The Trans-Pacific Strategic Economic Agreement (TPP),which is called a “high quality, 21st century”, agreement has moved through negotiating stages since 2002 when it was known as the Preferential Trade Agreement (P3).This was the agreement of Singapore, Chile and New Zealand. The P3 was mainly focused on establishing a free trade area and the liberalisation of trade. In 2005, Brunei Darussalam joined the P3 and became known as the P4 . P4 was put in force in 2006. By 2010, at the Melbourne talks, the P4 had grown to P8 with the joining of Australia, Peru, U.S.A and Vietnam. Malaysia joined in later in 2010 and it became P9. Japan, Canada and Mexico have also expressed their interest to join (Elms, D & Lim, C. l, 2012). The major question that remain to be answered is wheather , this economic integration( TPP) has increased the value of New Zealand exports.
(Shakur & Rae, 2012).
This report will answer this question by examining the direct and non-direct trade effects of the TPP to the economy of New Zealand. It will further analyse the advantages and the limitations of the agreement to its dairy industry and will suggest some modifications which may result in the increase in New Zealand’s dairy products for exports. It is concluded that countries should increase production in the products in which they have a revealed comparative advantage (Pitigala, 2005).
How the TPP will increase the value of NZ exports
Direct trade effects:
In 2006, the P 4 come into force focusing mainly on the establishment of a free trade area(FTA) and the liberalisation of trade among its member states. This agreement included the elimination of tariffs on all traded goods and a high quality approach to trade in services. Tariff elimination opened up new market opportunities for New Zealand exports. It also restored a level playing field for New Zealand exports with competitors from those countries like...