WELLINGTON: If New Zealanders vote this weekend to change who governs them, that could create an obstacle to plans by members of the Trans-Pacific Partnership (TPP) to finalize a trade deal in November.
After President Donald Trump withdrew the United States from TPP early this year, the group has 11 members. New Zealand and Japan have led the way in saying they remain committed to a deal to cut trade barriers in the Asia-Pacific region.
New Zealand’s opposition Labour Party, which is neck-and-neck with the ruling National Party in Saturday’s election, says it would renegotiate the TPP to accommodate its proposed ban on foreign ownership of existing properties.
Historically, both political parties have championed free trade.
Some analysts say that the plan by Labour, if it wins, might prompt other TPP members to make fresh demands, stalling the agreement or even leaving New Zealand out.
“It’s a real risk that other countries will seize the opportunity to find the parts that they don’t like about the deal and try to change them,” said Daniel Kalderimis, partner at Wellington law firm Chapman Tripp.
Todd McClay, New Zealand’s trade minister, told Reuters he expected “a positive decision” when ministers of the 11 remaining TPP nations meet during November’s Asia-Pacific Economic Cooperation summit in Vietnam.
He said Labour’s plans were risky given the 11 have already said no to renegotiating the pact’s terms.
“What’s more likely to happen is the other countries say no, we’ve reached agreement, we said no renegotiation,” said McClay, who is due to co-chair the meeting if the National Party retains power in New Zealand.
Analysts say the ban Labour advocates would only have a minimal impact on the housing market, given that foreigners own a small percentage of homes in New Zealand, though the numbers are highly contested.
The nationalist New Zealand First Party, which could be a kingmaker after the vote, has also said it would renegotiate the TPP but would unlikely have enough leverage to make this a bottom-line in a coalition government, analysts say.
Jacinda Ardern, Labour leader, has said a government led by her party would still want to be part of TPP but that its “housing bottom line” was firm.
The fact that Labour has not said it would walk away from the TPP was significant, analysts said. Asked whether this meant Labour could give in on the ban if push came to shove, Labour trade spokesman David Parker said it would be “wrong to read that into it”.
John Ballingall, deputy chief executive of the independent New Zealand Institute of Economic Research, said he believes it is “very unlikely” that Labour would withdraw from TPP based on its concerns about foreign buyers of existing houses, as the trade pact would have many big benefits for the country.
If Labour does get power, “my suspicion would be that if push came to shove, they would support TPP,” Ballingall said.