Supply management not in ‘dress code’ for TPP club: N.Z.

Getting in on a potentially lucrative Asia Pacific trade pact will not just be a matter of showing up and asking in, one of the participating countries warns Canada and other would-be entrants.

New Zealand Trade Minister Tim Groser, in a speech Tuesday in his home country, said countries such as Canada, Japan and Mexico wanting in on the Trans-Pacific Partnership (TPP) need to know there is "a very strict dress code involved and we are going to be stuffy and old-fashioned in enforcing it."

For an example of what falls outside the TPP’s current dress code, Groser has specifically singled out the supply management system protecting Canada’s domestic dairy sector.

When the leaders of the nine current TPP members — the U.S., Australia, New Zealand, Vietnam, Singapore, Malaysia, Chile, Peru and Brunei Darussalam — said the pact’s aim will be to "eliminate" tariffs and other direct barriers to imports, "they meant it," he said.

Dairy, he said, "will be very challenging for Canada (which) follows a policy that many governments used to follow but most have moved forward. It is called ‘supply management.’ It is completely inconsistent with tariff elimination."

However, in a point made previously by Canadian ministers, Groser granted that supply management "is not inconsistent" with Canada’s previous trade talks and trade pacts.

He described Canada as "fundamentally a free trading nation with very strong interests in agriculture liberalization," but noted it "has always sought special treatment for its supply-managed industries. If I were a Canadian politician or trade negotiator, I would have done exactly the same."

In Canada’s previous trade pacts, he said, "Canada’s highly skilled senior trade negotiators… have negotiated concessions that have preserved the system of supply management, albeit a system operating at a lower level of output relative to domestic consumption than might otherwise have been the case."

He warned that "in terms of the negotiating history of TPP and the antecedent agreements that led to the launch of TPP, it was designed explicitly not to be ‘business as usual.’"

Groser added, however, that "the cynics, whether they are in Tokyo, Ottawa or Mexico City, have history on their side."

"On-ramp"

Speaking in Canterbury at the opening of a new baby formula processing plant by dairy firm Synlait, Groser said it was unlikely Canada or other would-be members will be able to formally join the TPP talks "within, say, the next few months" before TPP trade ministers next meet in July.

All nine TPP members, he said, will be ready in the meantime "to step up their level of engagement with Japan, Mexico and Canada to help these economies, as well as the existing nine TPP members, make a considered judgement as to whether there is indeed an appetite to engage in a formal expansion of the negotiation, when that might be possible, and under what understandings and modalities."

Ultimately, he said, allowing new TPP partners "is not going to be a mechanical exercise — there is no formula or number of boxes to be ticked. It finally will be a subjective political judgement on our part and their part."

The TPP countries, he said, plan to ask new applicants whether "we see clear evidence of a matching commitment to attain a high-quality agreement across all chapters, including the most sensitive matters."

New applicants, he said, will also need to be in a position to join the talks "as a highway ‘on-ramp’ without dramatically slowing the negotiations down."

Describing the scope and potential impact of the TPP, Groser called the framework reached to date "a most significant development for the sole reason that it involves the United States and, as from last week, has received an extraordinary political endorsement from President Obama and the other leaders of the nine countries concerned."

New Zealand and Singapore, he said, "can rightly claim to have done the original working drawings, if not the full architecture, of TPP" when they entered into their own free trade talks in the late 1990s.

"The real objective was to provide a platform for APEC trade liberalization that the world’s No. 1 economy — the United States — could buy into."