RCEP-LATEST- Public Q+A - 4-11-2019



PUBLIC AND MEDIA Q+AsFOR PUBLICATION UPON 4 NOV ANNOUNCEMENT RCEPThe Regional Comprehensive Economic Partnership (RCEP) has today reached a significant milestone, with 15 countries agreeing the text . Talks on market access are ongoing among the 15 participants, but New?Zealand welcomes this progress after seven years of complex negotiations.Leaders also announced on 4 November that they would work with India to seek to resolve its outstanding issues in a way that will satisfy the interests of all participants and enable India to join the Agreement. RCEP comprises 16 countries including Australia, ASEAN (the Association of South East Asian Nations), China, India, Japan and South Korea. Together, they account for more than half the world’s population and nearly 30 per cent of global trade.If successfully concluded, RCEP will be the largest free trade bloc in the world in terms of population. It has the potential to be a game changer for regional trade.The completion of the text provides valuable momentum and an important boost to the regional economy at a time of rising turbulence and tariff retaliation - the sharpest rise in protectionism since 1995, and slowing global trade and economic growth. RCEP holds significant strategic value for New?Zealand, embedding us in the regional economic architecture, giving exporters improved market access, and protecting the competitive interests of our exporters across the region. Importance of RCEP to NZRCEP is important for New?Zealand for both strategic and commercial reasons. Being part of this agreement helps secure New Zealand’s prosperity in the region.RCEP would cover nearly half the world’s population, nearly a third (US$28 trillion) of the world’s GDP, and is the destination for 58 per cent of New?Zealand’s total exports of goods and services.In strategic terms, RCEP is emerging alongside the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) as the other main instrument for integration in the regional economic architecture. We’re at the table to ensure we get the best possible outcome for New Zealanders and to protect the things we care deeply about.New?Zealand is a trading nation and this agreement brings together the powerhouses of Asian trade. RCEP is an important strategic commitment to the international rules-based trading system at a time when it is under considerable stress.Why is New?Zealand involved?There are over 3.6 billion people in the 16 countries, and they account for about 27 per cent of global trade.RCEP covers 7 out of our top 10 trading partners (China, Australia, Japan, Singapore, Korea, Thailand and Malaysia – (June 2019) New?Zealand exported over $36 billion worth of goods to RCEP countries and $13 billion of services in the year ending June 2019. If successfully concluded next year, RCEP will cover around 61 per cent of New Zealand’s goods exports and 50 per cent of our services exports. In addition to the direct commercial benefits, a successful RCEP would have significant strategic value. Why didn’t NZ stand aside from RCEP when the gains for our goods exports are limited? Our existing FTAs with most of the RCEP countries already provide high levels of goods market access. The only country that we don’t have an FTA with already is India, and we are continuing to negotiate market access with them. The larger commercial gains are therefore in services and investment, progress on Non-Tariff Barriers and the benefit of a single ‘rule book’ covering 16 countries. We can only influence the Agreement if we are part of it.The statistics on the scale of economies in RCEP, and their importance to NZ as trading partners, speak for themselves.What benefit does RCEP have for New Zealand if we have FTAs with all its component countries?RCEP establishes a single set of trade and investment rules across all participants, rather than a range of different rules with separate FTA partners.RCEP is also an opportunity to add an FTA with India. India is a big market with which we have not yet concluded a bilateral FTA with. It has a fast growing economy with a GDP of more than US$2.7 trillion. RCEP is also a means to negotiate investment market access commitments with our ASEAN partners, which were left for future negotiation following the signature of the ASEAN-Australia-New Zealand FTA (AANZFTA) in 2009. RCEP is expected to improve existing market access conditions for goods and especially services beyond those in our concluded FTAs. Why didn’t RCEP conclude in full this year? As reflected in the Leaders Statement, one party, India, has a number of outstanding issues that need to be resolved.But I am pleased to confirm that Leaders of the 16 RCEP countries announced that they would work with India to resolve its outstanding concerns in a way that would satisfy the interests of all participants.? Leaders have allowed more time for negotiations to be completed and the agreement, as a whole, to be concluded and signed in 2020.? New?Zealand is working intensively with India to seek to agree a commercially meaningful market access? deal by that date.? How have New Zealanders been consulted?The public was given the opportunity to make submissions on RCEP when negotiations first began in 2013. Since then there has been extensive outreach and engagement with stakeholders, including many meetings with individual companies and other parts of civil society. This has included dedicated engagement with Māori, and more recently through the Government’s Trade for All agenda. Why have you not released the text?The full negotiations have not yet been concluded. All 16 participants would need to agree to release the texts. However, we recognise the importance of transparency to the New?Zealand public particularly around free trade negotiations.We have also outlined issues under negotiation at stakeholder and public meetings throughout the negotiation process; we provided summaries from negotiation rounds and other information on MFAT’s website.PROTECTING M?ORI RIGHTS Treaty of WaitangiNew Zealand’s approach to its free trade agreements reflects the constitutional significance of the Treaty of Waitangi to New Zealand. I am pleased to confirm that RCEP participants have agreed to include the New?Zealand-specific ‘Treaty of Waitangi exception clause’. This has been in every free trade agreement signed by a New Zealand government since 2001.The Treaty of Waitangi exception allows the Government to implement domestic policies in relation to Māori, including in fulfilment of the Crown’s obligations under the Treaty, without being obliged to offer equivalent treatment to persons of other countries that are party to the Agreement.How will RCEP protect Māori traditional knowledge?RCEP will not affect New?Zealand’s domestic approach to the protection of Māori traditional knowledge. As in all our recent FTA negotiations, New?Zealand’s position in RCEP has been to ensure that we retain the requisite policy space to address this issue, as required. The international conversation on this issue is taking place at the World Intellectual Property Organisation (WIPO).GOODS MARKET ACCESSBusiness has highlighted its concerns about non-tariff barriers (NTBs). RCEP will address these concerns through improved rules for goods trade, especially on customs procedures and some of the Rules of Origin, sanitary and phyto-sanitary (SPS) measures and a specific mechanism to handle NTBs in future. The market access tariff negotiations are continuing. SERVICES MARKET ACCESSNew?Zealand’s approach to services in our FTAs recognises how much services matter to our economy.? New?Zealand’s objective is to set a level playing field for New?Zealand service suppliers in RCEP markets and to encourage greater certainty and transparency for doing business. Across financial services New?Zealand seeks to increase economic growth and development facilitating the flow of financial services in the RCEP region, while preserving the capacity of regulatory authorities to apply measures to maintain a sound financial system and protect depositors and investors.Will RCEP impede our ability to provide social services?No. In all of our agreements we have preserved the New?Zealand government’s ability to regulate for legitimate public policy purposes, including social services.INVESTMENT AND INVESTOR STATE DISPUTE SETTLEMENT (ISDS)Investment: what can NZ expect to gain on investment through RCEP?The New Zealand Government sees attracting good quality new investment as crucial for New Zealand’s growth and prosperity. Such new investment creates jobs and grows incomes, bringing new ideas and new capital to the economy.RCEP is expected to go beyond the ASEAN-Australia-New?Zealand FTA (AANZFTA) and our original China FTA, through negotiation of market access schedules for investment, which we don’t currently have. That certainty helps New?Zealand businesses get closer to their customers. Facilitating the flow of international capital is vital to support trade in goods, business activity and global supply chains.? That can assist economic development.Will ISDS be included in this agreement?We have ensured that ISDS will not apply to New?Zealand in RCEP.Is the government’s ability to regulate protected? Yes. The government’s right to regulate for legitimate public policy purposes continues to be protected. There will be specific additional reservations in New?Zealand’s schedules in services and investment and other areas such as E-commerce, as well as General Exceptions. INTELLECTUAL PROPERTYNew Zealand recognises that intellectual property (IP) rights are important to promote innovation and creativity. New Zealand has a robust IP regime providing effective and efficient protection and enforcement of IP rights tailored to meet the needs of a small, developed economy.The standards set out in the World Trade Organisation (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement are largely adequate for this purpose. We believe countries need flexibility to develop and implement an IP regime that is optimum for domestic circumstances.New Zealand has been prepared to accept limited outcomes that build on this existing TRIPS Agreement where there is evidence they promote innovation and creativity and support economic development, without unreasonably hindering the development of domestic policies or creating costs on the economy. New Zealand also supported the inclusion of provisions in the agreement aimed at ensuring transparency and due process, where that reduces regulatory and business compliance costs relating to procedures for the protection and enforcement of IP in our RCEP partners.Will RCEP restrict New?Zealand’s policy space on innovation and IP protection?The Government has said many times we will not sign RCEP if it is not in the overall interest of New Zealand.We have not agreed to any provision that restricts New?Zealand’s ability to take meaningful policy decisions on IP protection.Our approach to the negotiations on IP has been informed by New?Zealand's recognition of the importance of a balanced intellectual property framework in promoting innovation, creativity and economic growth. Why does there need to be an IP Chapter in RCEP at all?IP is one of the areas agreed by Ministers and endorsed by Leaders for inclusion in RCEP. It is an important concern for a number of RCEP participants, and PETITIONThe objective of the Competition Chapter is to facilitate economic efficiency and consumer welfare through the promotion of open and competitive markets. RCEP is expected to require Parties to have in place competition laws and maintain competent authorities to enforce laws which prohibit anti-competitive conduct and promote consumer welfare. That would be an important step forward in the region.The chapter is expected to ensure that those competition laws are transparent and follow due process in its enforcement. The chapter is also expected to establish systems to facilitate cooperation between the Parties’ competition authorities.E-COMMERCEElectronic-commerce (E-commerce) offers important opportunities for a small, distant trading country like New Zealand.At the same time we are very conscious we need to include adequate safeguards for legitimate public policy purposes including to protect the privacy and the interests of consumers.?We are satisfied that the outcome in RCEP achieves this balance.Next Steps for New ZealandAs with any treaty action, there are several steps that need to be completed before the RCEP Agreement can enter into force in New Zealand:?Conclusion of negotiations.Engagement: Government discusses RCEP outcomes with New?Zealanders. Legal verification: RCEP officials (including New?Zealand) will engage in a technical process called legal verification to prepare the RCEP text for treaty action. ?National Interest Analysis: The Ministry of Foreign Affairs and Trade (MFAT), in consultation with other agencies, will prepare a National Interest Analysis (NIA) and present this along with the final text to Cabinet for approval. The NIA sets out the advantages and disadvantages for New Zealand of ratifying the RCEP agreement.? Cabinet Review: Cabinet reviews the NIA and final text of the RCEP agreement and decides if New?Zealand will sign the agreement.Signing: If Cabinet approves the NIA and final text, it will authorise the signature of the RCEP agreement. The final text of the RCEP agreement would be released at the time of signature.? Parliamentary Treaty Examination Process: The RCEP agreement? text and NIA would be presented to the New?Zealand House of Representatives. The text and NIA would then be considered by the Foreign Affairs, Defence and Trade Select Committee, which would then report back to the House. Ratification: Once New?Zealand has completed the Parliamentary Treaty Examination process and implemented the necessary domestic legislative changes, it will deposit its instrument of ratification.? You can read more about New Zealand’s general processes for treaty ratification on the Parliament website: ................
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