Second free trade agreement to be signed this year

Second free trade agreement to be signed this year

The first multi-party free trade agreement spanning the Pacific and Asia was signed today in a ceremony at Parliament, announced Prime Minister Helen Clark.

The Trans-Pacific Strategic Economic Partnership links New Zealand with Chile, Singapore and Brunei, liberalising trade in goods and services between the four countries.

Helen Clark said that New Zealand, as the depositary state for the agreement, was hosting the signing ceremony.

The documents were signed by New Zealand Minister for Trade Negotiations Jim Sutton, Singapore High Commissioner to New Zealand Ms Seetoh Hoy Cheng, and the Chilean Ambassador to New Zealand Mr Juan Salazar. Brunei will sign early next month.

“This is a high quality trade agreement of strategic and economic importance to New Zealand. It provides for the elimination of all tariffs among the four countries, a feat not often achieved in trade agreements,” said Helen Clark.

“It builds a strategic partnership for New Zealand with three other open and dynamic economies.

“It is also an agreement that has the potential to grow – as shown by Brunei’s decision to join half way through the negotiations. We hope to see others join.”

Also signed today were the accompanying Labour Co-operation Memorandum of Understanding and an Environment Co-operation Agreement.

Together the four countries, which are all members of APEC, have a combined GPD of some NZ$400 billion. There is potential for trade flows, currently worth over NZ$2.5 billion, to expand significantly.

The SEP is the second free trade agreement signed this year by New Zealand. In April, the Closer Economic Partnership with Thailand was signed in a ceremony in Bangkok.

More information about the Trans-Pacific Strategic Economic Partnership is available at: mfat.govt.nz/tradeagreements

Monday 18 July

Introductory Remarks for the Prime Minister on the Trans-Pacific SEP

I am very pleased to welcome the Singaporean High Commissioner and Chilean Ambassador who are here today to sign, with New Zealand, the Trans-Pacific Strategic Economic Partnership Agreement and accompanying Labour Cooperation Memorandum of Understanding and Environment Cooperation Agreement.

The Trans-Pacific SEP – the Agreement previously referred to as P3 - is a four-way trade agreement between Brunei, Chile, New Zealand and Singapore that has significant strategic and economic benefits for all of us.

Together the four countries, which are all member economies of APEC, have a combined GDP of some NZ$400 billion and trade flows among the four countries are worth over NZ$2.5 billion dollars.

The Trans-Pacific SEP builds on our existing trade agreement with Singapore and it takes our relationship with Chile and Brunei to a new level of political and economic engagement.

It is very satisfying for me personally to be present at this signature today, as I launched the negotiations with my Chilean and Singaporean counterparts at the APEC leaders meeting in 2002, and have been involved in discussion about such an agreement since 2000.

Our shared vision was an agreement which would stimulate more open trade within the Asia/Pacific Region.

We have already made progress on this objective, with Brunei joining the agreement as a founding member during the negotiations.

While Brunei is unable to be represented here today, its High Commissioner to New Zealand (who is based in Brunei) is expected to sign the agreement in Wellington in early August. We are pleased that Brunei is a member of the Agreement and we look forward to the opportunity to appropriately mark its signature soon.

This is a high quality trade agreement and reflects the positive spirit in which the negotiations were conducted. It achieves a benchmark reached by few bilateral trade agreements in having a commitment by the countries party to it to eliminate tariffs on all traded goods. The “negative list” approach to scheduling services in the agreement also establishes a superior framework for services liberalisation.

The Agreement offers a number of benefits to New Zealand.

On the Agreement's entry into force, tariffs on ninety per cent of New Zealand’s exports to Chile will be immediately eliminated, with 92 percent of exports to Brunei also being duty free from day one. New Zealand will eliminate all its tariffs on imports from Chile and Brunei by 2015.

Tariffs between New Zealand and Singapore are already zero under the existing New Zealand/Singapore Closer Economic Partnership.

The Trans-Pacific SEP will provide more opportunities, and greater certainty and transparency, for New Zealand businesses wishing to operate in Chile, Singapore, and Brunei.

The trade agreement also establishes a framework for resolving technical barriers to trade and sanitary and phytosantiary issues which may arise, and will reduce transaction costs for exporters.

The accompanying agreements on labour and environment, will reinforce our objective of having good labour working standards and of improving environmental protection in our four countries.

The agreement also has a strong focus on strategic co-operation. There are major benefits to be gained from having our four relatively small yet open economies working collaboratively at the government and business level.

The benefits to New Zealand from the Trans-Pacific SEP and agreements on labour and environment are set out in more detail in the National Interest Analysis which was submitted to Parliament today.

Following signature, each party will submit the treaties to their respective processes for ratification. Upon completion of this process, the Trans-Pacific SEP and accompanying labour and environment agreements are expected to enter into force 1 January 2006.