The Trans-Pacific Partnership (TPP) – good or bad? In February 2016, the controversial TPP trade deal was finally signed at a ceremony in Auckland, New Zealand. Content removed due to copyright restrictions Table 1.1: New Zealand's total trade in goods, with selected TPP partners and China in NZ$(m), year ended June 2015 Exports to | Imports from ---|--- Australia | 8514 | 6285 US | 5483 | 6081 Japan | 2943 | 3413 Singapore | 1078 | 1801 Malaysia | 982 | 1877 Canada | 597 | 598 China | 8267 | 9332 All other countries | 20 532 | 19438 Total trade in goods | 48 396 | 48825 Source: Global New Zealand - Investment and Travel Profile, 2015 Imports are mainly vehicle parts, mechanical equipment, petroleum products and a wide range of other non-food items. Source: New York Times, 2 February 2016

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. [1] Malaysia
2. [1] NZ$895 million
3. [2] The answer must have correct figures and denominations i.e. NZ$ and millions units.
4. [2] Trade in services is NZ2400m + NZ429m = NZ$2829m
5. [2] There is no requirement to show the calculation, but if there is a correct calculation that arrives at the wrong answer 1 mark can be awarded.
6. [1] Primary income
7. [1] Secondary income
8. [2] 'Old' terminology is an acceptable alternative i.e. net transfers and investment income.
9. [1] For a clear idea that comparative advantage relates to the lowest opportunity cost of production
10. [1] For recognition that comparative advantage is determined by factor endowment
11. [Up to 2 marks] For an explanation of how New Zealand's membership of the TPP will lead to the exploitation of comparative advantage and a better allocation of resources through specialisation and trade
12. [4] New Zealand has a comparative advantage in lamb and dairy products. Entry into the TPP will allow New Zealand access to a bigger market and through specialisation and trade it will be able to export more of these products and import those goods that it can only produce at higher opportunity cost.
13. [Up to 2 marks] For explanation of how there might be negative effects upon Canadian farmers incomes
14. [Up to 2 marks] For explanation of how there might be beneficial effects upon Canadian farmers incomes
15. [4] The most likely outcome is that the Canadian market will be flooded with cheap food imports from other members of the TPP, especially New Zealand. If so, this will reduce prices and the incomes of those farmers who produce similar products. It could also be argued that membership of the TPP provides new opportunities for Canada's farmers with tariff and quota free access to new markets within the TPP. This could have a positive effect on certain farm incomes. Overall outcome though is uncertain.
16. [Up to 3 marks] For an explanation of the possible costs:
17. [Up to 3 marks] For an explanation of the possible benefits:
18. [1] Reserve 1 mark for a reasoned conclusion
19. [6] There are both costs and benefits that could result if China joined the TPP:
20. Possible costs include: the domestic market could be flooded with cheap imports; there might be increased balance of trade deficits, infant industries might be prevented from development and so on.
21. Possible benefits include: tariff free access to the massive Chinese market; increase in scale of production of exporting industries leading to economies of scale and so on.