Tuesday, December 5, 2023

New urgency to tackle petty trade hurdles 

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What exporters gain through FTAs they risk losing to pointless, and very expensive, bureaucracy.
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The true cost to meat exporters of behind-the-border red tape was recently revealed in a new report. Meat Industry Association chief executive Sirma Karapeeva spoke to Nigel Stirling about the industry’s $1.5 billion non-tariff barrier problem and what can be done about it.

For Sirma Karapeeva, one incident during the pandemic underlined the true uselessness of many of the bureaucratic box-ticking exercises meat exporters routinely face.

It related to the requirement for containers of meat bound for the Middle East to have their export documents rubber-stamped by the receiving country’s embassy staff in Wellington.

“Of course during covid everyone was holed up in their houses and we could not get the country’s staff to make themselves available to stamp these documents,” Karapeeva recalls.

“We had to call on MPI and the New Zealand ambassador to the region to go and strike a deal for that requirement to be removed so that we could carry on with the transaction.

“That did not make any difference to the safety of the product, or any of the certification or labelling requirements – they were still done  — it just meant the fee was foregone.”

The processing fee charged by the embassy was $1,000 per consignment.

“In this instance, the company concerned sent 10 or more consignments per month so very quickly the money being spent was going up and up and for no reason.

“Small things like this add up.”

Just how much these “small things” add up to for the meat industry overall was recently revealed in research for the Meat Industry Association (MIA) and Beef + Lamb NZ.

The research found that, at $1.5 billion annually, the cost of so-called non-tariff barriers multiplied by many times the $193m cost of tariffs to meat exporters last year.

Tariff costs are down from $366m in 2010 as more free trade agreements have been negotiated to lower tariff rates faced by exporters in overseas markets.

But with 75% of the country’s existing trade soon to be covered by tariff-busting free trade agreements, Karapeeva believes it is time to look again at NZ’s trade policy objectives – with non-tariff barriers needing the most urgent attention.

And she says existing trade agreements are the best place to start.

“People forget there is more to trade agreements than just removing or reducing tariffs.

“Obviously that is the big and immediate win but what people probably don’t appreciate is that in those agreements is a whole bunch of provisions that deal to non-tariff barriers.”

Karapeeva has been reported as saying that the government should not shy away from suing trading partners where they have not upheld commitments made to open their markets as promised.

NZ became the first of the 11 countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to sue another member when it took Canada to court for misusing import quota administration rules to block access for dairy products from NZ.

However, Karapeeva said there are plenty of alternative mechanisms in NZ’s trade agreements that could be better utilised to overcome non-tariff barriers before they turn into trade disputes and the lawyers have to be called in.

“Those provisions set up administrative or bureaucratic systems that bring those issues to light and compel agencies and governments to work together to resolve them.

“We have got strong chapters on sanitary and phytosanitary and technical barriers to trade which we do not believe have been fully utilised by our government to resolve some of those behind-the-border issues.”

Karapeeva said the 2008 China-NZ free trade deal established forums where officials from both countries meet regularly to discuss trade blockages, and this is working well.

However the same could not be said for other large-scale trade agreements involving NZ, including the CPTPP; the Regional Comprehensive Economic Partnership – the world’s largest trade agreement including the 10 South-East Asian countries of ASEAN as well as Australia, South Korea, Japan and China; and the ASEAN-Australia-NZ deal negotiated in 2010 and recently upgraded.

“These are big agreements that were negotiated to bring a lot of our bilateral [trade deals] into comprehensive frameworks and they all have those sorts of provisions.

“Perhaps we should focus on extracting as much value as we can from those agreements given the resources that were spent negotiating them.”

So where should the resources come from to take the fight to trading partners unfairly wielding costly non-tariff barriers against NZ exporters?

Could they come from a redeployment of the battalions of highly paid trade negotiators currently employed by the Ministry of Foreign Affairs and Trade?

After all, they must have more time on their hands now that so much of NZ’s existing trade is covered by free trade agreements, and the negotiating function of the World Trade Organisation is at a standstill.

“There is a skill set negotiating the framework of these agreements and there is quite a different set of skills diving into regulatory settings and sanitary requirements and phytosanitary requirements, which are very technical,” Karapeeva says.

“They are probably not transferable skills but at a high level I think you are probably right.

“Given what we hear from our government, that we have pretty much done our deals and there are no mega deals in the pipeline for the timebeing, I think it is not unreasonable to suggest that we have to refocus our resources on resolving these technical areas.

“Hopefully our report has given people food for thought.

“It shows the big issues have not been resolved.”

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