Reassessing NZ 's Trade Strategy after Doha.

4 August 2006

Reassessing New Zealand’s Trade Strategy after Doha.

The Canterbury Manufacturers’ Association is pleased to hear President George W. Bush’s comments earlier this week that the United States will do what it can to revive the stalled Doha Round of trade talks. It is an encouraging sign for this country’s firms and exporters, but New Zealand should not necessarily expect these words to translate into progress at the World Trade Organisation.

“President Bush spoke of his commitment to reviving the Doha talks and his speech will raise expectations that the WTO can be given new momentum”, says CEO John Walley. “Although the balance of this country’s exports is weighted towards primary commodities, there are also a number of issues in selling manufactured products to government buyers in the USA. This closes the “homeland security budget” to New Zealand companies. New Zealand needs the access to the American and world markets which an agreement at Doha could bring but we really do need a plan ‘B’”.

Mr. Walley says that New Zealand needs to take into consideration the changing dynamics of the international community before deciding upon a particular trading strategy.

“If a multilateral approach to international trade cannot work then it is likely that regional blocs, such as the European Union, NAFTA and ASEAN will increasingly step in and fill the void. New Zealand may be forced to negotiate an entirely new deal with each particular bloc outside of any deal it has with an individual country”, says Mr. Walley. “The Government may have to focus on these regional entities in place of a broader WTO arrangement and should also avoid knee jerk reactions whereby we rush into bi-lateral agreements under which low cost countries retain their export subsidies and export supports and non trade barriers that are not reciprocated here”.

Mr. Walley says that the weighting of New Zealand’s economy towards the exportation of low margin commodities increases its vulnerability to any breakdown in world trade talks. “The weight of primary elements in our export basket means that New Zealand needs the sort of access to international markets that Doha could provide. If the balance was moved the other way, towards high tech, high value products, agreement at the WTO would still be desirable, but not as critical given the increased value return from these exports. If New Zealand focuses on producing and exporting products of high added value then access to overseas markets would largely depend on quality and branding and less on quota and access negotiations”.

“Despite the problems with the current Doha Round, New Zealand still has a role to play in supporting the WTO. However the Government should look at all its options regarding its trading strategies in a manner which is smarter and not faster, as the rush to negotiate bilateral agreements that may prove costly to our economy in the long term. This involves New Zealand addressing the shifting geopolitical trends along with the type of products we wish to produce and export. Then we will be better placed to deal with any future breakdown in talks at the WTO”.

ENDS

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