Stuff | 27 November 2016
Trade not so much about tariffs anymore, says NZ Trade Minister Todd McClay
Trade Minister Todd McClay is promising to bring a new more open style to trade policy as he attempts to press the case for free trade in the post-Trump and Brexit era.
McClay is taking New Zealand First leader Winston Peters with him on trade trip to Europe with Labour trade spokesman David Clark joining him in Iran.
"I would like to find ways to be much more inclusive in negotiations than sometimes we have seen in the past," McClay said on the eve of his trip to Europe.
"If the world decided to shut down and become protectionist it would hurt our economy considerably," he said.
New Zealand appears to have few obvious cards to play in that scenario.
Last year, Customs collected just $127 million in import duties on imported goods, once levies on imported petrol, tobacco and alcoholic beverages were taken out of the equation.
The Ministry of Foreign Affairs and Trade doesn’t keep tabs on the tariffs paid by New Zealand exporters, but agriculture firms reported paying $120 million in duties on exports just on red meat, seafood and horticultural exports to the European Union alone.
Australia, which is also seeking a deal with the EU, has more a few more barriers to trade away. It last year collected A$3.4 billion (NZ$3.6b) in tariffs on general merchandise, including almost A$1b on cars.
Although New Zealand is frequently rated amongst the easiest countries in the world for firms to do business, McClay indicated there were changes to non-tariff terms that the country could offer the EU.
"In essence, trade agreements are not about tariffs and goods anymore but about investment and services. In many areas there will be restrictions around things like government procurement.
"Around investment they will be interested in some of the thresholds that may be higher in other parts of the world than they are with the EU."
The country could be one of the first cabs off the rank for a free trade deal with Britain, he believed.
"I would suspect we would be one of a couple of countries that would have that opportunity fairly early in the piece," he said.
McClay has not written off the Trans Pacific Partnership despite a seemingly clear commitment by US president-elect Donald Trump to pull out of the proposed trade pact on his first day in office.
"We don’t think he would change his mind on this, but ... he hasn’t said he is opposed to trade. He has said he wants to do bilateral deals.
"I think there is a long way to go yet but I still see quite some merit for New Zealand in TPP. We are moving on and other countries have said they too are still looking to ratify and we see what that means by the end of next year."
Although three-quarters of the tariff gains from the TPP for New Zealand would come from improved access to Japan, McClay did not believe the TPP would be better for New Zealand without the US, given the potential it had to increase overall trade flows.
There appear to be better prospects for trade liberalisation in Asia.
McClay said he expected to engage a lot more with India next year. "I think that is going to take quite some time but it is a very big market."
Another major focus would be upgrading New Zealand trade agreement with China with the goal of increasing two-way trade to $30b by 2020.
"I think it will take a good year to get through that," he said.