Free-trade treaty win-win: leaders

BRUNEI - They came. They signed. They sipped lemon tea and nibbled muffins.

The champagne remained on ice, probably in deference to the early hour, as Singapore and New Zealand yesterday put their signatures to the historic free-trade agreement in a hotel ballroom just metres from the steamy heat of Orchard Rd.

"A morning well spent," remarked Prime Minister Helen Clark alongside Singapore's premier, Goh Chok Tong, even though the clock had yet to strike eight.

The leaders later flew to Brunei for the annual Apec summit, starting today.

Both countries considered the deal, hammered out over the past year, as win-win. NZ gets a toehold in Asia, Singapore companies can do more business in NZ.

Free-trade critics say the net result will be more cheap Asian products dumped on the New Zealand market.

But for the two Prime Ministers in Singapore yesterday, it was the start of things to come. New Zealand now wants a free-trade deal with Hong Kong and Chile.

Mexico and Singapore are talking over a similar agreement. Korea is talking to Chile. Japan is chatting to Singapore, Korea and Mexico.

Mr Goh said the intent of the New Zealand deal was to spin a web of interlocking free-trade agreements between Apec members to "catalyse" the organisation towards its long-standing free-trade goals.

Seventeen of Apec's 21 members are party to such agreements or are discussing them.

Mr Goh stressed there was a danger that some economies in the region could be left behind if they were seen as "unattractive" as free-trade partners. That was why Apec still needed to galvanise a fresh round of global free-trade talks through the World Trade Organisation - although Apec, which accounts for half the world's trade, does not as a whole seem to have the will to push for the resumption of talks which collapsed in Seattle last December.

In the short term, the deal is unlikely to spark an explosion in trade between the countries, as both already have low tariffs on most goods. More than 90 per cent of imports from Singapore enter duty-free.

The immediate winner from the deal is NZ beer, since exporters have faced high tariffs getting their brews into Singapore.

Down the line, the treaty should generate more business for architects, engineers and other service industries such as private education providers and investment financiers. do business in Singapore.

nteLabour ministers (and the National Party, which began the negotiations last year) hope the treaty will send a firm message about NZ's willingness to "engage" with Asian countries.

But critics such as the Alliance and the Greens describe the partnership as a "Trojan horse" for wider free-trade agreements with other Asian countries which could seriously damage domestic industries and provide open slather for uncontrolled foreign investment.

Those critics predict that the Singapore treaty will devastate what is left of local clothing and textile industries.

Herald Online feature: Apec