Dialogue: Lower barriers vital to traders

By JIM SUTTON*

Trade is the life-blood of the New Zealand economy.

It's only by selling our products internationally that we can afford the living standards we have today. More than 80 per cent of all primary production is created for export.

So, access to international markets is essential.

The Government works to improve market access for New Zealand products on the multilateral level, the regional level, the plurilateral level, and the bilateral level.

Our first priority for trade liberalisation is through the World Trade Organisation (WTO).

This 143-member body agreed at its ministerial meeting in Doha, Qatar, last month to begin a new round of world trade negotiations - the first since the Uruguay Round was launched 15 years ago.

This agreement is important for New Zealand because the negotiating text, which will form the basis of the negotiations, includes a commitment to phasing out agricultural export subsidies, the most pernicious of subsidies and the most distorting to international markets.

Agriculture is at the heart of the Government's trade liberalisation focus. It has been estimated that even a 50 per cent reduction in trade barriers on a global level could add about 4 per cent to our GDP.

Last year developed countries gave away $US361 billion ($864 billion) to their farmers.

Our exports face tariffs of well over 100 per cent in many markets.

So when this Government talks about wanting trade liberalisation, we are talking about our trading partners starting to give us a fair crack of the whip. Simple as that.

The best way to do that is through a comprehensive round of world trade negotiations, with all sectors on the table.

That way, in return for concessions on agriculture, other members can receive concessions in other areas.

While the WTO is our highest priority, it's not our only priority.

The Asia Pacific Economic Co-operation forum has a goal of trade liberalisation by 2010 for developed nations and 2020 for developing nations. Whether that can be achieved remains to be seen, but Apec has significant weight in other international forums.

Another regional proposal is the idea of a linking of CER with the Asean trade agreement, Afta.

This would be a win-win proposition for both groupings, with overall gains of at least $US50 billion over the period from last year to 2020, roughly shared between Afta and CER.

Bilateral trade agreements are also useful.

The closer economic relations agreement with Australia has been hugely successful, linking our economy with Australia's, to the mutual benefit of both.

We have recently followed that up with a closer economic partnership agreement with Singapore, and are now negotiating one with Hong Kong.

These agreements have a significant role in motivating nations who are reluctant to engage but then fear that they may be left out.

The reality is that big trade groupings are forming and there is a risk of being left out. It's something NZ is working hard to avoid.

A country with a population the size of New Zealand's will prosper only if it is a dynamic trader and if it is integrated into the global economy. It is no surprise that, at the other end of the population scale, China has come to the same conclusion and joined the WTO.

But it is important to remember that liberalisation and rules to govern international commerce are not ends in themselves. The reason they are valued is because they can contribute to the wellbeing of our citizens.

Every trade agreement is scrutinised closely. If, on balance, it doesn't benefit our citizens, then the Labour-Alliance Government won't sign up to it. So far, we haven't come across that situation.

But when people advocate joining a trade arrangement that doesn't include agriculture - a sector that produces 60 per cent of our exports - it shows the potential to "shoot ourselves in the foot" is out there.

* Jim Sutton is Minister for Trade Negotiations.