New Zealand: Trans-Pacific Partnership (TPP): end-game in sight

Earlier this week, President Barack Obama signed into law legislation giving the US "fast track" authority to conclude the Trans-Pacific Partnership (TPP) — removing a major roadblock to the 12-nation regional trade and investment pact.

There now appears to be sufficient political will for remaining hurdles, though high, to be cleared.

For New Zealand, the real promise of the TPP lies in greater market access for our primary products – especially dairy. But to access these benefits (if available), New Zealand will need to trade concessions in other areas.

The size of the prize

The US, Japan and Canada represent the three largest economies involved in the TPP negotiations. None of them has a Free Trade Agreement (FTA) with New Zealand, and all of them currently impose high barriers to agricultural imports.

If New Zealand can remove or reduce these trade barriers, the size of the prize could be game-changing.

Indeed, collectively, the TPP countries account for a combined GDP of more than US$27 trillion. A study by the East West Centre estimated the potential gain to New Zealand exports at US$4.1 billion in 2025 – a 6.8% increase. New Zealand exports to China have grown four-fold since New Zealand signed the FTA with China in 2008. Exporters hold out similar hopes for the TPP.

But there is a way to go before the Government can feel confident the deal will deliver sufficient gains for exporters. Negotiations on market access concessions have been left until last – and New Zealand negotiators will be working hard to achieve real progress in the coming weeks.

Will the trade-off stack up for New Zealand?

Any market access improvements, however large, will be balanced against difficult concessions in other areas. The TPP will be a wide-ranging agreement, with a particular emphasis on so-called 'next-generation' trade issues (that is, beyond border tariffs) to help integrate and facilitate regional supply and value chains.

New Zealand does not have many bargaining chips to offer. We have little remaining tariff protection, few restricted services, large Foreign Direct Investment (FDI) inflows and small FDI outflows. Our limited overseas footprint also means that New Zealand does not – in the near term – stand to gain significantly from ancillary agreements, like enhanced investor protections.

New Zealand's guiding strategy for negotiating ancillary chapters is accordingly, and in general terms, to reduce domestic (including fiscal) risk, rather than secure particular rights. Of these ancillary issues, three are particularly important:

  • the scope of intellectual property (IP) rights
  • restraints or disciplines on government procurement (especially of pharmaceuticals which are presently bulk-purchased in New Zealand through PHARMAC), and
  • the reach of investor-state dispute settlement (ISDS).

None of these issues is likely on its own to be a deal breaker. With careful drafting and appropriate safeguards in place, the costs associated with stronger IP protections, ISDS or new procurement rules should all be manageable.

In the end, the question is whether one can point, overall, to sufficient market-access gains to justify the trade-offs.

Likely outcomes


The TPP is likely to extend the scope of IP rights, which will have regulatory and cost implications for New Zealand. In 2013, leaks from the TPP talks revealed that New Zealand had opposed US demands for greater IP protection. It is unclear whether concessions have been made in respect of other IP rights but recent reports suggest negotiators have agreed to extend copyright terms.


The TPP is also likely to include binding ISDS. One might argue that this ought not to be especially controversial, given that New Zealand already has binding ISDS agreements as part of its FTAs with China (2008), ASEAN (2010), Malaysia (2010) and Korea (2015). Also, although increasingly the subject of public scrutiny, the risks of ISDS can be significantly reduced by careful drafting. New Zealand's negotiators are highly-skilled in this respect.

Nonetheless, all negotiations face constraints. The TPP investment chapter may in some respects go further than the text of deals previously reached by New Zealand. For instance, it may extend some "pre-establishment" rights without wholly carving out Overseas Investment Act approval decisions from all aspects of the ISDS mechanism.

A leaked draft also included a weak form of "umbrella" clause, under which investors could claim ISDS compensation for a State's failure to adhere to non-treaty investment obligations. This would be a new (and not necessarily prudent) step for New Zealand in its FTA investment chapters. It is also not clear whether the TPP will include any cross-cutting general exceptions, which assist in explicitly balancing investor protections with a State's right to regulate.


New government procurement rules could affect the way PHARMAC makes decisions (although there is no suggestion that PHARMAC will be abolished by the deal). A draft annex on "transparency and procedural fairness for pharmaceutical products and medical devices", leaked earlier last month, sets out principles and procedures that PHARMAC would need to work within. Critics argue that the annex could expose PHARMAC to protracted litigation brought by international pharmaceutical companies.

Given that more rules provide more scope for complaint, this may be so. However, PHARMAC, as a Crown agency, is already subject to public law rules which can be enforced through judicial review. TPP is most likely simply to increase the intensity and cost of challenges against PHARMAC's decisions.

A level playing field for trade and investment

In making any cost-benefit assessment, one must bear in mind that the future of global commerce is being reshaped by 'mega-regional' trade and investment agreements. While the TPP may not be perfect, it looks increasingly likely to be a reality, whether New Zealand joins or not.1

If New Zealand walks away, its exporters will likely be at a significant disadvantage, relative to their competitors in other TPP economies. The purpose of the TPP is to level the playing field for trade between member states. It will do quite the opposite for countries outside the deal.

The onus is on negotiators to secure meaningful gains for exporters, and to minimise fiscal and sovereignty risk, so that New Zealanders can be confident they are better off in the tent, than outside of it.

Next steps

A ministerial meeting aimed at finalising the TPP is scheduled for the last week of July.

If our negotiators succeed, and New Zealand joins the TPP, New Zealand will need to go through a process to ratify the treaty. This will include ensuring New Zealand's domestic laws and regulations are consistent with our obligations under the TPP.

Chapman Tripp will be running seminars in Auckland, Wellington and Christchurch on the implications of the TPP for New Zealand business, once the agreement is finalised.


1As well as the TPP, two other significant 'mega-regional' agreements under negotiation at present are the Transatlantic Trade and Investment Partnership being negotiated between the EU and the US, and the Regional Comprehensive Economic Partnership being negotiated between the ten ASEAN member states and the six states with which ASEAN has FTAs, including China, India, Australia and New Zealand.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Kate Yesberg
Colin Fife
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions