Daily Times

WELLINGTON: New Zealand is in for some very challenging times ahead due to the uncertain future of the 12-nation Trans-Pacific Partnership (TPP) and Brexit, a New Zealand expert has said.

Professor Rob Scollay of the New Zealand APEC (Asia-Pacific Economic Cooperation) Study Center at the University of Auckland made the comments in a recent interview with Xinhua.

TPP is New Zealand’s first-ever trade agreement with the United States — a breakthrough in opening up new markets. However, US President-elect Donald Trump has pledged to withdraw the US from the current deal.

Scollay said the New Zealand government had still given no clear indication of how it would react to Trump’s statement.

“I don’t think New Zealand would be particularly enthusiastic about renegotiating the TPP,” he added.

“I think they would prefer to see the TPP as it has already been negotiated. I would expect they would prefer to see it go ahead as it is,” he said.

Furthermore, just as New Zealand was seeking to start talks on a European Union-wide free trade agreement, the Brexit occurred.

New Zealand is already at odds with some nations in the 16-nation Regional Comprehensive Economic Partnership (RCEP) by “strongly advocating positions that would involve perhaps a more open approach to trade …” said Scollay.

“From a New Zealand point of view, although we can say that tariffs in general are not high in the Asia-Pacific region, they are still very high in agriculture,” he added.

In the meantime, he pointed out that New Zealand will continue to support the Free Trade Area of the Asia-Pacific (FTAAP) as long as APEC members are willing to continue working on it.

However, he said, “I don’t think it’s going to happen quickly and it will depend eventually on some sort of accommodation being reached between China and the United States.”

What Trump seems to be ignoring at the moment is that China and the United States are both very dependent on each other economically, said Scollay, adding that the positions he’s been publicly stating up till now show no recognition of the fact. “I suspect that if Trump and his advisors are talking about bilaterals, they’re going to come back with a renewed emphasis on the original US model, which for most small economies or most economies in the region contains some very objectionable features,” he said.

“You could go further than that and say that the kind of trade policy that Trump has been talking about, which involves massive increases in tariffs on China and Mexico and a much more aggressive US-first approach to trade policy in general, that could finish up putting the final nail in the coffin of the WTO (World Trade Organization).”

New Zealand, like the rest of the Asia-Pacific region, is waiting to see if Trump would follow through on his campaign pledges. “We just don’t know of course whether he will. We really won’t know what we’re dealing with until we see the shape of a Trump trade policy start to emerge,” Scollay said.