Fran O'Sullivan: Importance of trade a silver lining from Covid's dark clouds

Trade Minister Damien O'Connor. Photo / Mark Mitchell

OPINION:

An unexpected silver lining emerging from the dark clouds of the Covid-19 crisis has grabbed Trade Minister Damien O'Connor's attention.

The coronavirus pandemic has exposed the need for co-operation on trade matters among countries; some of which have obviously embraced protectionist instincts in recent years.

China and the United States are clearly in that camp. Their disruptive trade war has made other free-trading countries like New Zealand angsty and has now morphed into straight out geo-strategic competition.

But this is New Zealand's year as chair of Apec; the 21 economies that make up the Asia-Pacific Economic Cooperation group and account for 50 per cent of global goods trade and 40 per cent of services trade.

As chair of the Apec trade ministers' talks, O'Connor wants to ensure that by the time the 21 Apec political leaders meet virtually in mid-November under Prime Minister Jacinda Ardern's chairmanship some commonality has been reached on major international trade issues.

Not simply the free flow of Covid vaccines and their components, which was the subject of the trade ministers' own virtual talks earlier last month and where significant progress was made.

But also an acceptance by China and the US, in particular, that it is time to put some ballast under the World Trade Organisation (WTO) which is holding its 12th ministerial meeting in Geneva from November 30 to December 3, 2021 under the aegis of Director-General Ngozi Okonjo-Iweala who sat in on the Apec trade ministers' talks.

"Firstly, she (Dr Okonjo-Iweala) got a clear signal as to what we were intending, in terms of Covid and the post-Covid rebuild," O'Connor told the Herald. "She also got the clear signal that we want to see reform of the WTO."

"And that Apec economies were going to endorse it along with clear signals around the need for the appellate body to be operational."

Critical to this breakthrough has been the changing stance from the United States.

During the Trump era, the US Administration was perceived as pursing an isolationist stance by pulling out of several key multilateral institutions and throwing a spanner in the appointment process for the WTO's appellate body.

O'Connor's contention is that the US has clearly signalled that they see the value in the WTO and will continue to push for reform.

"I think everyone feels more positive that as a major player, particularly, the key player of the appellate body, the US is now back in the game," he said.

Central to this more emollient stance was the appointment of Katherine Chi Tai, an American attorney serving as the 19th United States Trade Representative from March 18, 2021.

"I think everyone finds Katherine Tai and the new regime a breath of fresh air in a challenging world of growing protectionism and uncertainty relating to Covid."

Covering 50 per cent of global trade, Apec obviously has huge heft. The agreements there, while voluntary, carry weight and O'Connor is hopeful that by the time the trade ministers meet again just prior to the political leaders, there will have been sufficient movement by officials to make even further inroads into the free flow of medical components and vaccines to combat Covid, and other critical issues like environmental technologies to combat climate change.

19 countries are producing the components for the Pfizer Covid-19 vaccine. Photo / AP

He highlights the international co-operation supporting the rollout of the Pfizer vaccine which is being used in New Zealand to provide immunity to the Covid-19 virus; pointing out the Pfizer vaccine involves 280 components over 80 companies with 19 countries producing the components for the vaccine.

"Any of the barriers to the flow of those components or to those companies or countries, is going to slow down the production. And that interconnectedness I think on vaccines is the same for many other products that we rely on around the world, be it cell phones, or food, or whatever.

"We've argued for tariff-free, or the elimination of all tariffs relating to vaccines and essential medical equipment. We promoted the fact that none of us are safe until all of us are safe. This was stated on a number of occasions.

"The realisation that individual economies can't progress until all of us across Apec and the wider world are in front of it."

O'Connor expects environmental issues will also be on the Apec agenda in November.

Specifically, the need to reduce or outright remove tariffs which make the sharing of technology and goods more expensive when it comes to the environment and climate change. "It's absolutely necessary if we're going to get ahead of climate change issues.

"The world should be watching the outcomes from Apec and I think that the leader's summit will be a great test of progress to both combat Covid, but to also look ahead to the issues of climate change and the reduction of harmful subsidies."