TRADE TALK

Engaging with New Zealanders A key objective of Trade Agenda 2030 The Ministry will report regularly on progress and discuss issues with the public Trade agreement activity: World Trade Organisation (WTO) Gulf Cooperation Council (GCC) European Union (EU) Singapore Closer Economic Partnership upgrade Pacific Agreement on Closer Economic Relations Plus (PACER Plus) Regional Comprehensive Economic Partnership (RCEP) ASEAN Australia New Zealand FTA (AANZFTA) China upgrade India Trans Pacific Partnership (TPP)

PACER Plus

Unique trade and development agreement Overview Unique trade and development agreement Will lower barriers and provide greater certainty for New Zealand businesses Whilst creating jobs and raising living standards and lift economic development in our Pacific neighbourhood PACER Plus is a landmark trade and development agreement that , while raising living standards, creating jobs and increasing exports in Pacific Island countries. A/NZ support to implement- benefit from the agreement PACER Plus builds on existing trade agreements: the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) (1980) and the original PACER Agreement (2001). 

Next steps Agreement signed on 14 June Release of National Interest Assessment Outreach is ongoing On line resources - factsheets Parliamentary examination process to begin shortly Confirming priorities for working groups

Working Groups Looking at setting up working groups dealing with areas of most potential for New Zealand e.g. services, including food and beverage, niche investments and labour mobility. Links with the Māori economy and potential growth in domestic Pasifika economy. Input to be sought from NGOs and academics for a results framework and evaluating trade and development impacts.

China FTA Upgrade

New Zealand trade with China Exports: $12.3 billion – made up of $9.4b in goods and $2.9b in services. China is a little different from the other agreements discussed today. We’re not creating a new agreement but upgrading our existing agreement concluded in 2008, which itself has been a big success for exporters. China is our largest goods export market, two way trade has tripled and service exports have grown to almost $3bn. China is the second largest source of visitor arrivals and 1st in terms of international students. However, there is significant scope to improve. 3 broad upgrade objectives: Tackling barriers New Zealanders continue to face daily doing business in China, including: Issues we weren’t able to address in 2008; New issues since 2008; and Better processes for the future. Modernise the agreement by updating it to reflect: Recent regulatory developments such as competition law in China; Developments in trade policy, both ours and China’s, since 2008; and New issues, such as digital trends. Deepen cooperation with China’s regulators. By doing these three things the aim is to contribute to meeting our 2020 target.

The story so far Our FTA relationship stretches back to 2004 (launch) and 2008 when FTA came into effect. More recent history to the upgrade: We started exploring the question of whether or not to do it: 2014; Spent 2015 and 2016 discussing the scope; Received public input in 2015 as part of that; Finalised the scope in a Joint Assessment report agreed in November, largely between the Ministers. This year, Premier Li’s visit was hugely significant to New Zealand’s relationship with China as it set a date, the objective of boosting trade, and a commitment to global leadership. Second round of discussions started in the week of 3 July 2017.

Scoping document available: mfat.govt.nz/chinafta Scope of negotiations Objective: improve and upgrade Nine areas identified: Technical barriers to trade (TBT), customs and trade facilitation, rules of origin, agricultural cooperation, services, e-commerce, government procurement, competition policy, environment Other priorities will be discussed Sanitary and phyto-sanitary (SPS) issues being progressed separately, in parallel The scope of the upgrade is set out in a Joint Assessment report – available online. Objective: improve/upgrade the FTA. 9 areas were agreed upon: Couple of points: See TA2030 coming through with a focus on non-tariff barriers (NTBs), services and digital/e-commerce; Not exhaustive – the Joint Assessment recognised that there are different requests, views, positions. One area explicitly not being discussed is SPS issues: High quality framework under the FTA; Led to cooperation; Their priorities are being progressed through that forum in parallel with a 5 year strategic implementation priority plan. Scoping document available: mfat.govt.nz/chinafta

Engaging with New Zealanders Written public submissions, individual and group meetings, public meetings, email and phone contact, online updates Key questions: Of the nine agreed areas, what should our priorities be? What other issues should we be thinking about? Feedback from business on red tape (non-tariff barriers) in China We’re at the start of the process. A key focus of ours at the moment is engaging with New Zealanders on the issues we should be addressing in the upgrade. Some key questions are listed. We have already received a lot of feedback through 2015 submissions process and other channels. There are some brochures around but please feel free to talk to me at the end. Things like NTBs impacting the goods trade e.g. safeguards for dairy, product standards issues, cosmetics, customs/border frustration. In the services space online restrictions, e.g. education investment restrictions in some sectors. In e-commerce there are questions over the impact of newly adopted laws in China. It’s not just the upgrade where we are working with China. It’s also a key part in RCEP.

RCEP

What is RCEP? Comprehensive 16-party FTA negotiation RCEP is an ASEAN initiative Covers 3 billion people and 27% of world merchandise trade Designed to integrate existing network of FTAs and will build new FTA relationships

Potential benefits Goods and services exports to RCEP: NZ$39 billion (CY 2016), includes 6 of our top 10 export partners Improved market access for New Zealand services exporters and New Zealand investors overseas Some improvements on the tariffs and Non-Tariff Barriers that goods exporters face New FTA relationships, e.g. with India Secures New Zealand within deeper regional economic integration

What is being negotiated? Core areas (including market access) Trade in Goods Customs Procedures and Trade Facilitation Rules of Origin Technical barriers to trade Sanitary and Phytosanitary Measures Trade Remedies Trade in Services Financial Services Telecommunications Investment Rules-based areas Intellectual Property Competition E-commerce Legal and institutional issues Government procurement Economic and Technical Cooperation (ETC) Chapters on ETC and SMEs are finalised.

Current state of play Negotiations launched in 2012 18 negotiating rounds so far (next one in India in July ) RCEP Leaders’ joint statement in September 2016: to “intensify negotiations” for the “swift conclusion” of RCEP Although pressure to conclude RCEP is increasing, New Zealand believes early conclusion should not come at the expense of quality and commercially meaningful results.

INDIA

Background New Zealand’s 9th largest trading partner and 7th largest export market Two tracks: RCEP and bilateral. Negotiations launched in April 2010, most recent “round” occurred February 2015. Prime Ministers’ joint statement, October 2016 – included commitment to work towards a high-quality, comprehensive and balanced FTA Continuing actively to seek progress with India to a high quality FTA, but at this time progress will depend on what India is prepared to bring to the table in goods.

Potential benefits Better access to India’s large market for consumer products and services Address India’s very high tariffs for our exporters Better ways for dealing with non-tariff goods barriers, e.g. sanitary and phytosanitary measures, technical barriers to trade, arbitrary import licensing More opportunities for service sector and more certainty for investors

EUROPEAN UNION

Opportunities for New Zealand Third largest trading partner, with two-way trade in goods and services: around $20 billion Goods and services exports: $8.3 billion in 2016 Second largest investment partner: around $85.5 billion inward and $48 billion outward Most important region for science and innovation partnerships: 40% of our international research collaboration Global reach, which creates significant opportunities Integral to implementation of the Trade Agenda 2030 strategy – EU is 10% of our goods exports All data are for the year ending March 2017. The European Union is New Zealand’s third largest trading partner with two-way trade in goods and services valued at around $20 billion. It is our third largest export destination (12% of total exports) and, our latest figures show, our largest source of imports. Combined goods and services exports totalled $8.3 billion and imports from the European Union were $11.7 billion. The European Union is also our second largest investment partner (around $85.5 billion total inward and $48 billion total outward investment) and is New Zealand’s most important regional science and innovation partner, accounting for nearly 40 percent of all our international research collaboration. A free trade agreement with the European Union would also level the playing field with New Zealand’s competitors in the European Union market, where New Zealand is increasingly facing commercial disadvantage in the market as competitors conclude or improve their free trade agreements with the European Union. It would also help create a strong, modern foundation for the growth of services and digital trade, investment, and commercial innovation partnerships with the European Union.

The story so far Preliminary discussions began in 2009 October 2015 – New Zealand and EU leaders announced we would work towards negotiations March 2017 - Scoping discussions on possible FTA completed Both sides want to launch formal negotiations as soon as possible this year. The EU seeks a mandate for negotiations and New Zealand will decide whether to launch soon Given the EU’s substantial importance to New Zealand, we have been working actively for many years to commence negotiations on a free trade agreement. Preliminary discussions began in 2009 and in October 2015, New Zealand and EU leaders announced that we would work towards the launch of free trade agreement negotiations. Joint scoping discussions on a possible free trade agreement were completed in March 2017. A scoping summary paper setting out the likely parameters for negotiations has now been released by the government. This is designed to inform the public, Māori ,and other stakeholders of what we are setting out to achieve and the key issues for the negotiations. By its nature, the summary document is high level. It does not contain an exhaustive list of the issues that will need to be addressed, since final decisions on launching negotiations have not yet been taken. The European Union is now working towards agreeing a mandate for negotiations. Both sides are keen to launch negotiations as soon as possible this year. Brexit – UK remains part of EU for foreseeable future Negotiations between the UK and EU over the next 18 months on the terms of exit and their future relationship are likely to generate significant complexity and uncertainty. While Brexit negotiations continue, existing commitments, including important trade access arrangements governed by WTO rules, will remain in place. We have established a regular Trade Policy Dialogue with the UK

EU and Brexit UK remains part of the EU for now - important trade access arrangements will remain per WTO rules We have established a regular Trade Policy Dialogue with the UK The UK invoked Article 50 of the Treaty on European Union on 29 March, triggering the start of a two-year process to negotiate its withdrawal. In the meantime, there is no change to our current trading arrangements. These include a number of key areas that are incorporated in the EU’s commitments under the World Trade Organisation Negotiations between the UK and EU over the next 18 months on the terms of exit and their future relationship are likely to generate significant complexity and uncertainty. The Government will continue to pay close attention to the withdrawal process as it unfolds. While Brexit negotiations continue, existing commitments, including important trade access arrangements governed by WTO rules, will remain in place. New WTO arrangements will need to be put in place for the UK and the EU27 which preserve their commitments to third countries. We have regular contact with decision-makers in the UK and EU ensuring NZ’s interest are well understood. We have established a regular Trade Policy Dialogue with the UK, but negotiations with the UK can only commence once they have departed the EU.

What’s the agreement about? Objective: A strong, modern foundation to grow goods, services and digital trade, investment, and commercial innovation partnerships Integral to implementing Trade Agenda 2030 – EU is 10% of our goods exports Challenges to address: - Goods market access - Intellectual property - Government procurement - Investment NZ and the EU can create a strong, modern foundation for the growth of goods, services and digital trade, investment, and commercial innovation partnerships with the European Union. The scoping summary paper released by the government sets out the likely parameters for negotiations, encourage you to visit our website to read it. Challenging areas to address in negotiations include: Goods market access - particularly for some agricultural products in the EU Intellectual property - the EU has high standards and specific ambitions on Geographical Indications Government procurement –the WTO agreement provides the basis for negotiations Investment – the EU will likely seek strong commitments and an investment court system Further notes (from scoping summary) Both sides agreed that all products will be part of the negotiations. The Agreement should aim at full tariff liberalisation with any phasing out of tariffs to occur over a relatively short period. In recognition of possible sensitivities (such as, in the case of the EU, for some agricultural goods) it was agreed that consideration should be given to these sensitivities during negotiations using a range of possible methods. Both sides agreed to include an Intellectual Property chapter in the agreement which should aim at ensuring an adequate and effective level of protection and enforcement of all forms of Intellectual Property Rights. We agreed that provisions in this chapter should contribute to a more sustainable and inclusive economy for the parties. Both sides also agreed to explore liability of Intermediary Service Providers, enhanced border enforcement measures, and issues related to genetic resources, traditional knowledge, and folklore during negotiations. The EU has a particular framework for recognising and protecting GIs that is different, in many ways, to how New Zealand currently protects them. In scoping discussions, both sides agreed that negotiations should aim at providing a broader framework for recognition and protection of GIs beyond wines and spirits. However, any agreement on providing such a framework will be subject to a satisfactory overall outcome in the Agreement for New Zealand. Both sides agreed that the Agreement should aim to build on the World Trade Organisation Government Procurement Agreement and improve access to public procurement markets at all levels of government, while taking account of any sensitivities. Negotiations in this area will also consider covering commitments for public-private partnerships. New Zealand and the EU agreed that the Agreement will also include a mechanism for resolution of disputes between investors and states, but also agreed that the detail of this mechanism will be an issue for negotiations, taking into account recent policy developments in this area.

Any questions?

TRADE TALK