Prime Minister Jacinda Ardern with Chinese Premier Li Keqiang during her trip to Beijing this year. Photo / File
Prime Minister Jacinda Ardern with Chinese Premier Li Keqiang during her trip to Beijing this year. Photo / File
COMMENT:
New Zealand is doubling down on free trade, with Jacinda Ardern poised to herald an upgraded deal with China.
Ardern is also ready to carry the flag for New Zealand if it emerges as a member of a powerful new US$10.3 trillion ($16t) trading pact — RCEP —this coming week.
(That is as long as negotiators can keep India — one of 16 expected signatories to RCEP — to stay through to the finish line.)
Further afield, top New Zealand trade official Vangelis Vitalis has been in Washington DC talking with US trade negotiators about opening discussions on a bilateral free trade agreement (FTA) with that country's trade representatives, building on Foreign Minister Winston Peters' diplomacy.
Trade and Export Growth Minister David Parker will also meet other World Trade Organisation ministers in Shanghai this coming week where he is attending the opening of Chinese President Xi Jinping's centrepiece Import Expo. In an environment where international protectionist instincts are again to the fore, this is smart positioning by New Zealand.
The NZ-China deal won't go as far as New Zealand exporters hope. But they should pocket it as a plus.
Ardern had been expected to witness the upgrading of the 2008 bilateral free trade deal at the Apec Leaders meeting in Santiago, Chile, which had been scheduled for November 16 and 17.
But violent protests in Santiago, which saw thousands of arrests and left at least 20 dead, put paid to President Sebastian Pinera's plan to host both the Apec meeting and the COP25 UN climate conference the following month.
Said Pinera: "This has been a very difficult decision — which has caused us great pain — because we understand perfectly the importance of the events for Chile and the world.
"When a father has problems, he must always put his family before everything else. Similarly, a president must always put his own countrymen ahead of any other consideration."
It is not only Ardern who was robbed of a major summit platform.
So too was US President Donald Trump, who with his counterpart Xi, had hoped to sign phase one of the truce that the US and China have "agreed" in their trade war.
They are now searching for a new venue. Currently, Macau and Hawaii are in the frame.
But if the powerful pair want to announce their truce on neutral territory, they could always opt for Auckland. Just a suggestion.
Trade and Export Growth Minister David Parker. Photo / File
Particularly as New Zealand — which hosts Apec in 2021 — will be in an influential position to drive forward free trade against a focus of inclusive growth.
The East-Asia Summit, which takes place in Bangkok on Monday, could also provide an alternative platform for Ardern and Chinese Premier Li Keqiang, who will be China's representative at the summit this year, to get the New Zealand-China free trade agreement upgrade unveiled. Alternatively, it may be left to Parker and China's Commerce Minister to announce it in Shanghai if RECP (Regional Comprehensive Economic Partnership) looks to dominate.
International attention will be focused on whether talks on the RCEP pact, in which New Zealand is a player, will finally be agreed.
The drum out of Bangkok yesterday afternoon was that the 10 Asean members and six trading partners (which include New Zealand) were optimistic about a breakthrough on the RCEP deal during the East Asia Summit.
The 16 signatory countries to the RCEP have a combined population of about 3.56 billion, with nearly one-third of world trade.
RCEP — which is backed by China — was seen as a rival to the Trans-Pacific Partnership (now CPTPP) where negotiations had been led by the US until Trump pulled America out.
Free trade has been a sensitive issue in the RCEP talks, with India in particular proving a sticking point.
Pragmatism will have to reign if a deal is to be notched.
On NZ's China FTA upgrade, the basic deal was finally hammered out weeks ago. It is not expected to be the great leap forward that the dairy sector, in particular, had hoped for.
Dairy will still have the same phase-out period for tariffs as in the original agreement.
And they will still go to zero. A plus that might have been lost if Fonterra had succeeded in its lobbying of former Prime Minister John Key's Government for "safeguards" to be phased out. That's where higher tariff rates kick in when the thresholds on certain milk powder exports into China are passed.
But the Ardern Government sensibly took note of China's signalling that such a step might see the zero tariffs commitment rejected.
But the forestry and wood sector will be brought into the net and there is speculation that there will be an easing on export certification requirements for both dairy and wood under rules of origin.
There is expected to be some movement on e-commerce and possibly services.
This will not be a biggie — but any step forward in the current environment is a plus. It is not a step backward and for that NZ exporters should give thanks.
