Not much for NZ exporters to worry about after Trump revamps Nafta deal, says trade specialist

The US has a slightly better deal on access to the Canadian dairy market than it would have had under TPP. Photo / Doug Sherring

The revamped North America Trade Agreement will not greatly disadvantage New Zealand in the Canadian market, according to trade specialist Stephen Jacobi.

Canada has signed up to a renegotiated and renamed US-Mexico-Canada Agreement (USMCA) after President Donald Trump promised during the 2016 election campaign to renegotiate the nearly 25-year-old trade pact.

But Jacobi, the executive director of the New Zealand International Business Forum, said the gains the United States had made in Canada were not much more than it had gained in the TPP before Trump pulled out the US.

"We are seeing the strategy now pretty clearly which is threatening to blow everything up, then make gains and claim them as some enormous advance," Jacobi said.

Apart from some changes to automobiles "it is kind of business as usual for Nafta".

"The huge amount of trade is going to carry on, the value chains will carry on, there will be some marginal things around the edge but not much real difference."

One of the positive aspects of the US deal with Canada which heavily protects and manages its dairy sector, was the abolition of special milk class No 7 – for skim milk powder.

That means Canada will have to compete without subsidies or protecting regulations on a level playing field with the US and other countries, including New Zealand, in selling skim milk powder.

Jacobi said another positive aspect of the deal was on wine because British Columbia and some other provinces were planning to allow only Canadian-produced wine to be sold in supermarkets.

"There was a WTO [World Trade Organisation] dispute brewing about that and it looks like Canadians have agreed to withdraw that practice."

Executive director of the New Zealand International Business Forum Stephen Jacobi. Photo / Natalie Slade

Jacobi said the most surprising new provision was a clause saying that if any of the three parties wanted to negotiate a free trade deal with a "non-market economy" they had to consult with the other two and the USMCA – of Nafta 2.0 - could be set aside.\

Jacobi said it was directed at China and believed the provision would apply equally to China doing an FTA with any of them or potentially joining the revamped TPP, which Mexico and Canada have both signed.

"I've never seen anything quite like that," Jacobi said, and both Mexico and Canada had been exploring FTAs with China.

The Investor State Dispute Settlement procedures are no longer part of the US and Canada deal although it is still part of the US Mexico agreement.

TPP, now called the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), is set to come into force early in 2019.