New Zealand, Russia to start free trade talks
Stuff 13/11/2010
New Zealand, Russia to start free trade talks
Vernon Small in Japan
New Zealand and Russia have agreed to kick start talks on a free trade agreement that will be a first for the former Soviet republic.
The deal was announced in Japan today at bilateral talks between Prime Minister John Key and Russian President Dmitry Medvedev.
Trade Minister Tim Groser said the move was another step in New Zealand’s "aggressive trade strategy".
Though negotiations had not yet started, the two countries had already agreed on some outcomes of the talks. Once they were completed tariffs on goods such as dairy, sheepmeat and manufactured goods would immediately be lifted.
Tariffs on other "sensitive products" would be phased out over 10 years.
He said the pre-agreed elements amounted to a "part-cooked or half cooked outcome statement".
A similar strategy had been used in the early days of the New Zealand-Australia free trade talks that led to CER.
New Zealand’s trade with Russia amounted to only $187m a year but it was growing rapidly. Russia was the 35th ranked trading partner for New Zealand but the15th biggest economy in the world.
The two countries’ trading specialities are seen as largely complementary - New Zealand sells Rusia mostly butter, cheese, meat and fish while Russia exports energy and machinery.
Mr Groser said the move was a step towards "future-proofing" New Zealand.
Investment heavyweight Goldman Sachs has forecast Russia, with an economy of about $1.28 trillion dollars now, would be the largest economy in Europe by 2050.
He said it was a "low cost strategy" for both countries.
"They want to put a rouble into the middle of the pot and play," he said.
"Russia want to play and they have chosen New Zealand."
Russia has been thwarted for the last 16 years in attempts to join the WTO.
It likely sees a free trade deal with New Zealand as a parallel route into the growing free trade bloc in the Asia Pacific region, based around ASEAN and the Trans Pacific Partnership.
The TPP includes New Zealand, Australia and the United States among its nine member countries.
Mr Key said it was hoped to sign the free trade deal at the 2012 Apec meeting in Vladivostok.
President Medvedev had invited him to visit Russia before then and he might go next year as part of a planned trip to the Northern Hemisphere.
The talks include Belarus and Khazakhstan, who are part of a customs union with Russia. Talks will start early next year. Russia has tariffs on all of NZ’s major exports ranging up to 15 per cent on butter and 10 per cent on sheepmeats.
