Video: New Zealand Leader Says China Sees Opportunity in the TPP

New Zealand Prime Minister John Key discusses China’s economic transformation and the country’s changing posture toward the TPP during a conversation with ASPI President Kevin Rudd. (1 min., 55 sec.)

New Zealand Prime Minister John Key said he thinks that trade ministers from the 12 countries in the Trans-Pacific Partnership (TPP) stand a chance of reaching an agreement during their current round of talks in Atlanta, Georgia — but that the “window of opportunity to complete TPP is closing.”

“You wouldn’t say it’s impossible to complete the deal if it doesn’t take place in Atlanta, but it does become more difficult,” Key said during a discussion with Asia Society Policy Institute Kevin Rudd. “Probably the last opportunity for 2015 is when [the Asia Pacific Economic Cooperation summit] is hosted in the Philippines. Beyond that, you start getting into the U.S. primaries and all the challenges that we know those present.” 

Noting that the TPP excludes some of Asia’s largest economies, including China and India, Key said he regards the potential trade pact as a “starting point” for opening trade more broadly across Asia.

“The collective level of economic activity that will funnel through TPP will grow over time,” Key said. “In the absence of anything from the WTO, it will be seen as the vehicle for free trade.”

Key agreed with Rudd’s assessment that China’s posture toward the TPP has shifted from one of “hostility” to “a more open discourse.”

“I had dinner with [Chinese President] Xi Jinping when he came to New Zealand late last year, having come from Australia where he’d signed the free trade agreement, and quite a lot of discussion took place between us about TPP and the like,” Key said. “I think China has long-term aspirations potentially to get into TPP under the right conditions.” Key added that “it would make sense” for India and Korea to join the TPP as well.

Key predicted that the transformation of China’s economy will have a significant impact on its profile as a trading nation.

“I think five to ten years from now, China will be really significant producers of intellectual property,” he said. “They'll go away from producing running shoes and pretty basic products and putting together Apple iPhones, to creating the intellectual property that challenges Apple.”

Despite “distress” in the Chinese economy, particularly because of its debt burden, Key voiced confidence in the country as a destination for New Zealand’s exports: “The consumer demand side is still very strong.”

“We’re pretty excited about what we see in India, with Prime Minister [Narendra] Modi being in place,” Key added. “We’re certainly seeing a lot more economic activity.” Key also said he felt that it would make sense for India to join the Asia-Pacific Economic Cooperation (APEC) forum, as a point of entry to regional free trade agreements such as TPP.

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Joshua Rosenfield is Director of Content Strategy with the Asia Society Policy Institute. He is based in New York.