Thursday, July 7, 2022

US-NZ trade relations stagnant

There now appear to be few hopes of significantly improved trade relations with the United States, eight months into the Biden administration. The preceding Trump administration was avowedly protectionist, but his successor has done little in real terms to reverse that trend.

There now appear to be few hopes of significantly improved trade relations with the United States, eight months into the Biden administration.

The preceding Trump administration was avowedly protectionist, but his successor has done little in real terms to reverse that trend.

What progress that has been made stems from hard work and initiative by sectors like the meat industry, which enjoyed a 32% increase in the year to July.

But Government to Government, it is a different story.

For one thing, there is virtually no chance of the US joining the Comprehensive and Progressive Trans Pacific Partnership, or CPTPP, according to official and unofficial sources.

They make clear that President Joe Biden has other things on his mind – a lot of them – such as battling covid and restoring neglected infrastructure.

The US was one of 12 countries that signed an earlier version of the treaty, the Trans Pacific Partnership, or TPP, in 2016.

But US President Donald Trump rescinded that signature after his election later in the year, citing a nationalist policy of “putting America first”.

However, Trump’s defeat in the 2020 poll does not mean the TPP’s successor, the CPTPP, will see the US back inside the tent.

An official statement from the American Embassy in Wellington made clear this was unlikely, despite Trump’s replacement by a Democratic administration.

“Trade with other nations is, and always will be, of paramount importance to the United States,” the statement said.

“However, as President Biden has said, the United States must focus on making investments in the American worker, their families, US infrastructure and covid recovery before he signs any new trade agreements.”

This official view is echoed by comments within the US.

“Anyone hoping that the Biden administration would pursue international trade policies to counter the protectionism of the Trump administration would be sorely disappointed,” wrote a trade lobbyist, Kent Kaiser, in an opinion piece for the Washington news site, The Hill.

“President Biden has left the Trump tariffs in place and he shows no signs of wanting to pursue new trade agreements, having allowed his trade promotion authority (in Congress) to lapse.”

The US is New Zealand’s third largest trading partner after China and Australia.   Meat, beverages and foodstuffs like honey and dairy made up the top three export commodities from this country and values have been rising.

A veteran trade expert Stephen Jacobi says New Zealand has been able to weather the protectionist storm in Washington better than might be expected.

It has been able to retain access to entrepreneur visas and government procurement contracts that have offset losses from heightened tariffs for steel and aluminium.

And, it has been able to maintain agricultural trade despite continuing restrictions via tariffs and quotas.

But a trade deal would still be worthwhile.

Meanwhile, another development has caused regret in NZ: persistent, if falling, state subsidies to American agriculture.

These contradict popular myths about American industry standing on its own two feet, in line with common beliefs about rugged individualism.

According to the USDA, direct government payments to farmers for this year are forecast to fall 38.6% from the Trump years.

But they will still reach $US28 billion, of which $US9.3b will be for covid relief.

NZ producers have criticised these subsidies for many years.

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