Q + A SUSAN WOOD INTERVIEWS TIM GROSER
SUSAN Good morning, Trade Minister Tim Groser.
TIM GROSER - Trade Minister
SUSAN How are your nerves this morning?
TIM Oh, like everyone's. Just want this damn uncertainty to end and hopefully in the right way.
SUSAN Absolutely the right way. All right, Pharmac - does the TPP, if we sign it, mean an end to Pharmac?
TIM Oh, of course not. Absolutely not. Look, I think there's support right across the New Zealand Parliament for Pharmac. It's an outstanding public institution. We're defending it in this negotiation, and we'll continue to do that.
SUSAN So what impact will it have on Pharmac, if any?
TIM I think it'll have a very marginal impact, at the end of the day. It certainly won't result in higher prices for pharmaceutical products for New Zealanders. This is really about protecting the model of Pharmac to ensure that they're in a tough negotiating position with international pharmaceutical companies, and we've got some very good negotiators who are doing just that.
SUSAN So generic medicines - they'll still be available here for Pharmac? We'd still be able to get those?
TIM Of course. Provided they're not breaking patents, yes, and copyright, absolutely.
SUSAN What about parallel importing? How is it good for consumers not to have parallel importing - more expensive books, as we saw in Dita's track, more expensive consumer goods?
TIM I think parallel importing, providing, again, it's consistent with intellectual property law, is absolutely a good thing for New Zealand, and it will continue.
SUSAN So that's something that they will not be getting their way on that? You're standing your ground on that?
TIM There's some complicated issues about the interface of this with copyright and that's a legitimate concern, and our negotiators will work their way through those issues.
SUSAN Just how complicated is that? Because we know how hot the Americans are on copyright.
TIM It's unbelievable complicated. This negotiation is the most complicated negotiation that I have ever seen, and these extreme statements that we've just heard - look, wait until we get to the final result. I am absolutely certain that this will be a great deal for New Zealand along the lines we're negotiating.
SUSAN If it is that complex, the most you've been involved with, and I know you've done one or two, how can you be certain that the end result will be the right thing for New Zealand? How can you be certain that- you know, as they say, the devil is in the detail.
TIM Exactly right, and all we've got to do is look at past experience, in which similarly dramatic negative statements have been made. None of them have come to pass, and it won't happen again this time. The objectives we've agreed on in this agreement are truly extraordinary for New Zealand if we can achieve them and will bring great benefits to this country, so I'm quite excited about it. I'm going off, in fact, to Japan first, which will be totally about TPP, because TPP's a huge issue up there in Japan at the moment. And then we've got this very important meeting on the 8th of October, which will be chaired by President Obama and involve Prime Minister Key, in which, well, we're trying to take some quite tough decisions to move it forward.
SUSAN Fonterra - is it at risk? Would it have to be broken up?
TIM No, no, it won't have to be broken up. Fonterra is not at risk. This is a negotiating tactic used by those people who want to restrict New Zealand's access into their market because this is something New Zealand's deeply competitive, but we will work our way through those issues.
SUSAN So, what are your sticking points? What are your not-negotiable things that you are really stuck on in this agreement at the moment?
TIM Well, for us, the crucial element, because we think this will create thousands of jobs in New Zealand, open up huge opportunities for our export industries, is that our principle export items are not excluded from comprehensive liberalisation. That's the real red line. I think in terms of concerns around Pharmac, we've already made it abundantly clear that we will defend those public institutions, and we will ensure that there is policy space for future governments. So I'm not worried at all about any downside from this agreement. I can only see real upside.
SUSAN So if it's so good, if it's such good upside for New Zealand, why so much secrecy?
TIM Because you can't do anything in the real world that's worthwhile without discretion around it. That's why we have confidentiality about Cabinets. We discuss this amongst trade ministers in Brunei about three or four weeks ago. There's absolutely no support for putting these texts out in the public. You have to understand this that if you put out texts into the public with different and conflicting negotiating positions, lobbies who are opposed to change will seize on that text, will try to stop their negotiators showing any compromise.
SUSAN I do understand that.
TIM It's a recipe for a failure.
SUSAN I do understand that, but the reality is this will be signed, and then it will be sent to select committee. There is no democratic oversight of this at all. We just have to trust you and your negotiators and your officials.
TIM And we will do a very good job for New Zealand, I can assure you. We have in the past, and we'll do it this time. There will be a very full debate on this. This is not as if, you know, we're doing this in a vacuum. We've got the most extensive stakeholder contact that I've seen in any trade negotiation underpinning this negotiation. We have a very clear idea of where people's views, where people's interests are, but the final negotiation is done on a confidential basis that's been agreed by all 12 countries, and it has to be done that way.
SUSAN All right. Big wins for us, you're telling me sitting here today, but to get something, you've usually got to give something up. What do we have to give up?
TIM Well, to be truthful about the situation, the reason why New Zealand is in such a comfortable position is precisely because we've already lowered the barriers to competitive imports in this country, almost more than any country in this negotiation.
SUSAN So you're saying we haven't got much to lose?
TIM Frankly, we haven't. If we were talking about where we were in the mid-'80s, my goodness me, I remember when I was involved first in the Treasury and then in Foreign Affairs in the CER negotiations, where we had, you know, massive import licensing, high, high tariffs. All of our focus was on defence. Now our focus is on offence.
SUSAN Is it naïve, as Jane Kelsey was saying, to think we can play in the same sandpit with the Americans and the Chinese? Would we get I think her line was sand in our eyes?
TIM Well, Jane Kelsey has opposed every single trade agreement New Zealand's been involved in in the last 25 years. And if either Labour-led or National-led governments had been influenced by her, we would be in a shocking position as a country, so I never listen to anything Jane Kelsey says. It's always the same deal. Now, the reality is that New Zealand has got an excellent relationship with China and a very, very good relationship with the United States, and I don't see any reason why we should buy into this binary concept that we have to choose. The reality is New Zealand's the only country in the world with a comprehensive FTA with China, and we've added Hong Kong, and we're about to add a comprehensive economic deal with Taiwan to that, and at the same time we're moving with the Americans and others in TPP. So I think it's a win-win situation.
SUSAN All right, you talked about the jobs and benefits - where will they be once this thing is signed in hopefully December?
TIM Oh, there will be overwhelmingly in the export-oriented goods and services companies of New Zealand, and it's always very difficult to pick winners, because people respond to opportunities. But I see, look, since the addition of Japan, this negotiation's become bigger than King Kong, and while it's become a little complicated, the benefits to New Zealand companies in the export sector are very real. And what this country needs above all is to shift resources into the export sector, because as the PM has said in his sort of simple terms, you know, we've proven that we can spend like a First World country; we now have to prove we can earn like a First World country.
SUSAN But we are, to some extent, still stuck in the commodity market. You know, Fonterra's shipping off billions of tonnes of essentially a commodity product.
TIM And there's a huge market for that, but there's also a huge market for processed food products. The compound average growth rate of our processed food products - think of it as the more sophisticated end of this - has been growing in the last 10 years by about 15 per cent on an average base. That is outstanding. I tell you, we are seeing little gems come through - nutraceuticals. All this high-end stuff is also going along at the same time as this high-quality Fonterra product is going into the mass markets of China. It's a win-win.
SUSAN TPP, when you sign it off, you're confident it will be done by the end of this year? I mean, the Americans want it done, don't they?
TIM There are two different questions. Can it be done realistically, given the progress that's been made, by the end of the year? Will it be done? The answer to the first is, yes, it can be done. Will it be done? We'll see. We'll see. Trade negotiators have a very long record of not meeting deadlines, but I know this can be done. Frankly, the political decisions have to be made for some of these countries who are taking steps into the unknown, not New Zealand. They've got to do things they've not been prepared to do for 70 years. Can they do it? Yes. Will they do it? We'll see.
SUSAN And if despite your very best efforts and those of all your officials, a couple of years down the track we find there's things in there that really do hurt us, we're stuck with it, aren't we? We can't get out of it?
TIM Well, I don't see any serious downsides to this negotiation. I think we've adjusted to international competition over the last 25 years. No, no, if this doesn't work, what we will see is a huge opportunity missed.
SUSAN Very good. Thank you for your time, Trade Minister Tim Groser.