Trade Minister Todd McClay scores win in world trade talks, but tough season lies ahead - Fran O’Sullivan

Todd McClay has to walk a fine line between diplomacy and pressing for trade breakthroughs. Photo / George Heard

OPINION

Todd McClay comes across as an eternal optimist.

He’s full of energy as he sells New Zealand’s trade story but it’s underpinned with a strong streak of realism.

This is something inherent in the DNA of trade ministers - the capacity to keep relentlessly beating down the doors of protectionism and forging new markets, while retaining a diplomatic disposition when barriers stay raised.

This was amply demonstrated by McClay’s intention to continue as a vice-chairman of the World Trade Organisation (WTO) ministerial conference for another year, despite a disappointing outcome at its recent meeting.

Overall, McClay rates the WTO meeting at five out of 10. He gives nine out of 10 for the United Arab Emirates hosts, who turned on a superb event in Abu Dhabi. And a “very positive sort of eight out of 10” for his New Zealand team, who spearheaded one of the few concrete gains to emerge from the meeting – a two-year extension to the e-commerce moratorium.

As McClay – who chaired the e-commerce talks – notes, this was recognition for New Zealand, which posted almost the sole achievement from the meeting, which was in e-commerce. He has received messages putting the success down to New Zealand and his delegation, which he believes is a good thing for a small economy.

The e-commerce move gives New Zealand businesses, especially small- and medium-sized exporters, predictability, certainty and transparency. Agreement was reached against significant opposition “just before midnight” on the crucial negotiating day.

It bears saying here that New Zealand’s experienced negotiators are deeply immersed in the strategies necessary to wear down resistance and use fast-eroding time as an asset in such talks.

The WTO’s 166 members did commit to strengthening the rules-based trade system exporters rely on, and accelerating progress towards restoring functioning disputes settlement by the end of the year.

Now back in the saddle as Minister of Trade after a six-year spell on the parliamentary opposition benches, McClay has his work cut out for him. Free trade is no longer a geopolitical priority. While McClay missed out on meeting his peers at last year’s Apec meeting, he did hold bilateral meetings with 14 countries in Abu Dhabi, including the United Arab Emirates (UAE); China; the European Union; India; the United Kingdom; the United States; Colombia; Brazil; and Saudi Arabia.

The reality is that the uneven benefits of global trade are undermining confidence in the WTO. There is still no coherence in the WTO’s appellate system and a real risk remains that it could all fall apart.

Geopolitical rivalries and protectionism are also threatening the gains of globalisation.

McClay notes that the big players weren’t as engaged as they could have been at the WTO meeting: “You need the US and EU to drive stuff through … but they were not using their political capital at the moment.”

McClay steps carefully about the fact that major elections this year, including in the United States, have the capacity to further derail global trade.

Former US President Donald Trump has flagged raising tariffs on all goods exported into the United States to 10 per cent. This would have an immediate effect on our own exporters. Trump has also talked about introducing 60 per cent tariffs on Chinese goods imported to the US – a step that could no doubt ignite another trade war with major implications worldwide.

Much of McClay’s work takes place in capitals. That’s where he and key officials like Ministry of Foreign Affairs deputy secretary Vangelis Vitalis are spending a great deal of time endeavouring to open further markets like India and work to get non-tariff barriers reduced in existing markets as the ability to post real gains from the WTO negotiations remain remote.

World Trade Organisation director-general Ngozi Okonjo-Iweala speaks at the WTO summit in Abu Dhabi. Photo / AP

But he also plans to lead a number of trade missions this year, including to the United States, where he is keen to open doors and assist New Zealand businesses.

The major moves in New Zealand’s prime relationships get under next week with the impending visit of China’s Foreign Minister, Wang Yi, to Wellington.

This is a precursor to an official visit from China’s top brass, which is expected mid-year.

McClay met with Chinese Commerce Minister Wang Wentao while at the WTO. He says it was a very good meeting and quite respectful.

Expectations are that it will be Chinese Premier Li Qiang who will come to New Zealand on an official visit, possibly in June.

Former Prime Minister Chris Hipkins extended an invitation while he was in Beijing last June. There is an off-chance President Xi Jinping will come instead. But with Australian Prime Minister Anthony Albanese talking publicly about his own invitation to Li – and Australian media openly promoting that upcoming visit – it is most likely the premier will come down, taking in both countries.

McClay himself goes to Beijing next month to liaise with China’s Minister of Commerce and his officials on trade issues. He is also the Minister of Agriculture and will no doubt be expected by New Zealand industry – especially Zespri – to raise current issues affecting bilateral trade.

Wang is himself no stranger to this dispute.

He met with former Prime Minister Sir John Key and Zespri’s outgoing chairman Bruce Cameron in Beijing last November, as both sought to resolve a longstanding issue over the unauthorised growing of Zespri’s prime brand, SunGold, in China.

Zespri will have expectations that this issue is addressed in the talks between Foreign Minister Winston Peters and Wang next week.

When it comes to talking about these issues after the bilateral talks, Peters will carry the day.

McClay is highly conscious that Peters is the senior minister, not only carrying the foreign affairs portfolio but also as Deputy Prime Minister. However, McClay is Associate Foreign Minister and the pair dovetail on key matters.

This is painstaking diplomacy. But it is necessary if the coalition Government is to succeed in its goals of expanding New Zealand trade and putting a firm platform under economic growth.

it won’t be easy. The World Bank is projecting a decade of historically low growth of just 2 per cent annually.

Trade – which has long been a driver of growth and poverty eradication, having helped 1 billion people lift themselves out of poverty in recent decades – is facing strong headwinds as protectionist forces mount.

McClay will need to keep his optimism bank topped up.