Parsons said Trump’s controversial move was a “significant blow” that would create a “struggle” for beef and lamb farmers trying to carve out competition in Japan, one of 12 TPP members. The current draft of the TPP contract cannot be entered into force without America, meaning the deal may fall apart.
In the short term, this means New Zealand is likely to seek a bilateral free trade agreement (FTA) with Japan to level the playing field for its beef. This may be difficult, due to an existing Japan-Australia FTA which has seen Australian beef exports to Japan rise by 13%, while those from New Zealand have fallen by 11%.
“Our competitiveness in that market, and our resulting market share, will continue to be affected for some time,” said Parsons in a sombre market update on Wednesday 25 January.
Free trade ‘allies’
While Donald Trump’s withdrawal from TPP is a blow to trade liberalisation and a “major setback” for New Zealand, Parson portrayed a sanguine disposition for the future of trade. He expects remaining TPP members – Australia , Brunei, Canada , Chile, Japan , Malaysia, Mexico Peru, Singapore and Vietnam – to redraft the deal and show leadership in free trade.
The Regional Comprehensive Economic Partnership trade deal, which includes New Zealand, China, India Japan and other south-east Asian nations, is also under negotiation. This may offer an opportunity to establish common trading rules in the Asia-Pacific region.
Over the next two years, Beef + Lamb New Zealand directors Andrew Morrison and George Tatham will visit the US as part of earlier-arranged trips to meet producers. Parson said US beef farmers were New Zealand’s “allies” and hoped a mission to meet them would build mutual understanding for the importance of a free trade agreement.