P4 to P7
November 21st, 2008 at 11:37 am by David FarrarThis looks very promising. The P4 free trade deal between New Zealand, Singapore, Chile and Brunei is the deal the United States may join. And now Australia and Peru are keen to join it, as maybe other APEC economies.
Some very good news for Tim Groser’s first week as Trade Minister.
The one good thing that may come out of the credit crisis is a renewed determination to lower trade barriers.
It is also looking promising that Obama’s protectionist rhetoric was for the campaign only. This will be one flip-flop I welcome if he does stick with the P4 negotiations.
Related posts:
- Obama delays P5 trade negotiations
- And another FTA – Hong Kong
- Good news for free trade fans
- Trade vs Aid
November 21st, 2008 at 11:44 am
This is an instant feather in the hat of Tim Groser, less than a week in the job and to be a part of this is justification for a change in Govt.
Vote:Must be some kind of record.
November 21st, 2008 at 11:45 am
Tim Groser’s first week as Trade Minister was very fruitful, and is a positive step in solving the global finance crisis.
Vote:November 21st, 2008 at 12:11 pm
Anyone know how much New Zealands trade with the original four has improved during the two years of its’ existence.
Vote:November 21st, 2008 at 12:12 pm
Obama doesn’t really have the luxury of being protectionist, he has to do whatever will help the recovery. US trade policy should be very pragmatic for the next few years.
Vote:November 21st, 2008 at 12:28 pm
While Groser is very capable, the P4 agreement was started 2 years ago, repeat 2 years ago.
So success has many fathers.
AS for Frank your comments belie any sort economic viability, as ignorant as many of the Greens , except for when they say the globalisation of financial services has produced most of the mess that has occurred
Vote:November 21st, 2008 at 12:33 pm
Fantastic news. Lets hope it comes to fruition. One of the things that deepened and prolonged the Great Depression was trade protectionism. Deals like this are just what the global economy needs.
Vote:November 21st, 2008 at 12:38 pm
But proper free trade working both ways without all the tricky ohh we must limit this area….
Vote:November 21st, 2008 at 1:18 pm
ha ha every man and their dog are joining this P4 group. I hardly think the US is seriously going to give NZ a look-in.
At least, if I were the US I would not , given NZ’s frosty attitude towards them. We want their money , but we don’t want their nuke ships.
Vote:November 21st, 2008 at 5:20 pm
If any of those several countries export say, agricultural products or cars, he’s going to need a lot of luck to get a/the agreement through Congress…
Vote:November 21st, 2008 at 6:25 pm
Bigger may not be better in this instance. The premise of the P4 agreement was that it was a free trade partnership between 4 small and complementary economies. Peru and Australia are much larger and hence potentially disruptive of the trade balance achieved by the original partners. The attractiveness of the P4+1 agreement with the US, if it were to be achieved, lies in the fact that the US would be bound by the universal rules of the P4 agreement or would receive mutually agreed upon concessions from the smaller partners. The US already has FTAs with Australia and Chile. Australia already has its CER with NZ, so it is clear that the two middle sized potential partners are looking beyond NZ in this proposed deal. Peru could open up as an investment destination for NZ industry and exports, but it is clear that Australia and Peru have other objectives that transcend any purported benefit to NZ. That same is true for the US.
Vote:In fact, it has been claimed that the more partners of different size are brought into FTA networks, the more costs and benefits are unevenly distributed throughout the network, to the detriment of the original (particularly smaller) partners. Free riding on the original deal–where the original partners shoulder all of the costs of the negotiations and newcomers receive the benefits of the arrangement without sharing the costs–is the bane of such agreements. Thus NZ should therefore be very cautious in agreeing to the incorporation of any new (larger) members outside of the special circumstances of the proposed P4+1 deal. Beyond the issue of US protectionism of the very industries in which NZ has an (export) comparative and competitive advantage, the size of Australia and Peru may make their entrance into the P4 a backdoor means of accessing as of yet unreachable markets–potentially at the expense of NZ firms due to the economies of scale involved.
That does not mean that an enlarged P6+1 would not be beneficial to all concerned. What it does require is due diligence and deliberation in negotiating the terms of enlargement so that the original partners are not disadvantaged by the move. Obama’s perspective on trade will be a minor influence on the negotiations since his constituencies are not those affected by any potential market opening to the countries involved in this deal. Plus, his foreign policy orientation will be far more multilateral than bilateral in nature, so his trade negotiators could well be instructed to push harder for an agreement than was the case under the approach of the Bush 43 administration (although the latter did agree to the P4+1 talks).