by Macaulay Jones, Federated Farmers Policy Advisor
Federated Farmers says the Regional Comprehensive Economic Partnership (RCEP) Agreement provides a much- needed qualitative show of support for the rules-based international trading framework.
In mid-February, Andrew Hoggard, the National President of Federated Farmers of New Zealand, appeared before the Foreign Affairs, Defence and Trade Select Committee as it considered the RCEP. The agreement is a free trade deal between fifteen nations who have all previously signed free trade agreements (FTAs) with one-another, which does beg the question, why do Federated Farmers care?
RCEP is the result of about a decade of negotiations between the members of the Association of South East Asian Nations (ASEAN) and five countries with existing FTAs with the trading block. The members of ASEAN are Brunei-Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand Viet Nam and the other members of RCEP are Australia, China, Japan, New Zealand and South Korea. While India withdrew from negotiations a year before their completion, the deal nonetheless represents an important bulwark against the rising tide of protectionism gripping the world.
RCEP sends a clear message that the member nations are committed to liberalised rules-based free trade while also delivering a single set of rules that will make it easier for companies to trade in the region, reducing non-tariff barriers (NTBs) .
RCEP better connects New Zealand with about a third of the global population and about a third of the global Gross Domestic Product (GDP). A regional agreement of this nature provides important trade and investment frameworks through which linkages can evolve and expand driving economic growth. It allows for each nation to further maximise their comparative advantage and allows for wider regional integration, along with integration into regional supply chains.
Buttressing the web of trade between New Zealand and the Indo Pacific region, improves certainty that New Zealand farmers will be able to get products to market in the future. New Zealand is one of a few net exporters of food, exporting about 95% and 85% of our efficient unsubsidised dairy and meat products to countries that do not share New Zealand’s comparative advantage.
Exporting efficiently farmed food and contributing to global food security is only possible if New Zealand companies are able to get this product to international markets. Rather than every nation doing a little of everything and being average at doing so, open trade enables each nation to do the most of what they are the best at, and to rely on others to in-turn produce excesses of what they are best at.
New Zealand farmers are very efficient and unlike farmers from many other nations are able to produce more than enough for the nation’s population without receiving subsidies from the government. Any agreement, such as RCEP, that further solidifies the rules-based trading framework, is both good for new Zealand farmers and international consumers as it provides certainty that there will be a long-term market for excess food to be exported to. RCEP is an evolutionary, and not a revolutionary agreement, but this evolution improves a trading system that is good for consumers and farmers and should be applauded by both.