New Zealand votes in election that could thwart TPP deal

WELLINGTON — New Zealanders vote in a general election tomorrow that is too close to call, but if they elect a new government, it could scupper plans by members of the Trans-Pacific Partnership (TPP) to finalise a trade deal in November.

New Zealand’s opposition Labour Party, which is neck-and-neck with the ruling National Party in the election, says it would renegotiate the trade pact 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 Mr Daniel Kalderimis, partner at Wellington law firm Chapman Tripp.

Mr Todd McClay, New Zealand’s Trade Minister, said 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 that 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,” added Mr McClay, who is due to co-chair the meeting if the National Party retains power in New Zealand.

After President Donald Trump withdrew the United States from the trade agreement early this year, Japan and New Zealand pushed for the revival of the pact.

“At this time of international uncertainty, it’s more important than ever for outward-looking trading countries like New Zealand and Japan to state their principles clearly,” said Prime Minister Bill English in May.

The remaining signatories have met several times, including in Australia last month, to discuss ways to salvage the deal. The 11 countries, which include Singapore, Canada and Mexico, have a combined gross domestic product of US$12.4 trillion (S$16.8 trillion).

Analysts say the ban that 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.

Labour leader Jacinda Ardern has said that a government led by her party would still want to be part of the TPP, but stressed that its “housing bottom line” is 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”.

Mr 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 the 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 the TPP”, Mr Ballingall noted.

The issue of immigration that is at stake in this election explains Labour’s proposed ban on foreign ownership of existing properties. Ms Ardern has criticised National for failing to tackle the housing crisis during its nine years in government, and Labour’s proposal seeks to cool the housing market and to make home ownership more affordable for New Zealanders.

Ms Ardern has denied claims that her housing and other plans could generate anti-immigrant sentiment, saying the party acknowledges New Zealand has been built on the contribution of migrants.

“I want to make sure those who want to call New Zealand home have decent opportunities and at the moment, with the housing market we have, I’m concerned that is simply not the case,” she told Financial Times. AGENCIES