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Current as of 02/09/15 08:59AM NZST

High powered push for Japan trade deal

By Chris Daniels

It's time to get serious about doing a trade deal with Japan, says free trade and business lobbyists, who say we've been neglecting our relationship with the world's second biggest economy.

A high-powered delegation of senior government and business leaders, including the Prime Minister Helen Clark, are travelling to Tokyo this week for a big meeting with Japanese officials.

Organised by the NZ International Business forum, the meeting is being described as the "largest and most significant gathering of government and business leaders from the two countries ever held."

Stephen Jacobi, forum executive director, said strengthening the relationship with Japan was a top priority.

"Japan is the world's second largest economy and now is a good time to advance New Zealand's relationship with a major trading partner and leading source of investment and technology."

Japan is our third largest trading partner, after Australia and the United States. We exported $3.3 billion worth of goods there in the year to the end of June 2006, with coal, aluminum and agriculture at the top of list.

The International Business Forum says that for the Japanese, New Zealand is "a reliable, secure and sustainable supplier of safe food and important natural resources.

It says there a good opportunities to expand export sales of "non-traditional products" from New Zealand's expanding IT, biotech and creative industries.

One of the toughest parts of doing a trade deal with Japan will be countering the force of its notoriously powerful farming sector, which been sheltered from foreign competition behind high walls of protection.

In a speech given to the Japan/ NZ Business council late last year, Fonterra's strategy general manager Philip Turner said that big changes in world food prices could mean there's now greater room to move on a trade deal with Japan.

Japan is Fonterra's number two market, after the United States. It has been doing business there for more than 50 years.

Global agriculture supply was not growing fast enough to meet demand, said Turner, which meant prices were rising and the traditional price gap between Japan and the rest of the world was eroding.

"For the first time in decades, international prices for some dairy products are now above local Japan prices. At the same time, stocks are falling rapidly. Japan is moving from a surplus dairy situation to a shortage in very quick time."

While Fonterra Japan was keen to keep doing business with traditional customers, there were other parts of the world increasingly prepared to pay as much, or more than the Japanese.

"This means Japan is increasingly going to look like other markets around the world. The aura of uniqueness and the "Japan premium" are likely to disappear."

Japanese self sufficiency in food was falling and consumers now had to rely more and more on imported food for their nutritional needs.

Turner said since the price difference between imported food and locally grown produce had now narrowed, Japan did not need to be so concerned about the prospects of cheap goods flooding their market after liberalisation.

Chief executive of the Wellington Chamber of Commerce Charles Finny says the recent signing of a trade deal with China has lead to increasing interest in our business relationship with Asia.

"Japan should take not of China's successful strategy and move quickly to commence FTA negotiations with New Zealand.

"We also look forward to a successful negotiation of a free trade agreement with Korea, and India as well as an immediate resumption of negotiations with Hong Kong," said Finny.

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