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Posts Tagged ‘trade’

NZ and China- The 5th First?

Posted by Grant Robertson on June 27th, 2010

This weekend I am attending part of the University of Otago’s Foreign Policy School that examines China’s place in the world. It is timely, and not because of the incident involving Russel Norman’s flag. China’s “ascent” as the conference title terms it, in world affairs is remarkable, seemingly inexorable and certainly vital to our future economic, strategic and security interests. Forget about the G20 for a moment, people are talking about the G2 (US and China, though some speakers today are wary of this).

MPs, and indeed all New Zealanders must have their right to protest protected.  My view, though,  has always been that a strategy of engagement with China is the best path for New Zealand. I do hold concerns over human rights abuses and lack of media freedom in China as elsewhere. I have been in the room when Helen Clark and Phil Goff have raised these concerns, as they should. But to really see change in these areas, and some depth to the relationship of a very small country with a very large country we have to engage- and we have to be bold.

There is instant recognition in Chinese government circles of the “four firsts” that have defined China and New Zealand’s recent relationship. The first first being supporting China’s entry to the WTO, then the first recognition of China as a market economy, followed by being the first to start free trade negotiations and finally the fourth first by finalising a free trade agreement.

When I was in Shanghai recently with the Wellington City delegation I challenged the participants at a Young Leaders Forum (thank goodness 38 is still considered young in China!) to work out what the fifth and sixth firsts will be in our relationship. We need to have the courage to move the relationship forward, as a relatively insignificant country in terms of China’s wider interests.

At the opening of the Foreign Policy School I understand Murray McCully said an FTA with Hong Kong is the fifth first.  I think we need to focus on how we broaden our relationship, beyond trade.  The Chinese are well aware that their rapid economic growth is straining the environment. They see the damage that it does not just to their way of life, but also their international reputation. They are doing a lot in this area, and see New Zealand as a country with much to offer in this regard.

So how about the fifth first being a comprehensive treaty level agreement on the environment and clean technology?  One that explicily recognises how much China has done and the scale of the challenges they have. We already have an environmental cooperation agreement that sits alongside the FTA. This could be enhanced to develop cooperative projects on issues such as renewable energy, air quality (a massive issue in Chinese cities), freshwater management, “green” buildings and more. There is enormous opportunity around clean technology, especially in China’s rapidly growing agricultural sector. As the doctor said to Steve Austin- we have the technology. Let’s use it, and take our relationship with China to the next stage.


Is NZ ready to take advantage of new FTAs?

Posted by Stuart Nash on June 26th, 2010

During urgency last week, parliament ratified, through amending legislation, two new FTAs: one with Malaysia and the other with Hong Kong (technically, the HK treaty is called a Closer Economic Partnership (CEP) agreement).

Labour supported the passage of both Bills.  After all, former Labour Trade Ministers Jim Sutton and Phil Goff did the ground work.  However, I have major concerns about the government’s (and Grosser’s) ability to put the framework in place that will allow NZ companies to take advantage of these agreements. 

In last year’s budget the govt cut $110m over 4 years from New Zealand Trade and Enterprise’s (NZTE) budget, thereby slashing the funding that Labour had directed towards developing NZ international markets.

Why is a government overseas development agency important?  I could write a book on this, however, in a nutshell, 97% of NZ companies are SMEs (they employ 19 staff or less).  This means the vast majority that may have export potential simply do not have the resources to: a) employ a full time International Marketing or Market Development Manager, b) set up an office in an off-shore market, or c) fund the level of due diligence necessary to justify capital expansion in order to become ‘export-ready’. 

Only 12% of our exports now go to Europe – and these two FTAs were ratified with countries that have completely different cultures, customs, languages, legal systems etc.  Exporting into Asia is a whole new ball game and success requires a significant level of competency that is in short supply in NZ.  The Fonterra’s and Fletcher’s will be able to take advantage of these FTAs as they do have the resources, knowledge and networks, but as we know, these firms are few and far between. 

This is where NZTE should come to the fore.  This government organisation should, in my view, be NZ’s international eyes and ears (and a lot more besides…).  About 6 months ago, I asked the retiring CEO of NZTE if his organisation was NZ’s international market development manager, and he replied “if only…”. 

How can NZ achieve an international vision when $110m has been cut to the budget of the country’s off-shore operators?  Quite simply, we can’t. 

I think we all agree (except the Greens..) that if NZ is to achieve a high level of sustainable economic growth, it has to be though a much greater level of international engagement (ie grow our export volumes, value and competencies).  Negotiating free trade agreements is an important step, however, helping NZ companies see the possibilities and reach their potential is vital if we are going to make it a reality.  National is failing on this one I am afraid.

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NZ-Malaysia FTA signed

Posted by Maryan Street on October 27th, 2009

Last night (Malaysian time), Hon Tim Groser, our Trade Minister, and his Malaysian counterpart, Y.B. Dato’ Mustapa Mohamed, signed the NZ-Malaysia Free Trade Agreement. PMs John Key and Y.A.B. Dato’ Sri Mohd Najib Tun Abdul Razak were in attendance.

This essentially is the culmination of bilateral talks which were kicked off by Helen Clark in 2005, which is why Labour developed, and the Nats are continuing, the bilateral approach to trade – they often take longer to nail down than one (or more) electoral cycle(s). As you can see by various news stories logged by the journos present, Fran O’Sullivan for the Herald, Colin Espiner for the Press and Ian Llewellyn for NZPA and from Radio NZ today, it is like the ASEAN Free Trade Agreement except better and faster.

95.1% of tariffs will be eliminated immediately the FTA comes into force in 2010, and then it moves quite rapidly, in trade terms, to 99.5% tariff elimination by 2016. That’s in 7 years, quite a lot faster than the 12 years it will take to get to the same point under the AANZFTA (ASEAN one). This is good news for our exporters, especially kiwifruit growers who will see a 15% tariff disappear immediately upon implementation. That’s a lot more profit to be kept in NZ. Good on them. It’s also a fillup to Fonterra which has invested megabucks in new plant in Malaysia recently.

In case you were wondering, the remaining .5% tariffs apply to things like wine and pork products which have their own religious and cultural barriers here. Fair enough.

The labour and environment side clauses are there too. It’s going to be important however to ensure that they are honoured at every point. Our CTU will watch with care to make sure that the clauses signed off by Kate Wilkinson a few weeks ago in NZ mean what they say. We were told yesterday by one of the presenters at a very good seminar organised by NZTE that Malaysian employment law tends to be “employee friendly”. That may be news to some of the unions here.

There was a formal dinner last night attended by both the PMs. I had the pleasure of sitting next to Dato’ Dr Michael Yeoh, CEO of the Asian Strategic Leadership Institute – and also a Commissioner on the Malaysian Human Rights Commission. Now THAT was an interesting conversation………for another blog.


NZ-US Partnership Forum – Washington

Posted by Maryan Street on October 13th, 2009

Well that went well! No really – it did. I was pleasantly surprised at how warmly the Americans responded to us. They didn’t have to, but they put up seriously senior officials, gave us access to significant politicians, and presented us with substantial business leaders. All credit to Stephen Jacobi and the team at our end and to his counterparts in the US.

Given the overwhelming, all-consuming debate around whether everyone should be allowed to have access to health care (say what?), it’s surprising the Americans had any time to talk about trade at all. But they did. The Trans-Pacific Partnership (TPP) was clearly on the agenda, but timing was the issue.

Obama clearly has to make workers feel more secure before he can venture out into trade territory which might make them nervous. The Land of the Free isn’t always – certainly not when it comes to health and sometimes not when it comes to trade either. Providing healthcare for all will go a long way to shoring up  insecure workers. With nearly 15 million of them out of work, security becomes paramount.

I was interested in how much the talk around business actually included talk around security – of borders, of the rule of law, of nuclear non-proliferation and disarmament. It all ties together actually….and that segues nicely into my next blog, when I talk about the Parliamentarians for Nuclear Non-proliferation and Disarmament meeting (PNND) which I have just been at in New York. If we don’t get that right, we won’t have anybody left to trade with….


Trading our way to a better world

Posted by Phil Twyford on October 4th, 2009

Green co-leader Metiria Turei struggled to articulate her party’s position on trade in a tough interview with Guyon Espiner on Q&A this morning. She didn’t answer Espiner’s questions on whether or not the Greens supported CER or the China trade agreement.

Labour’s approach to the China agreement is unequivocal:

1. New Zealand’s long term prosperity relies on our firms successfully selling into international markets, particularly in the dynamic East and South Asian economies. We owe it to future generations.

2. China is becoming a super power. Trade (and political, diplomatic, cultural and people-to-people) engagement by NZ and other countries is a necessary part of bringing China into the international community, and fostering its commitment to international law and mulitilateralism.

3. New Zealand can and does use the access we get from our special trade and political relationship with China to raise issues of human rights.

Personally I’ve always been of the view that boycotting trade with China because they don’t share our views on labour, human rights and the environment is not tenable. Chinese workers deserve jobs just as much as workers anywhere else.

Trade liberalisation can harm (for example by reducing the policy space to protect infant industries, or forcing countries to open up sensitive sectors to foreign competition) but it can also help (for instance by getting rid of rich-country protectionism that damage the livelihoods of farmers in poor countries and New Zealand).

Not only is trade the only way that a small isolated country like New Zealand can prosper, it is also one of the most important ways the world’s poorest nations can work their way out of poverty. Trade is not inherently good or bad. It depends how the rules are written, who the winners and losers are, and how trade-offs are managed.

The challenge for New Zealand is to balance the gains we get from liberalising agricultural trade and opening up important new markets, against possible concessions that might reduce our own policy options (for instance the long expected opposition of the US to Pharmac). In the Pacific we and the Australians need to balance the gains of helping Pacific states export more, against liberalisation that could reduce the policy options of governments to protect sensitive sectors.

What do you think?


Next letter from America…..

Posted by Maryan Street on October 3rd, 2009

This weekend I set off for Washington and the NZ/US Partnership Forum as Opposition Trade Spokesperson. Led by Jim Bolger and Mike Moore, with 2 Cabinet Ministers and Phil Goff and me from the Opposition, we will accompany a group of some 40+ NZ business people to explore ways of progressing US/NZ trade opportunities. The US has at some levels recognised that NZ provides through TransPac a stable way into Asian economies. It will be interesting to see where that recognition has landed and who is looking at trade deals with NZ.  I have asked for a briefing from the World Bank and the IMF while I’m in Washington – let’s see what they say about recovery from the recession, the future of financial regulation and climate change, which is now inextricably linked to trade negotiations and prospects. 

At the end of that I go to NY to participate in a conference and Annual Meeting of  Parliamentarians for Nuclear Non-Proliferation and Disarmament (PNND). I have been a member of the NZ PNND since I entered Parliament. It’s sooo good to know that Key and the Nats have come on board with the anti-nuke agenda!  Hasn’t anybody told Matthew Hooten? I wonder what Key was doing during the 1980s and the debate around our now  “iconic” anti-nuke legislation? Praps he can’t remember, just like he can’t remember what he thought about the Springbok tour of 1981.

Oh – and seeing you asked – Parliamentary Services (aka the taxpayer) pays 25% of my NZ-US airfare because I am a second term MP. Not the internal US flights, not the accommodation, not the meals which I will probably have to eat or fall down. I’m paying for all of those.

I will post at intervals while I am away so you can find out who said what about anything.

Cheers.


Fonterra

Posted by Damien O'Connor on September 18th, 2009

Fonterra announced it’s capital restructuring plan. Now the farmers will get a chance, maybe if they are not too busy on their farms, to attend a meeting to discuss the plans. This process is one of the most important facing NZ in the near future, up there with ETS consideration. This is arguably our largest and only truly NZ private company. Its success is our success. In a low payout year with high debt levels already, Fonterra’s ability to raise capital internally could not be proposed at a worse time for many farmers. I hope they can but I have concerns that the ultimate outcome of the restructure is the inevitable float of Fonterra on the open market. Who then might get to control of our biggest company and second biggest export earner next to tourism??? Sir Henry Van der Hayden should have an inkling having served on the board of NZX until recently. I’m sure he can see the danger looming.


Cuts to the thin green line

Posted by Brendon Burns on September 10th, 2009

Rotorua. Labour conference starts tomorrow – hurrah -and was in Taupo area today visiting Landcorp farms with Primary Production committee, so made sense to come on here. First person I bu mped into was Ag Minister David Carter. Reminded me that I took the last call in the House last night on his Biosecurity Amendment Bill. It doubles the fines for those caught smuggling prohibited items like food into NZ. A welcome move. But doing so under urgency the day after 54 Biosecurity staff lost their jobs was highly cynical. And yes, there may be a current downturn in trade, notably Jap car imports, but trade is always cyclical. The bill also provides for the easier trans-Tasman travel promised by John Key on his recent visit to Oz.  Making life easier for travellers is a good thing – but not it exposes the lifeblood of our economy to more risk.  Christchurch biosecurity staff have told me that the ‘thin green line’ is already very stretched – and that was before the announced cuts.  Savings of $2m are estimated. The varroa mite incursion alone cost 100 times that amount. Little wonder Fed Farmers president Don Nicholson has been moved to say this is one area of government cuts he won’t support. Labour will be scrutinising the bill very closely in the Primary Production select committee.


Ethical trade bites the dust

Posted by Maryan Street on July 29th, 2009

Tonight I tried to move our arcane systems around trade forward a notch. I introduced a member’s bill to prohibit the importation of products made from slave labour. You wouldn’t think the government felt so concerned by it that they needed to reject it but that’s what they did.

We seem to be able to prohibit products made from prison labour from getting into NZ but we can’t seem to do it around the fruits of slave labour.

In the end, things are changing. Old economic orders have crumbled and we need to devise new ones. Raising the flag for ethical trade isn’t such a big ask is it? Certainly 17,000 Kiwi consumers represented by Geoff White and Trade Aid supported a petition to Parliament for just this kind of law. In a few years, ethical trade will be the name of the game and we won’t be trading if we can’t demonstrate some standards.

I’m all in favour of free trade, but it doesn’t happen in a moral vacuum. Trade has to be at the right price – a fair price, an ethical price, not just any price.

Foreign Affairs and Trade officials told the select committee which finally considered the petition earlier this year, just how hard it would be to get a form of words which could be enforced, as well as a mechanism to do it. Well, we did it and do it for products made from prison labour. It seems to me that what we are missing is the political will. My bill was lost 58 votes (Lab/Greens/Maori/Prog/United) to 63 (Nats/Act).

You can be sure that if we never do anything, nothing will be done. Damn shame.