Christchurch Trade Burst

Christchurch Trade Burst Monday 10 November 2003

Chairman of the Board – Brian Lynch

When the Trade Liberalisation Network was getting off the ground two years ago, some people said to me “Why bother? Surely the trade reform argument is already well accepted?”

Well, to you and me maybe that seems so. We know what trade means to this country. We see the business case for further trade reform as clear, compelling and convincing.

But let me make three points.

Not all New Zealanders view things the way we do. There are strong and articulate opponents of trade liberalisation in this country and they are becoming more strident.

Secondly, consider the political context. After some initial hesitation the current Labour government has been a staunch advocate of trade reform. But what if the political mix altered? We could see a new administration slip into ambivalence on the trade question. That would be a bad thing. Why? Because some heavy-duty national interests are at stake.

No one out there in the wider world is going to take care of this country’s future well being if we do not make the effort ourselves.

New Zealand is heavily trade-dependent. The economy’s strength is hugely reliant
on the thirty billion dollars external revenue earned abroad each year.

We are not able to muster a lot of economic or political muscle. If your community is 0.06% of the global population as ours is, and you make up only 0.27% of world trade as we do, not many players on the international stage deem it prudent to step aside when they see us coming.

The stark reality is, size does count in the global arena. Unless we are determined to have our say and demand to be heard, ‘punch above our weight’ as that old saying goes, the international community will go about its business oblivious to New Zealand’s needs.

The lesson is that we have to do what we can to overcome the tyranny of size and the challenge of distance from key markets. Otherwise we become merely trade policy supplicants and price takers.

New Zealand has to be internationally engaged – multilaterally, regionally and bilaterally. It’s the first that has the potential to deliver the most in trade terms and which has also just shown its infamous potential to falter and stumble.

The World Trade Organisation’s Doha Round is only two years old. We would be kidding ourselves if we thought it was going to be delivering outcomes at this stage, but it was disappointing to see the recent meeting in Cancun stumble so badly. Everyone lost. This was disappointing but not a disaster.

So where do our trade negotiators go from here?

We certainly stick with the WTO. But some rethinking of our strategic alliances is necessary.

For the first time developing countries are having a real say and this is to be welcomed. However, the speed of the G21’s establishment and its effectiveness has taken everyone somewhat by surprise. The Cairns Group’s role has been diminished and as a result NZ and Australia have lost vital influence. How do we get the Cairns Group into the G21’s orbit?

It shouldn’t be too difficult. Our interests are closely aligned – we both want export subsidies eliminated, we both want domestic support for agriculture eliminated and we both want more market access into North America, Europe, Japan and Korea.

There are two other pathways to building relations with trading partners, the bilateral and the regional.

On a one-to-one basis New Zealand has CER with Australia, a Closer Economic Partnership (or CEP) with Singapore and more of the same in the offering: Chile, Korea, Thailand and maybe a ménage a trois with Chile and Singapore.

And what of the big one talked about; an FTA with the USA? It has been said there could be a billion dollars annually to be added to our gains from that market from such an agreement - mainly through greater dairy sales.

One would have to be supremely optimistic, naive even, to expect more than glacial movement in that direction over the foreseeable future, for a host of historic, political and resource reasons. Is that all bad?

Personally I do not believe so. By all means let us maintain a credible level of interest in pursuing an FTA with Washington. But the timing is their call. Meanwhile, it will be salutary to study the detail of FTA’s the USA has settled with other countries - with Chile, Singapore, and above all, with Australia in due course.

There is anecdotal comment of long lead-in time frames, up to fifteen years, being negotiated by the USA to give comfort to their domestic producers. That takes some of the immediate gloss off the appeal of such an FTA with the USA. If the Australians went along with an inadequate outcome; i.e., a less than comprehensive agreement, we would have cause to be concerned.

At the regional level APEC has been the main focus. The ambitious Bogor goals contemplated the removal of all tariff barriers among developed members of APEC by 2010 and among the developing country members by 2020.

There is solid work going on in APEC of a technical nature in areas such as trade facilitation and business travel. But substantial progress towards the Bogor goals is proving a hard slog. There has not been a truly productive APEC heads of government meeting since that hosted in Auckland in 1999. Let’s hope that the APEC meeting in Bangkok later this month, drawing on the disappointment of Cancun, picks up the cudgels and renews it’s commitment to the Bogor goals.

As I said at the outset, New Zealand has much at stake.

Persuading other New Zealanders of that is part of TLN’s task and as Suse has said, your task too.

Thank you.

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