After many years of negotiations, a deal has now been done on the Trans-Pacific Partnership Agreement (TPPA) – a free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
It is the largest free trade deal in twenty years and the strategic implications for world trade are huge. Although the text of the TPP has not yet been released, information about some of its terms is beginning to emerge.
In this note, we comment briefly on four key areas.
Tariffs: Although New Zealand was not able to secure significant early concessions on access to North American markets for its dairy exports or on beef exports to Japan, the good news is that tariffs on nearly all other exports will be eliminated. Some will be removed immediately, while others will be phased out. In return, New Zealand will remove the few tariffs which it still applies to products from the signatories. The signatories have also committed to remove trade barriers arising from the application of customs procedures or food safety measures.
Intellectual property: The signatories have committed to provide protection for so-called ‘biologic’ medicines. The PHARMAC medicine-buying model has been preserved (although it has been suggested that some administrative changes may be needed). The TPP provides for copyright in music and films to continue for 70 years rather than the 50 years currently provided for in New Zealand. The TPP also provides that New Zealand will amend its laws on technological protection measures (TPM) to provide that they may be circumvented where copyright is not infringed.
Overseas investment: The TPP should not affect existing laws regulating overseas investment in New Zealand such as the Overseas Investment Act 2005 (other than to increase the threshold for approval from $100m to $200m in some cases). However, it will introduce some new protections both for New Zealand parties investing offshore and for foreign investors in New Zealand. In particular, such investors will be entitled to expect that they are treated as well as domestic investors or those from other countries, and that they will not be subject to expropriation without due process and compensation.
Investment disputes: The TPP contains provision for investor-state disputes to be resolved by arbitration. This will allow private parties to ensure that their rights in respect of investments in signatory nations are not violated by state action. There is a carve out in relation to tobacco control measures. There is also provision for disputes between signatories to be resolved by consultation or arbitration.
Once the text of the TPP has been legally verified, it will need to pass through each signatory’s domestic legislative procedures. In New Zealand, that will involve Parliamentary examination followed by legislative change to implement the deal. If you would like to discuss the possible implications of this development for your business, please contact us.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.