The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP) trade agreement has the potential to transform the agricultural sector and at the same time benefit the environment, agribusiness expert Dr. Nic Lees of Lincoln University says.
The CPTTP is the re-negotiated Trans Pacific Partnership after the USA withdrew, and is a free trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Negotiations have concluded between the countries but it is yet to be ratified by New Zealand. The TTP had met some public and political opposition.
The CPTTP could change the sector from relying on low cost commodities to a focus on high value exports intimately connected to a pristine environment, Dr. Lees said.
“Where New Zealand producers are exporting high value branded products we see an associated increase in concern for the environment. These producers know that they need to meet consumers demand for products to be produced ethically and sustainably.”
He said tariffs on New Zealand beef exports to Japan will drop from 38.5% to 9%, saving the industry $25 million.
“This reduction in tariffs will give New Zealand and Australia a competitive advantage over the USA beef in the high value Japanese market.
“It will encourage New Zealand beef farmers to target high value beef cuts in the Japanese market rather than export commodity hamburger beef to the USA,” Dr. Lees added.
Tariffs on kiwifruit exports to Japan, the largest importer of New Zealand kiwifruit, will be eliminated. Tariffs on wine exports to New Zealand’s fourth largest market Canada will also be removed.
Overall the CPTPP could provide approximately $222m of tariff savings each year.
However, he said, the public need to be convinced of these benefits.
“There is suspicion that benefits of the agreement will not be shared equally across the economy and many will see it as only benefitting already wealthy farmers who are damaging the environment,” Dr. Lees said.
“For the public to get behind such a deal New Zealand agriculture needs to demonstrate that increased agricultural production won’t have further impacts on the environment and will have benefits to all New Zealanders.
“In fact, the greatest benefit will be to the regions and to agricultural industries that are already addressing their environmental footprint.”
He cited the example of the wine and kiwifruit industries.
“They are committed to minimising their environmental impact not because of regulations, but because they market high value branded products and their customers demand that these products are produced sustainably.”
This is contrast to sectors such as the dairy industry which export primarily commodity products that are used in ingredients.
“As a result, few retail customers are aware that New Zealand milk products are present in the final product and there is little market incentive for dairy farmers to respond to customers or the general public’s concerns over how the product is produced.
“There is no significant premium for New Zealand commodity dairy exports therefore farmers perceive reducing the environmental impact of their farming practices as a cost rather than a market advantage.”
He said the answer to ensuring that improvement in market access for our agricultural products truly benefits all New Zealanders is for the agricultural sector to move away from commodities to producing high value branded exports.
“This will provide incentives for farmers to meet higher environmental standards not reluctantly as a result of public pressure and regulations but because it gives them a market advantage.
“If the public can be convinced that the benefits to the agricultural sector can contribute to improving the current environmental challenges as well as regional economic growth then the CPTPP can be seen not only as a win for global collaboration but a win for all New Zealanders.”