Friday, December 1, 2023

Our position on trade is just plain crazy

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Alan Emerson says trade stipulations are dictated ‘more by domestic pressures than any degree of logic’.
Open Country CEO Mark de Lautour says his company’s approach when it comes to non-tariff conditions of trade is to ‘focus on doing what is right rather than public box-ticking’.
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The recent Free Trade Agreement between New Zealand and the European Union is massive. It will eventually be worth $1.8 billion a year, and duties will be removed from many our exports there from day one.

In addition we have new access quotas for beef, sheep meat, butter and cheese.

The EU farmers claim their negotiators gave away far too much and our farmers wanted more. Such is the nature of trade agreements.

Of interest is that Australian farmers have told the government that if the deal isn’t right, they should just “walk away”. I hope they do.

The next challenge for an FTA is with India.

Almost 40 years ago then prime minister David Lange hosted a trade delegation to India. Not much has happened since. Australia has an agreement with India. 

It’s the fault of successive governments, as Australia has established universities in India and opened Indian immigration. We have done neither.

We are a trading nation and we do that well. We are part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership CPTPP, we have the FTA with the United Kingdom that’s just come into force, we have a strong market in China and we now have an FTA with the EU.

The world economy is changing and our focus needs to change with that. Those countries moving up the GDP ladder include India, Indonesia, Nigeria, the Philippines and Vietnam. Conversely, those losing their positions include many of our traditional markets, the United States, Japan, the UK and Australia. 

Non-tariff barriers have been a fact of life for decades and appear to be decided more by domestic pressures than any degree of logic.

An upcoming non-tariff barrier, we are told, will be carbon footprint.

For example, the New Zealand EU FTA has each holding the other to account for their commitments under the Paris Agreement.

I view that with a strong degree of cynicism.

Mark de Lautour is the chief executive of Open Country. He was previously with AFFCO. He is regularly involved with selling NZ’s primary produce, including wood products, seafood, beef and lamb and now dairy on the international marketplace.

Asked about the requirement that we reduce our GHG footprint to meet the demands of the international marketplace, he is forthright.

“To date we have had no restrictions,” he told me. “The key issue is that no consumer is currently prepared to pay a premium for product with a reduced carbon footprint. There continues to be a lot of media hype and large corporations making statements about carbon reduction but nobody has answered the important ‘who is going to pay’ question.

“There is little doubt in my mind that in the short term the issue will fall into the too-hard basket and carbon reduction timeframes will be stretched. It will be impossible to enforce when food supply and cost will create bigger challenges.

“For example, large European supermarkets will struggle to limit supply from New Zealand as our carbon footprint is already a lot lower than that of local produce, even considering freight.

“Scarcity is the only true driver of sustainable value. Our approach at Open Country Dairy will be to focus on doing what is right rather than public box-ticking. As New Zealanders our approach should be to collectively maintain our position as the best supplier of food in the world, be that based on quality, food safety or carbon footprint. By doing that we will create scarcity that will drive value. Let’s not fret about being locked out of markets.”  

I totally agree.

I went onto the Ministry of Foreign Affairs and Trade website, which filled me with horror. Their Trade for All principles are outrageous.

For a start, they want consultation with Māori. Why? What will that achieve?

That’s followed by labour rights, gender equity and the rights of indigenous people. Poverty reduction and sustainable job creation are in there as well. Again, why?

We’ve recently had the United Arab Emirates in NZ attempting to negotiate a trade agreement. Stupidly, in my view, NZ introduced labour and environmental standards into the negotiations.

The UAE response: “The minute we bring politics into discussions we are diluting the main objective of the agreement,” their trade minister said.

I agree. Our position is just plain crazy.

It gets worse with Parliaments Primary Production Committee refusing to insist imported pork has the same animal welfare standards that we do. Their reasoning is that ‘they would be contrary to NZ’s international obligations’.

What a cop-out. It appears we can insist on labour rights, the rights of indigenous people and gender equity, but not animal welfare.

A final thought. With Ireland drastically cutting cow numbers, the Dutch disembowelling their dairy industry and an increasingly harsh war in Ukraine, where’s the food going to come from?

We should be concentrating on free trade and not own goals.

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