The Future of the Trans-Pacific Partnership – Phil Houlding

On 4 February 2016, Ministers representing Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam signed the Trans-Pacific Partnership (TPP) agreement. At the time, the Ministers remarked, “After more than five years of negotiations, we are honoured to be able to formalise our collective agreement of TPP which represents an historic achievement for the Asia-Pacific region.” However, the United States officially withdrew from the TPP agreement earlier this year. To understand the impact of this development on others in the Asia-Pacific Region, Emma Schneck, a 2016-2017 Future Hawaiian Diplomat, reached out to the Trade and Economic Counsellor at the Embassy of New Zealand in the United States, Philip Houlding.


Many supporters of the TPP, most notably exemplified by US trade ambassador Michael Froman, have claimed that the economic partnership is not exclusively, or even primarily, based on economic incentive or gain. Rather, such supporters argue that the TPP is meant to focus on establishing international norms in regards to employee working standards for conditions and wages. What does New Zealand believe is the most influential aspect of the TPP and why does the country feel the need to support it?

From New Zealand’s perspective, TPP is really a strategic economic agreement. We [New Zealand] are very much an export-dependent and agricultural-dependent economy, so a lot of our exports are agriculture-related. It is very difficult to export agricultural products, because the rules can be quite challenging through the use of high tariffs and other barriers, so from New Zealand’s perspective–as we are a tiny country with 4.5 million people export to over 100 countries–what an agreement like TPP does is alter rules for exporting to make it easier for our companies. This really applies to all exports, from agricultural products through to digital products – it’s easier to deal with one set of rules than several. So, from an economic perspective, it is very crucial to New Zealand that we try to forge better conditions for us to trade.

In regards to the quote from Ambassador Froman, there are lots of positive rules that TPP members are expected to uphold, such as stronger labor standards and stronger environmental standards. These standards are very important to New Zealand and we are very supportive of such measures. We have also been able to get in some other good standards into the TPP agreement, such as a clause stopping international wildlife trafficking. If countries want the economic benefits of being a member in this agreement, then they must adhere to these higher standards.

The United States’ president has officially withdrawn from the TPP. While the involvement of the United States is not completely off the table, the odds of passing such an agreement in this current political climate look rather grim. If the US is out, what does this mean for the future of the TPP? What does it mean for the future of relations between New Zealand and the United States?

Yeah, well on the relationship front, New Zealand and the United States have a wonderful relationship. TPP was a big part of our engagement, however regardless of the US’s involvement with the TPP, we still have a strong relationship with the country. We, like everyone else, are just trying to get to know the new administration, and are trying to figure out the best places in which the US and New Zealand can work together.

This is actually a great time to be talking about the US’s involvement [in TPP], as we just had a meeting with the now 11 member countries of the TPP in which we discussed the future of the agreement. These member countries agreed that they will meet again within the next 6 months to discuss whether or not we can take the TPP forward as 11 instead of 12 member nations, after rounds of negotiations with their own government leaders. I don’t know yet, until the 11 countries have our next meeting, what the state of the agreement is. The positive thing is that all 11 countries have said that they are still committed, and that’s a discussion that is going to continue within the next 6 months or so.

In 2006 New Zealand had spearheaded the “Pacific 4”, an economic partnership between Brunei, Chile, and Singapore. The agreement had “phased out” most tariffs between the nations and put member countries’ goods on an equal platform as local products, resulting in an $145 million and $1 billion trade increase with Chile and Singapore respectively. As this agreement serves as precedent for the current proposed partnership, how does New Zealand plan to transfer this smaller-scale economic partnership to the larger, more encompassing TPP? Likewise, if the TPP fails to be implemented, what would this mean for the fate of the P4?

P4 was initially established as an organization or group that other countries would be able to join. P4 was what we call a “comprehensive agreement”, and phased out as many tariffs and other barriers to trade as possible–so in that respect it continues to serve as a model for TPP. When the United States joined in 2010 under the Obama administration, just with a country as big as the United States coming aboard, it really brought a new life into the agreement.

TPP itself is therefore more of a new agreement rather than a transition from the P4. However, some of the concepts remain. But, the shape is much bigger and more things are covered by the partnership. Legally, P4 is still in effect, nothing has happened to that. But, we will see TPP as a much larger evolution from P4. Formally speaking, the two agreements do not interact with each other. However, I think the philosophy of P4 remains in that TPP is also a comprehensive agreement, and we could invite other countries to join over time.

One of the United States’ proposed amendments to the TPP was the introduction of a judicial entity with the obligation to settle disputes between member countries. Many of those opposed to the TPP agreement have voiced concerns regarding a State’s entitlement to sovereign rule and jurisdiction. Where does New Zealand stand on the incorporation of this judicial body and how does the country believe the inclusion of this entity will alter the future discourse on the TPP?

I think that it’s important to understand that every county has a sovereign right to be part of the agreement or not and the right to withdraw at any point. The agreement itself cannot force a country to do anything, but what it can do is say that the parties think that a particular country is not meeting a part of the agreement. There is a detailed process to follow, but if one country is not upholding its obligations, then the complaining country may be able to withhold some of the benefits of the agreement based upon that decision. We believe that the complaints about the dispute settlement clause are a bit overstated, and countries fundamentally retain their sovereign rights under this agreement – the most basic one being that you can either decide at any point whether your country wants to continue to be in the TPP. We also ensured that there were plenty of safeguards in the TPP, which protect the Government’s right to regulate in the public interest (i.e. to protect the public health or environment).

We have had some of these dispute arrangements in some of our other agreements, and most countries in these agreements don’t take a combative approach to dispute settlement. Having these arrangements in place is helpful, though, because it means that if two countries are unable to resolve a certain issue, you can appeal to an independent body to adjudicate. This being said, if the countries don’t like it, then it is up to them whether they continue to be part of the agreement which is the ultimate retention of sovereignty. The thing that keeps them together is that they believe the benefits of the agreement are worth the costs and will keep these countries together. All of these things are sovereign decisions, and our outlook is that our [New Zealand’s] sovereignty remains intact, which has been our experience with these types of trade deals.

Prior to the United States withdrawal, the proposed TPP member states accounted for 40% of the world’s economy and housed over a billion middle class consumers. Because of the massive scale of this deal, most trade in the Asia-Pacific region would be dominated by the TPP and its members. How would this deal affect New Zealand’s trade relationships with nonmember states, most notably China, who alone accounts for $12 billion of New Zealand’s current trade? For example, is New Zealand open to China being invited to join the TPP negotiations? If so, how would this affect New Zealand’s trade with the United States?

New Zealand and China have a great trade relationship, China is our largest single goods trade partner. As you can understand, we have our own bilateral free-trade agreement that we have signed with China in 2008. So, we don’t see much effect of the TPP on China-New Zealand trade. In terms of whether China will join the agreement, I think that question is probably quite a long way down the track.

What I think would happen, if another country was interested, is that they’d come to the members and basically ask, and we would see from here, but there would have to be a negotiating process between current member states, so it is a long way down the line. New Zealand has always supported a model of open regionalism, which means that if we set standards in these groups and other countries can meet these standards, then we will consider their application. That applies to basically every other country, and we could consider on a case-by-case basis. We support the open model for TPP, but we need to bring it into force first, as I mentioned, before considering any other members. In the meantime, we will continue to have a great relationship with China, and we’re pretty confident and supportive of the entire structure of TPP as well.

 


Phil Houlding

Philip Houlding has been Trade and Economic Counsellor in the New Zealand Embassy since January 2015. He is responsible for leading the Embassy’s advocacy efforts in Washington on trade and economic issues, including the conclusion of the Trans-Pacific Partnership trade agreement.


Emma Schneck

Emma Schneck is a 2016-2017 Future Hawaiian Diplomat. She hails from the island of Kaua’i, Hawai’i. Currently, she is attending Trinity College, where she is pursuing her interest in International Relations. In the future, she aspires to become a diplomat or foreign relations advisor.


The views expressed represent those of the respective contributors. Alternative viewpoints are always welcomed. Please send any responses to pr@islandssociety.org. Our editors will consider any and all responses for future publication.

Image Credit: blueSkySunHigh (Flickr CC)

Protecting Pacific Natural Resources, Peace and Security in a Changing Climate – Tim Groser

In 2015-2016, several initiatives have bolstered the U.S.-New Zealand relationship, including modernization of defense ties and cooperation on transnational issues like action on climate change and protection of the ocean. In addition, the Obama Administration has heralded the conclusion of negotiations for the Trans-Pacific Partnership Agreement as its primary economic platform for engagement and growth in the Asia-Pacific policy re-balance. To examine recent key events and aspects of the U.S.-New Zealand relationship, Genevieve Neilson, Pacific Island Security Scholar, interviews New Zealand Ambassador to the United States Tim Groser. Appointed in January 2016, Ambassador Groser has regularly drawn from his expertise as the former Minister of Trade and Minister Responsible for Climate Change Issues.


As Minister, you played a central role in several significant achievements, such as the finalization of New Zealand’s free trade agreement with South Korea, conclusion of Trans-Pacific Partnership Agreement negotiations, and securing the Paris Climate Agreement. After settling in to life in Washington, what are your priorities as Ambassador in the coming months?

To begin with, paradoxically, my focus was dominated by the Paris climate change agreement and TPP; as a former Minister I have a unique position in both these areas. I have had to avoid becoming involved in internal US politics on these issues, but put forward the substance of the case as the New Zealand Government’s Ambassador in Washington.

With time, I have begun to reacquaint myself with the defence and security elements to the relationship and enhancements to the scientific and innovative sectors. It has been pleasing to see in my time as Ambassador the announcement of a 15-year modernisation plan worth nearly $20 billion to ensure the New Zealand Defence Force has the capabilities it needs to meet the country’s security and defence challenges. Demonstrating New Zealand’s willingness to share the burden of international peace and security is an important part of our relationship here.

Prior to the signing of the Paris Agreement in April, the Royal Society of New Zealand released a report detailing the impacts of climate change for New Zealand. What has been the New Zealand Government’s response to the report?

The report observes that New Zealand is strongly dependent upon international connections and that the way other countries respond to climate change will influence New Zealand’s international trade relationships. This is something that I followed closely in my former capacities as Minister for Trade and for International Climate Change Negotiations. It is important to me that these debates are informed by sound economics, and a real understanding about the carbon cycle. Otherwise, real damage can be done by junk concepts such as “food miles”. Research has shown that New Zealand’s mild climate, greater efficiency, and availability of electricity that is over 90% renewable leads to a very low carbon footprint for its food production, and the amount of carbon emitted by shipping product halfway across the world is about the same as that emitted by driving between the supermarket and one’s home. There is an opportunity for New Zealand agriculture to tell this story as consumers become more conscious of climate change impacts.

Because the country is so interconnected with the international economy, the Royal Society of New Zealand report states that “New Zealand cannot chart its response to climate change based on impacts in New Zealand alone.” Since your time as Minister Responsible for Climate Change Issues, what have been some highlights of the New Zealand Government’s work with other countries in this area? How do you see international cooperation reducing the impact of climate change on New Zealand?

As a resource dependent and export dependent economy, New Zealand needs an effective global response to climate change.

The Paris agreement last December was an historic step forward and serves New Zealand’s interests well. It was the first truly global agreement on climate change. All countries are committing to take ambitious action. We can’t underestimate the significance of 185 countries making emission reduction pledges over the course of this year. The Paris Agreement banks these. While they collectively won’t solve global warming in one hit, the new agreement sets up a process for regular, 5 yearly, updates. This sets the world on a clear pathway to a lower-carbon future.

New Zealand’s 2030 target, to reduce emissions to 30 percent below 2005 levels, is a strong contribution to this global effort. At the Paris Conference, Prime Minister Key announced New Zealand would provide up to $200m in climate finance, particularly for Pacific Island countries, over the next four years.

Since 2013, we have been working closely with Pacific Island countries as they transition to renewable sources of energy. At the latest Pacific Energy Conference in Auckland in June, donors committed more than $NZ 1 billion to renewable energy projects in the Pacific. This investment will support Polynesia to achieve more than 50% renewable energy by 2024, provide access to electricity for an estimated 1 million people in Melanesia and support other countries in the Pacific to double their renewable energy generation.

Of conservation efforts, the creation of marine sanctuaries, reserves and national monuments are an essential method to restore fisheries and protect local industries in the United States and across the Pacific. Last year, U.S. President Barack Obama and New Zealand Prime Minister John Key announced significant, new marine reserves. How has the New Zealand Government engaged with locally impacted parties to decide on the scope its conservation efforts?

Prime Minister Key’s announcement last year of the creation of the Kermadec Ocean Sanctuary will lead to one of the world’s largest and most significant fully protected areas. It includes the second deepest ocean trench at over 10 kilometres and an arc of 30 underwater volcanoes, the largest anywhere on earth. It is home to six million seabirds of 39 different species, over 150 species of fish, 35 species of whales and dolphins, three species of sea turtles, and many other marine species like corals, shellfish and crabs unique to the area.

We continue to see news stories where the ‘largest’ or ‘one of the largest’ marine reserves and sanctuaries are announced, for example in Palau, Chile, and New Zealand. Why do you think governments have embraced policies that institute ever-larger marine reserves?

Oceans are the new frontier for environmental protection. They make up 72 per cent of the globe and are home to half of the world’s species, but currently only two per cent is protected. There is increased pressure from over-fishing, mining and pollution. Just as earlier New Zealanders set aside significant areas of our land in National Parks, we need to protect special areas of our sea like the pristine ocean around the Kermadec Islands.

New Zealand is a party to the United Nations Convention on the Law of the Sea and a party to the Convention on Biological Diversity. This means we have obligations to protect and preserve our marine environment. Under the Convention on Biological Diversity, we have committed to having 10 per cent of coastal and marine areas conserved by 2020. The Kermadec Ocean Sanctuary contributes to these targets. New Zealand currently has 9.7 per cent of our territorial sea fully protected, but no full protection in our EEZ. The Kermadec Ocean Sanctuary will mean 15 per cent of New Zealand’s ocean environment will be fully protected.

In the past year, Pacific island countries have faced a number of devastating storms and damaging floods, including Cyclone Winston in Fiji and Cyclone Pam in Vanuatu. El Nino is taking a toll on Palau and other Pacific states, causing water shortages. What has been the New Zealand Government’s strategy in aiding its Pacific neighbors in the face of extreme weather events? Does the New Zealand Government have any plans to modify its approach, such as concentrating more on preventative, disaster risk reduction, climate change adaptation or humanitarian response efforts?

Disaster Risk Management, preventative measures, and humanitarian responses are significant parts of the New Zealand Defence Forces’ thinking and planning.

The New Zealand Government engaged extensively with neighbours in the south-west Pacific ahead of last summer’s El Nino weather event, with a particular focus on preparedness for forecast drought and water shortages. The New Zealand Defence Force’s response to Cyclone Winston in Fiji was one of our biggest peacetime deployments to the Pacific, with close to 500 personnel, two ships and six aircraft, involved in delivering hundreds of tonnes of critical aid.

The New Zealand Government has committed more than $15 million for relief and recovery activities to date. The reconstruction phase of New Zealand’s support to Fiji will focus on rebuilding schools, evacuation centres and medical facilities, as well as efforts to stimulate the local economy.

In an interview last year, Prime Minister John Key alluded to the idea that you were selected to be the next Ambassador to the United States in order to support U.S. ratification of the Trans-Pacific Partnership (TPP) Agreement. From your perspective, what is the current status of the TPP, and how has becoming Ambassador changed the role you’re playing in supporting it?

The current status of TPP is that it awaits ratification by the 12 member countries. This is a complex undertaking in every country, but as Ambassador to the United States my focus is on events in Washington. My role is to make the case for TPP as the mechanism for sustained US engagement in the Asia-Pacific, and for setting the rules of the road in the 21st century.

It’s certainly the case that the environment on trade in the United States is very complicated, with the two major Presidential candidates opposed to the deal in its current form. What I have found, though, is a real understanding in Washington of the risks to the United States’ economic and strategic future in the Asia Pacific if it fails to ratify the agreement. I am confident the United States will make the right decision, and my job is to continue to argue for the reasons why.

 


Tim Groser

Tim Groser was appointed New Zealand Ambassador to the United States in January 2016. He is also New Zealand’s Special Envoy to the Pacific Alliance. In 2005, Mr. Groser was elected to Parliament and from 2008 to 2015 was cabinet minister, most recently as Minister of Trade and Minister Responsible for Climate Change Issues. From 2002-2005 he was New Zealand’s Ambassador to the World Trade Organization (WTO), and the Chair of Agriculture Negotiations for the WTO. He also served as Ambassador to Indonesia from 1994-1997.


The views expressed represent those of the respective contributors. Alternative viewpoints are always welcomed. Please send any responses to pr@islandssociety.org. Our editors will consider any and all responses for future publication.

Image Credit: lovelessland via Flickr CC

Bites in Tonga: Media, Development, and Zika – Lora Vaioleti

On Feb 4, 2016, the Tongan government declared it was facing a Zika virus epidemic. At that time, Tonga had two confirmed cases and 265 suspected cases of the Zika virus. Later, three cases were also discovered in New Zealand of people recently returned from Tonga. According to the latest information from the World Health Organisation (WHO) and the Center for Disease Control and Prevention (CDCP), the practice of enhanced precautions is necessary if traveling to Tonga (or Samoa and French Polynesia) to minimize mosquito contact. However, the WHO has yet to recommend that states should issue travel and trade restrictions on Zika-active countries. The New Zealand media’s role in potentially compounding the developmental challenge of the Zika virus in Tonga is a matter of concern.

New Zealand Media Reporting

Even prior to the Tongan government’s declaration of an epidemic, New Zealand media was already suggesting that a travel advisory for Tonga. Without directly stating causal links, another report included a lone sentence on the fact that Guillan-Barré Syndrome can cause paralysis. On February 7, New Zealand media published a further report entitled ‘Teenager feared to have Zika virus after Tonga holiday’. The teen was reported to have ‘rushed home’ from Tonga and had a ‘harrowing wait’ for diagnosis on her return to New Zealand. From February 8 onwards, new reports from New Zealand media promoted headlines like ‘In Tonga, Zika cases skyrocket’ and ‘Zika epidemic declared in Tonga – travel advisory in place’.

In my opinion, sensationalized media sound-bites flowing from relatively larger nations like New Zealand could well be the ‘bites’ of highest impact for Pacific nations like Tonga. While the long-term health impacts continue to be the focus of research, Zika’s short-term symptoms of fever and headache tend to pass in 4 – 7 days. Moreover, most recent updates from the WHO and CDCP reiterated that causal links between the Zika virus and Guillan-Barré Syndrome, and between maternal infection and infant microcephaly, remain circumstantial. Admittedly, there is a growing body of clinical and epidemiological data points towards a causal role for Zika virus. Ongoing research into causal links throws the integrity of the New Zealand media into question with a report released February 4th stating that the Zika virus ‘had been linked’ to microcephaly in infants.

Tongan Development

Sensationalized media publications, often not reflective of evidence, need to be considered through a developmental lens. Tonga’s capacity to source finance for investment in internal infrastructure including health and disease response is limited. As a geographically isolated Pacific nation limited practically in its access to global markets for trade, it relies heavily on tourism for employment, direct investment and exports. In 2014, travel and tourism contributed a total of TOP 143.9m to national GDP, and directly supported approximately 2000 jobs – over 6 percent of total employment. Predictions by the World Travel and Tourism Council – prior to the Zika virus epidemic – was that tourism contributions to Tonga’s GDP will increase by nearly 6 percent annually between 2015 and 2025. In addition, visitor exports generated nearly 60 percent of the country’s total exports in 2014. Recent government efforts have been made in establishment of the Tonga Tourism Authority (TTA) and documentation of local history as the country strives to differentiate its tourism offerings from other South Pacific destinations based on culture and heritage.

The developmental position of Pacific nations like Tonga are both precarious and necessarily dependent. In the Pacific’s reliance on international perceptions for its growing tourism industry, there must be checks and balances on regional media reporting of events like the Zika epidemic. Pacific nations like Tonga lack the marketing resources and brand strength that New Zealand enjoys and fiercely protects for its own multi-billion dollar tourism industry. Enlightened consideration of regional development must include policies for the reasonable protection of- and due respect for our Pacific neighbors’ emerging brand and image for which it so heavily relies. As the challenge of the Zika virus plays out, Tonga will continue to need additional resources to manage the internal threat. As a key developmental partner, it is important that New Zealand’s media outlets not represent an additional external threat to Tonga’s capacity to overcome this public health epidemic.

Author: Lora Vaioleti is a professional consultant on climate change and development.

The views expressed represent those of the respective contributors. Alternative viewpoints are always welcomed. Please send any responses to pr@islandssociety.org. Our editors will consider any and all responses for future publication.

Image Credit: James Gathany via Flickr CC

Note: Edits made to original on 3/2/16