exporters better access to 800 million customers across Asia and the Pacific.

“In particular, TPP represents New Zealand’s first FTA relationship with the largest and third-largest economies in the world – the United States and Japan. Successive New Zealand governments have been working to achieve this for 25 years," Key said.

The deal would eliminate all tariffs on 93% of exports to New Zealand's new trade agreement partners, including the United States, Japan, Canada, Mexico and Peru, he said.

However, dairy exporters would only get access to those markets through newly created quotas, in addition to tariff elimination on a number of products, Key said. Trade Minister Tim Groser subsequently said tariffs would remain on New Zealand wholemilk powder exports to the United States for 25 years.

Beef export tariffs to all TPP markets except Japan would be eliminated, Key said. 

“We’re disappointed there wasn’t agreement to eliminate all dairy tariffs, but overall it’s a very good deal for New Zealand,” Key said.

“We’ve seen with China how a free trade agreement can boost exports of goods and services and deepen trade and investment links," he said.

Key said the overall benefit of TPP to New Zealand had been estimated to be at least NZ$2.7 billion a year by 2030. He said consumers would not pay more for subsidised medicines and the Pharmac model would not change, although Groser later said drug costs would rise because of the deal.

'Not gold plated for dairy'

Groser later told Morning Report the deal meant all tariffs on cheese exports to Japan would be removed over time, while it would take 10 years for US infant formula tariffs to be removed and 25 years for wholemilk powder tariffs on exports to the United States to be removed.

"It's much less than what we would have wanted on some of our dairy products, but it's the best we could get," Groser said.

Groser said parts of the deal could be described as the 'gold standard' for trade agreements.

"There are other bits that fall far short of a gold standard in the dairy area, but it still leaves us miles ahead," he said.

"It was as good as we could get and a big step forward for New Zealand."

Groser said New Zealand now had trade agreements with its top five trading partners -- Australia, China, the United States, Japan and Korea.

"We've seen from previous FTAs, including the China FTA, how positive they have been for New Zealand trade and investment, and therefore in supporting jobs and growth for New Zealanders," Groser said.

"Not being in TPP, on the other hand, would put New Zealand at a competitive disadvantage compared to other countries."

Groser estimated the changes would ultimately reduce tariffs on New Zealand exports by NZ$259 million a year, which was double the initial forecast savings from the China trade deal.

Beef does much better than dairy

Groser said tariffs on beef exports to TPP countries would be eliminated, with the exception of Japan where tariffs would reduce from 38.5% to 9% per cent.

Tariffs on all other New Zealand exports to TPP countries - including fruit and vegetables, sheep meat, forestry products, seafood, wine and industrial products - would be eliminated, he said.

Groser said the most significant change for intellectual property rules was an extension of New Zealand's copyright period from 50 years to 70 years.

"The cost of this to consumers and businesses will be small to begin with and increases gradually over a 20-year period," he said.

"Other potentially far-reaching or costly proposals raised earlier in the negotiations were not included in the final agreement. Consumers will not pay more for subsidised medicines as a result of TPP and few additional costs are expected for the Government in the area of pharmaceuticals. There will also be no change to the PHARMAC model," he said.

"Regarding data protection for biologic medicines, New Zealand's existing policy settings and practices will be adequate to meet the provisions we have finally agreed on."

Groser said the TPP also contained a provision that allowed the Government to rule out Investor State Dispute Settlement challenges over tobacco control measures.

Groser said he expected the TPP to be in force within two years. MFAT has more detail here.

Here is a break-down on the likely tariff savings by types of export.

Dairy exporters disappointed

The Dairy Companies Association of New Zealand (DCANZ) said it was disappointed the agreement had not delivered a more significant opening up of TPP markets.

“It was always going to be very hard given the starting point for dairy as one of the most protected sectors globally” said DCANZ Chairman Malcolm Bailey.

“While further market opening is needed to help address price volatility in the global dairy market, the deal does contain some useful improvements," he said.

Fonterra Chairman John Wilson said the TPP deal was a "small but significant step forward."

“While the dairy outcome is far from perfect, we appreciate the significant effort made by Minister Groser and his negotiators to get some gains in market access for our farmers," Wilson said.

“Dairy has been very hard to resolve and New Zealand has managed to get some progress against the odds. Our team has done well to lift the deal from where it stood at the Ministerial meeting in Maui. While I am very disappointed that the deal falls far short of TPP’s original ambition to eliminate all tariffs, there will be some useful gains for New Zealand dairy exporters in key TPP markets such as the US, Canada and Japan," he said.

Wilson said entrenched protectionism in the US dairy industry in particular ensured the deal failed to reach its potential.

Political reaction

Labour acting Leader Annette King said the Government appeared to have failed to deliver meaningful gains for dairy while adding costs for Pharmac.

“Tim Groser has been left in the dust on this deal despite the big promises made of a “gold standard agreement’," King said.

"The deal falls well below expectations with only disappointing crumbs for our dairy industry and extended patents on new drugs which will cost the taxpayer millions and leave New Zealanders without life-saving drugs," she said.

“If the best Tim Groser can say is it sets a ‘direction of travel’ then it looks like a failure. We’ve missed the bus on our biggest export."

King said the Government needed to say what the 'devil in the details' concessions, including whether the government had traded away rights to further restrict foreign ownership of housing or farm land and what agreements have been made to allow foreign corporations to sue New Zealand for regulating in the public interest.

“The Canadian and US Governments are planning long and open debates in their parliaments over the details of the deal. New Zealand’s Government must commit to the same – an open consultation with public and a full parliamentary debate including the complete text of the agreement," King said.

“Labour supports free trade, but the TPPA is more than just a trade agreement. We have been very clear that we will not support it if it does not meet our bottom lines including meaningful gains for farmers, the ability to restrict house and land sales, protecting Pharmac and the ability to govern in the interests of New Zealanders.”

(Updated with political reaction)

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Works out at about $600 per person per year by 2030. $1.60 / day after 15 years. It's a rounding error.

Personally I'd rather we had our sovereignty.

Question: How are you, and others, so sure that we have ceded sovereignty when the entire agreement isn't public yet?

There is so much rhetoric on this theme but only speculation to support it.

National's detractors would have us believe that they are ego-driven, power-hungry megalomaniacs... who then, along with other Governments across the pacific, bend over and hand that sovereign power they so cherish to US private companies?

I'll reserve judgement until I see exactly what concessions were given.
I can't yet see where the credibility lies in that argument. If these guys are the right-wing nut-job, self-interested psychopaths the left would have us believe then surely their best interests aren't to burn the electorate and give away what little power they have.


Yes indeed, but it's a non-inclusive, asymmetric arrangement that leaves NZ on the outside, begging for crumbs to offset protection in one form or another for big foreign corporate winners.


It's already been confirmed that we lose the ability for future governments to ban foreign property speculators. Is that enough loss of sovereignty?

More horrors to come no doubt. I just hope like hell software patents don't come with the package.

What's the exact wording in the agreement that precludes a future government from banning residential property speculation?

"More horrors" ... WHAT EXACTLY?! This is my entire issue - it's all baseless scaremongering.

I'm skeptical that we have made hard concessions. However, until I see the whole document I, along with everyone else, can only speculate.

That's not wording from the actual agreement - but lets run with it....

"But it does not alter its ability to impose taxes on property."

So we could still, in draconian theory and without seeing the actual agreement, impose:
- a non-resident stamp duty on residential property investment of, say 100%, at time of purchase; or
- a non-resident withholding tax of 100% at the time of sale?

See - without seeing what it actually says its impossible to comment on.
You may not, strictly speaking, be able to ban them but you could still make it extremely punitive.

copyright extended for yet another 20 years to life of author + 70 years. We may as well just assign copyright for eternity, as Disney will get copyright extended everytime Mickey Mouse comes close to losing copyright protection, all the while making endless remakes of public domain folk tales. Since Mikey Mouse, all folk tales are private property, the public domain is dead.

Like Aussie, just like NZ. All change, no change. Breaking News.??? Old hat.

The TPP Strikes a Blow Against Corporate Impunity

The TPP Strikes a Blow Against Corporate Impunity

Tariffs on New Zealand dairy are almost irrelevant in the US, Canada and Japan.

Does anyone seriously believe that US, Canadian or Japanese consumers want palm-kernel dairy, palm-kernel beef? The market runs broadly from organic to grass-fed to pasture-raised to corn-fed to feed-lot. And palm-kernel fed?

The New Zealand dairy industry, the world's largest consumer of palm kernel feed (PKE) by far, has found its own new low in the market. And we expect any sort of demand, let alone premium, for the stuff? In first-world markets?

World Wildlife Fund (WWF) sees NZ PKE use differently to you workingman:
New Zealand, however, could play
a critical role in kick-starting the trade in certified sustainable PKE, as it is highly
dependent on PKE for livestock feed and a major player in global PKE trade. Ideally,
some of New Zealand’s larger animal feed manufacturers or dairy producers such
as the cooperative, Fonterra, for instance, would commit to seek PKE imports from
certified sustainable sources. Under this scenario, farmers and feed manufacturers
in New Zealand could demonstrate not only that are they helping to reduce tropical
deforestation but also that they are supporting the adoption of more sustainable
practices by major input PKE suppliers.

since 2009, Fonterra has been a member of the RSPO (Roundtable on Sustainable Palm Oil) which is a non-profit organisation set up by WWF (World Wildlife Fund) to promote the growth and use of sustainable palm oil products through credible standards and engagement with stakeholders.

Casual Observer, the WWF statement is worthy, but it is all about what NZ 'could' do, 'ideally' and 'under this scenario...' What matters is what we are doing, not the forlorn hopes of the WFF.

Yes,Fonterra joined the RSPO in 2009. In June 2015, around 20 per cent of global palm oil was certified by the RSPO. How much of New Zealand's PKE imports, standing at 40% of the total PKE trade, is certified?

I'm happy to be corrected in this, but I understand that Fonterra obtains its PKE from Wilmar International, ranked the world’s worst out of 500 global companies for corporate sustainability and environmental impact by Newsweek magazine in 2012.

Not many supermarket buyers in first-world countries are going to lend a tolerant ear to the facts involved - that the New Zealand dairy industry is the largest consumer of PKE in the world, is apparently indifferent to the environmental ravages and carbon footprint involved in its production, and that we have very little idea (so far as I can tell) of its nutritional benefits or risks to livestock, or its environmental impacts on the ground.

It's a hell of a way to run a 21st century business, but perhaps some such comments have finally got through to Fonterra, which I see is trying urgently to reduce its use. And further the problem is, the sorry reputation of this industry leaks onto every other New Zealand company and brand internationally.

Europe can't castigate us for it (Taken from the WWF report):
Animal feed manufacturers in Europe are also key players, and use more
than 80% of PKE destined to Europe, while the rest is purchased by European
power stations as biomass for co-firing with coal, partly in order to comply with
renewable energy mandates. As a whole, Europe accounts for almost half of global
PKE exports (or 31% of global production).

Finally, the beef industries in several Asian economies (notably South Korea, Thailand and Vietnam) took over 20% of PKE exports in 2012 (or 13% of global production) and are emerging as significant PKE consumers.

Wilmar and First Capital bought out Goodman Fielder - Wilmar's association with Goodman Fielder doesn't seem to have impacted on that business. There is a section of society that can afford to ethically buy, but for the majority, while they may like to buy ethically, they in fact buy on price.

NZ may use PKE but it is only marginally a larger user of PKE than Europe. Other countries use hormones and have a higher antibiotic use as a result, and GMO feeds.

GMO is likely to be the next big discussion Fonterra will be having with it's shareholders. We have been given the heads up on that at our farmer meeting.

"the sorry reputation of this industry leaks onto every other New Zealand company and brand internationally."

Perhaps the NZ MSM maybe able to answer why this is. ;-) 95% of Fonterra's production is exported, 5% is sold domestically. Yet it is the 5% that makes all the negative noise about Fonterra. 750 jobs go at Fonterra and people are calling the CEO greedy even though the CEO had offered and had accepted by the Board, a pay freeze. The MSM were told of this some time ago yet it was only after the farmer meetings where this was brought to light, that the MSM decided to acknowledge it - that was IMO manipulation by the media as it suited them not to report it - CEO bashing kept Fonterra in a negative light longer in the public eye.

One disagreement, Casual Observer. Fonterra's reputation in international circles has been on the floor since its incompetent handling of its botulism scare. Danone's experience and its subsequent decision to walk were no small matters. Danone is a highly respected business. The negative professional noise has a long echo.

yes two "market psychologies"

Countries that buy New Zealand milk powder are more concerned about food safety than whether it is produced by pasture-fed cattle, a visiting Dutch academic says. Professor Aalt Dijkhuizen says the situation is different for fresh products in domestic markets and niche markets overseas. "In China they couldn't care less whether the milk powder has come from a pasture-based or a barn system. What they are concerned about is the safety of the food," Dijkhuizen said last week

There was an advanced science in producing the feed, and what was in it varied from year to year, depending on the prices of the raw materials. It was expensive in relation to the price farmers received for their milk.

More and more 'modern diseases', in the west appear to have an environmental link not just a genetic one. Meaning people are going to be more conscience of what goes into their food.

"The Mortality and Morbidity Weekly Report (MMWR) is in some ways a medical version of the Kelley Blue Book, the publication that provides the value ranges of used cars. The MMWR provides, in mind-numbing detail, just how many people got sick or died last week. It's not exactly beach reading, and it's usually as exciting as watching paint dry. But within the endless columns and statistics of the MMWR, the patient and persistent can spot long-term trends and occasionally find serious short-term discontinuities.

"Physicians and epidemiologists get excited by short-term discontinuities; a sudden increase in an extremely rare tumor, like Kaposi's sarcoma, can be a harbinger of a massive infectious disease epidemic with a long incubation period, AIDS. The dozens of patients entering the hospital with this rare tumor in 1982 grew into 75,457 full-fledged AIDS cases in the United States by 1992.
"Usually changes in the incidence of a genetically driven disease take place slowly, across generations. Diseases such as cystic fibrosis or sickle cell anemia result from well-characterized DNA mutations in single genes, and the inheritance pattern is well understood: If parents carry the gene and pass it to a child, the child will be affected. Cystic fibrosis occurs in 1 of 3,700 newborns in the United States each year with no significant change in incidence over many years. Similarly, sickle cell anemia is a genetic disease. One of every 500 African Americans acquires the errant gene from both parents, and we can predict the incidence of sickle cell anemia with some regularity. You cannot 'catch' these kinds of conditions by sharing a room with someone; you inherit them. If your sibling has cystic fibrosis or sickle cell anemia, then you have a 1 in 4 chance of also being sick.

"Autism is diagnosed in 1 percent of individuals in Asia, Europe, and North America, and 2.6 percent of South Koreans. We know there is a strong genetic component to autism -- so much so that until recently autism was thought to be a primarily genetic disease. There is clearly an underlying genetic component to many cases of autism. If one identical twin has autism, the probability that the other is also affected is around 70 percent. Until recently, the sibling of an autistic child, even though sharing many of the same parental genes and overall home environment, had only a 1 in 20 probability of being afflicted. Meanwhile, the neighbor's child, genetically unrelated, has only a 0.6 percent probability, But even though millions of dollars have been spent trying to identify 'the genes' for autism, so far the picture is still murky. The hundreds of gene mutations identified in the past decade do not explain the majority of today's cases. And while we searched for genes, a big epidemic was brewing. "In 2008, when the MMWR reported a 78 percent increase in autism -- a noncontagious condition -- occurring in fewer than eight years, alarm bells began to go off in the medical community. By 2010 the Centers for Disease Control and Prevention (CDC) was reporting a further 30 percent rise in autism in just two years. This is not the way traditional genetic diseases are supposed to act. This rate of change in autism was so shocking and unexpected that the first reaction of many MDs was that it wasn't really that serious. Many argued, and some continue to argue, that we simply got better at diagnosing (and overdiagnosing) what was already there. But as case after case accumulates and overwhelms parents, school districts, and health-care systems, there is a growing sense that something is going horribly wrong, and no one really knows why.

"What we do know, because of a May 2014 study that looked at more than 2 million children, is that environmental factors are driving more and more autism cases. Whereas autism used to be 80 to 90 percent explained/predicted by genetics, now genetics is only 50 percent predictive. We have taken a disease we mostly inherited and rapidly turned it into a disease we can trigger. Now the chances of a brother or sister of an autistic child developing autism is 1 in 8 instead of 1 in 20.

"The rapid pace of today's human-driven evolution may not be giving humanity time to adapt and to reach a steady state within a new environment.


Tariffs on milk powder may not be such a bad thing. It may force us to use what little initiative that we seem to have and produced more processed higher value products.

Thought it said "Beer Tariffs Removed", damn it's only Beef

So thirty days for the detail. Dead rat day!

MFAT Summary of the Trans-Pacific Partnership Agreement

NZ is a founding member of TPP and the benefit NZ will get out from TPP is also at the very bottom.

A significant deal was rushed to be done in such a short period time -- 'the hard issues are dealt with in the last five minutes, so to speak' said Bill English.

That is really dodgy to anyone with half a brain.

Will be interesting to see how each nation will get TPP ratified. BHahahaha

There is huge dis-content in the US alone, so they may yet kill it.


Michael Hudson interview

"Economists for the last 50 years have used the term “host economy” for a country that lets in foreign investment. This term appears in most mainstream textbooks. A host implies a parasite. The term parasitism has been applied to finance by Martin Luther and others, but usually in the sense that you just talked about: simply taking something from the host.

But that’s not how biological parasites work in nature. Biological parasitism is more complex, and precisely for that reason it’s a better and more sophisticated metaphor for economics. The key is how a parasite takes over a host. It has enzymes that numb the host’s nervous system and brain. So if it stings or gets its claws into it, there’s a soporific anesthetic to block the host from realizing that it’s being taken over. Then the parasite sends enzymes into the brain. A parasite cannot take anything from the host unless it takes over the brain."


a) us the voter allow it, maybe its more like injecting drugs ie we want the high it gives but think we will not get the cold turkey. I say "we" as in us personally / this generation (and last), ie we leave the mess for the next generation(s) to clean up/pay for not even considering it seems if they can.

b) Sometimes there are mutual benefits like the organisms in our gut.

Are we actually given a choice though steven? Me thinks not. Take this article written in 2005, about the fledgling trade deal between NZ, Singapore, and Chile, which finally became TPPA.

"The three-way pact with Chile and Singapore would be no different, yet the Government has shied away from examining its social and economic implications.

New Zealand's official paper on the proposed agreement was shallow, and consultations on it cosmetic. It ignored the fact that in the first three years of the Singapore-New Zealand free-trade pact, New Zealand's exports declined by 37 per cent ($180 million) and the trade deficit with Singapore grew from $24 million to $323 million.

The Government concedes the three-way pact would not really be about trade in goods. Chile and New Zealand are small players on the world stage, with similar open economies, climates and seasons. Both have low tariffs. We compete in major primary exports and trade between us is small.

Instead, the Government says the pact would offer strategic benefits: all three countries can position themselves as platforms for foreign firms and investors to gain access to their wider regions by offering guarantees of favourable treatment."

John Key said benefits

estimated to be at least NZ$2.7 billion a year by 2030

If JK says estimated then that figure will be much less.

Where is Labour on all this?

I wonder if that is inflation adjusted....

I would like to see the details of that modelling. Is it really modelling with details and a plus minus range, or what I call "sports event benefit modelling"

Increased taxes for the aging baby boomers health care - make you happy Bernard?

He said consumers would not pay more for subsidised medicines and the Pharmac model would not change, although Groser later said drug costs would rise because of the deal.

In theory there should be no need for theory as all the worlds theoreticians have had years to become economists. Also known as spin merchants.

Benefits "may" accrue to those gaming the system. I think it is another word for gambling with the hoped for tax benefits accruing to pay their past bills and carry their personal slice forwards.

I think that was also technically called a 'deficit'

Estimates have been wrong, since I was a lad. Depends on what ruler you are applying.

Words are meaningless today, when twisted to suit the purpose.

I know.

I have a warped sense of reality.

Perhaps we should look at the wider economy, whose interest rates are appalling not appealing, unless going into debt as fast as one can.

Makes interesting reading.

Influences ones thinking on the realities of those who influence certain hell bent activities, like not raising a fraction of a %. as it might kill us all.... Etc.

More and more, bond traders are drawing the same conclusion: central bankers globally are coming up short in their attempts to combat the world’s economic woes.

Even after hundreds of interest-rate cuts and trillions of dollars in quantitative easing, the bond market’s outlook for inflation worldwide is approaching lows last seen during the financial crisis. In the U.S., Europe, U.K., and Japan, those expectations are now weaker than they were before their respective central banks began their last rounds of bond buying. Read more

Grocer threw Dairy under the bus so he can justify a life time of having both feet and snout in the big boys ,and publics trough, his swollen head and ego are supreme.

NZ is no longer a cheap country to do business, we have lost our most valuable advantage. Farm diesel is 35p a litre in the UK, the USA also has cost advantages that we have lost, without some kind of plan to restore competitiveness then we are pretty much stuck with declining standard of living for most of us.
How will the wine industry cope with the huge surplus in California? I have a friend with a couple of harvesters, he's had to keep them going 24 hours to keep up with growth in planting over the past few years, he told me it's unbelievable how many new vineyards and new plantings there are.

Kate, I drove up the valley last week and the rice harvest was in full swing, as long as thye can still grow rice things cannot be too bad.
Anyway rain has been talked about in California for years

But, that's the point - it's all a result of irrigation. If you ask me, they're completely bonkers. But then, a girl from the midwest would say that :-).

Bonkers for sure. Who had the bright idea to grow rice in a parched desert area? Take a look at the land subsidence photo in the San Jaoqun Valley in Kate's first link. Canterbury plains' future with irrigation for intensive dairying?

clay soils didn't grow much until they found it ideal for rice as it holds water so well. Now it's huge, thousands of acres of rice, elevators as far as the eye can see.

Andrew Totally agree with you,this is not a cheap environment to do business,food fuel, labour everything can be obtained cheaper other places in world

This TPP deal is a Pandoras box, put together by 600 large corporates and their lawyers. This is how the masters of the universe will exert pressure on governments to change laws and policy's. We don't have the money or the resources to fight these monsters and they, are going to eat us alive. These larger unions are a nightmare of litigation and lobbying, and this one is being overseen by Goldman Sachs and Monsanto... and our pollies are serving us up on a plate. A trade deal I wouldn't mind, but this is already limiting the laws that we can make... it is an abomination and a threat to our Democratic process. end rant..

I'm a bit thick with stuff like this so would appreciate some help.

I read that 93% of nz's exports will be tariff free, does that percentage refer to our trade in dollar terms or does it mean 93% of our export categories?

I remember earlier Mr Grocer said that unless the deal was significant for dairy he would not recommend it to cabinet. Was he bullshitting then or is he bullshitting now or is this indeed a significant improvement for nz's dairy industry?


Seems the 93% is trade overall
The line is that 80% was already tariff free, and that the 93% was just existing levels added to the TPPA gain

Canada's Dairy Cartel Isn't Going Anywhere Thanks to Trade Deal
. "We made a firm commitment to defend and preserve Canada's system of supply management, and we have accomplished that," said Harper. "In our dairy sector for example, we have limited access [to foreign goods] in just three-and-a-quarter percent of our market."

"Any imported cheese or milk products face tariffs of up to 245 percent, thereby keeping dairy prices and domestic industry profits high. This system has also allowed Canada's dairy producers to run a massive trade surplus, with the country's net export of milk products averaging $406-million per year between 2005 and 2014."

The compensation for the slice of Canada's dairy, chicken and egg market that will be opened duty-free to foreign goods comes in the form of a $4.3-billion government fund to be paid out over 15 years to farmers hurt by the deal. On average, each farmer will get $165,600 over the period.

Wonder if NZ dairy farmers will be compensated by our government (sarcasm)

Should we be concerned:
set common labor practices across industries in 40 percent of the world's economy.

Down in the drivers room at Milford Sound (11 o’clock boat) 3 ageing Kiwis and 7 drivers from China: advantage China.