Wednesday, December 6, 2023

Labour’s trade claims: gold standard or a lot of brass?

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Was the government’s glittering trade run achieved more in spite of Labour than because of it, asks Nigel Stirling.
Paris – France
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Go to the Labour Party’s website and you will find the free trade agreement with the United Kingdom up in lights, near the top of its list of achievements in six years of government.

Indeed, the FTA with what is still the world’s sixth largest economy is as much a “gold standard” as Labour says it is.

New Zealand beef, lamb, and dairy especially, achieve tariff-free access in the near record time of between five and 10 years.

But what plaudits does Labour really deserve for the deal and six others either signed or upgraded?

As was the case with his predecessor David Parker, the crowning achievement of Damien O’Connor’s three years as trade minister came despite rather than because of him.

Getting Parker’s signature on the Comprehensive and Progressive TransPacific Partnership (CPTPP) wasn’t as straightforward as it should’ve been.

In Opposition, Parker had upended the longstanding consensus between the two major parties to line up with anti-trade protestors to decry the deal.

En route to the final negotiations in Vietnam just days after the 2017 election, Parker threatened to pull NZ out of the 11-country agreement.

His concern that it opened NZ to lawsuits from foreign corporations was a straw man argument used by Green Party activists and not borne out by previous FTAs signed by NZ.

In the end Parker gave way and exporters breathed a sigh of relief.

Parker’s heavy workload saw him hand over the job to O’Connor, who picked up the United Kingdom FTA negotiations after the 2020 election.

With its veto over the UK’s application to join the CPTPP, NZ held all the cards in this negotiation. 

“The deal was there to be done quite easily,” said one former minister with knowledge of the negotiations.

“Late in the piece the government introduced confusing stuff around the Treaty of Waitangi holding up the deal for ages as the UK tried to get its mind around what all that meant.

“And they got credit for it? God. They damn near buggered it up.”

The Labour cabinet instructed negotiators to make similar demands of the European Union in the FTA talks concluded last year. 

These involved special protections for Māori data, which the Waitangi Tribunal said had been trampled on in previous FTAs. 

Such protections would have ensured data or digital images collected from or relating to Māori could never be stored anywhere other than in NZ. 

In the end the agreement included a clause to review the matter after two years. 

Because of the secrecy surrounding the talks it is difficult to know how much this concession from the EU contributed to the poor final outcome for NZ pastoral exports. 

What is clear, though, is that imposing so-called data localisation rules on EU cloud computing and financial services firms wanting to do business here goes against the trend of modern trade agreements to free up the cross-border transfer of data. It certainly would not have helped NZ negotiators to open the door to EU agricultural markets. 

Underpinning this approach was Labour’s Trade for All trade negotiations strategy. 

Where previous governments had confined their ambitions to reducing tariffs and other impediments faced by exporters, Labour set much loftier goals for its negotiators. 

Gender equality, workers’ rights and environmental protections, as well as protections for indigenous rights, all counted as objectives for NZ’s trade agreements under Labour. Labour’s obsession with using trade to further its ideological agenda became farcical when O’Connor travelled to the Middle East last year. 

There he demanded the Gulf Co-operation Council (GCC) re-open negotiations to better reflect the Trade for All agenda, including “outcomes on labour and environment”.

That would be fine except for the fact that key members of the GCC include Saudi Arabia, the world’s largest oil producer, and Qatar, the LNG-exporting powerhouse, and scene of the deaths of thousands of immigrant labourers working on stadiums for the 2022 football World Cup. 

The result was the GCC withdrew a previous offer to slash $60 million of tariffs on NZ agricultural exports, and negotiations stalled. 

But far and away the biggest failure has been with India. 

The previous National-led government tried but made limited headway in bilateral talks with India. 

Under Labour both Parker and O’Connor bet on the 12-country Regional Comprehensive Economic Partnership (RCEP) trade agreement, which for a time included India. 

However, India withdrew from those talks before they were able to be concluded and with that went any chance in the near term of access for NZ exporters to a market of one billion consumers. 

By comparison, Australia had not been content to place all its bets on RCEP.

It put in a massive diplomatic effort, including numerous prime ministerial and ministerial visits up until it signed a deal last year. 

In answer to complaints from exporters that the government was not putting in the same effort, Labour ministers are said to have responded they had their hands full securing FTAs with the UK and the EU. 

Somehow Australia found the time to put effort into the EU and the UK as well as India.

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