Thursday, February 22, 2024

McClay cools clamour for new FTAs

Avatar photo
Government under pressure to explore new markets for NZ goods.
Reading Time: 3 minutes

Trade Minister Todd McClay has doused hopes from exporters for a wave of new trade negotiations during the National-led Government’s first term. 

The new government is under pressure from exporters to resist the notion that New Zealand has reached saturation point for tariff-busting free trade agreements.

In a briefing to McClay late last year, the NZ International Business Forum (NZIBF), representing major exporters including Fonterra, meat exporters Silver Fern Farms and ANZCO, as well as kiwifruit marketer Zespri, said it did not believe NZ had reached “peak FTA” despite 73% of the country’s existing trade being covered by free trade agreements once last year’s deal with the European Union enters into force. 

The exporting heavyweights said they had been disappointed in the previous government’s muted response to their suggestions for new negotiations with Switzerland, Norway, Israel, a host of African countries, and others. 

They conceded, however, that the era of “transformative” trade agreements reducing barriers to trade with large economies achieved over the past 30 years was drawing to a close.

“Even so, the NZIBF has not given up on trade liberalisation or securing future high-quality and comprehensive agreements, which can take considerable time to develop, and which continue to create considerable opportunities for exporters,” it said.

Farmers Weekly understands that it was not just the Labour Government that demurred after knocking off significant deals with the United Kingdom and the European Union, however. Some of NZ’s top trade officials are understood to be unconvinced that the payoff from new trade deals with second-tier countries suggested by the NZIBF would justify the cost and time in negotiating them.

McClay said he wants to keep full the “pipeline” of trade negotiations, which he believed had not always been the case under the last government.

Priorities are salvaging stalled negotiations with the oil-rich Gulf Co-operation Council, and reviving talks with India and the Latin American countries of the Pacific Alliance. His government will also continue the previous government’s investigations into a possible negotiations with the United Arab Emirates. Tackling non-tariff barriers through existing agreements will also be a top priority, he said. 

“I have set a goal of doubling our exports by value in the next 10 years,” he said.

“To do that is not just about more trade deals. It is also about selling more right now.”

McClay said he is happy to discuss future FTA targets with exporters now but it is unlikely negotiations will begin before deals currently in the pipeline are concluded.

“I have heard some in the business community say that Africa within a decade will be very, very strong.

“That may well be the case … we need to think about where those opportunities might be in the medium to longer term.

“We will start a process … it does not have to be No 1 priority but I think it is important that the system knows the direction we will be asking it to head in four or five years’ time when we have these other deals ticked off.”

Meanwhile McClay said he was satisfied with the signals from his Indian counterpart, Commerce and Industry Minister Piyush Goyal, in the pair’s first meeting in New Delhi late last year, even though a timetable for resuming trade talks was not discussed. 

The National Party panned the previous government for failing to progress negotiations started under John Key’s watch.

Prime Minister Christopher Luxon, during last year’s election campaign, promised a free trade deal in National’s first term. However, trade-watchers are sceptical such rapid progress can be made given India’s aversion to opening its market to dairy imports. 

McClay said the one-hour meeting with Goyal was positive but very preliminary in nature.

“It was the first visit to say we want to make the relationship a strategic priority.

“We didn’t get into any detailed discussion about trade to the degree of saying things have to be in or out or what a deal would look like.”

Ahead of the meeting, Goyal announced a new testing regime for log imports from NZ.

McClay said this promises to reinvigorate the log trade with India and is a positive sign of its intent to improve trading relations between the two countries.

The pair are due to meet again later this month.

People are also reading