Getting the most out of Kiwi trade deals

By Felicity Wolfe

Over the past year Federated Farmers has been very involved in several international meetings and conferences in the hope of supporting government and industry efforts to increase the country's trading opportunities.

Trade is a cornerstone of New Zealand's agricultural sector which exports about 90 per cent of what it produces.

Federated Farmers is making sure New Zealand's farming industry is well represented on the world trade stage with national president Bruce Wills about to take a seat on the board of the World Farmers Organisation. This means he can directly talk to fellow farm leaders about their concerns around opening up trading access and share New Zealand's experience of how freeing trade has helped farmers run better and more efficient businesses.

"A number of trade deals - both bi-lateral and multi-lateral - which are in varying stages of completion at present will have huge benefits for agricultural trade," Wills says.

"We are watching these closely because we know the importance to our members, and the rest of the country, of selling into higher-value markets."

He will be taking on the role as Oceania's representative on the World Farming Organisation (WFO) at the group's next meeting being held in Tokyo in April, which will give him wider opportunities to promote the successes of New Zealand farming in a subsidy-free and free-trade environment.

"There are countries which are deeply sceptical of free trade as their farmers are worried that they would not be able to compete in a subsidy-free and barrier-free trading environment," Wills says.

"This was clearly demonstrated to me at our last WFO meeting in Rome. At that meeting 31 countries were represented, of those 31 only three supported free trade. However, we are living proof that an open trading environment actually makes for a more resilient and competitive industry, which is what we have here in New Zealand."

He is enthusiastic about the possibilities which would open up around the proposed Trans Pacific Partnership (TPP). This would substantially expand the existing Trans-Pacific Strategic Economic Partnership Agreement or P4 agreement between New Zealand, Brunei, Chile and Singapore to include Australia, Canada, Malaysia, Mexico, Peru, the United States, Vietnam, and possibly Japan and South Korea.

"This deal would make New Zealand part of a trading club worth US$21 trillion, larger even than the European Union," Wills says.

"In order to work the TPP must eliminate all tariffs which are used to protect domestic industries from competition. Any other non-tariff condition or restriction needs to have a real science-based rationale, such as biosecurity. The goal is to have trade which is open, accessible and above all, honest.

"If we can get a high-quality deal from the outset, especially one with water tight tariff phase-outs and rigour around 'non-trade barriers', New Zealand farmers and the whole economy will benefit."

"New Zealand has a reputation for 'walking the talk' when it comes to negotiating these deals," Minister of Trade Tim Groser says.

Groser, who is widely regarded internationally as a top candidate to take over the director-general of the World Trade Organisation this year, says expanding the number of free-trade partnerships is essential for New Zealand's economy.

"We must also diversify our risk. For instance, at present demand is depressed in Europe and we are selling more goods into Asia, where market access can be more complex," Groser says.

Federated Farmers chief executive Conor English says there could be opportunities waiting in these emerging markets which have not been explored or even thought of yet.

"If we can get tariffs eliminated from these markets, opportunities will open up as selling new products becomes economically viable," English says.

"There are many products currently under-utilised. One example could be taking something which is not highly valued here, such as ox-tail, and selling it in a market where it is more highly valued."

Currently New Zealand has the Closer Economic Relationship (CER) with Australia, free-trade agreements (FTA) with China, ASEAN, Malaysia, Hong Kong and Singapore, a Closer Economic Partnership (CEP) with Thailand and the P4 Agreement.

Groser says calculating the precise numerical value of FTA's is difficult, but points to the example of China as a newly opened trading area which is benefiting New Zealand.

"Exports to China more than doubled in the first three years since the FTA was signed," he says.

"Note that all of New Zealand's top 10 exports to China are agricultural or forestry products. At a 'first principles' level, our FTAs have allowed us to gain and maintain market share, returning ultimately more value to New Zealand for the products we sell.

"Free trade, without tariffs or other barriers, is the most fair way of ensuring everyone gets a good deal for their goods.

"[Without FTAs] other exporting countries, like Australia, Brazil or Chile, which enjoy preferential trade deals with some of our favoured markets, might edge us out of those markets if they can circumvent those barriers, so there is a competition element too. Ultimately it boils down to achieving a fair deal for our exporters and earning our way in the world," Groser says.

These barriers have been erected and kept in place because of many international farmers' fears about their ability to farm economically.

"This is why Federated Farmers is making a concerted effort to build relationships with international farming organisations, such as the WFO," English says.

"Despite seeing that New Zealand farmers do not just survive, but thrive in a post-subsidy era, international farmers and agricultural lobbyists around the world remain sceptical about ditching protectionist measures such as tariffs.

"That is why the partnerships and relationships which the Federation is working to strengthen with international farming groups is vital."

While there have been high profile free-trade deals made with the likes of Hong Kong and China over the last few years and more under way with other large emerging markets such as India, Russia, Belarus and Kazakhstan, English said convincing countries such as Canada and Japan to relax tariffs on products such as butter and beef could do a lot to improve returns for farmers at the farm-gate.

Having good trade relationships was good for both countries involved, helping encourage more efficient production and strengthening ties between countries.

This was evident when looking both at the well-established Closer Economic Relations deal between New Zealand and Australia which is celebrating its 30th anniversary this year and the more recent FTA with China.

"These are now our number one and number two trading partners in the world," English says.

Beef + Lamb New Zealand chief executive Dr Scott Champion says "we live in a world of bilateral and multi-lateral deals".

"In the absence of meaningful progress on the World Trade Organisation more and more countries are looking at how they can improve the prospects for their productive sectors, as well as offer more choice and opportunity for their consumers, and better access to education and investment opportunities overall.

"New Zealand needs to keep up with the pace and needs to continue to seek out better access to the growing middle class in Asia and other emerging markets."

Wills says the Federation remains highly supportive of the efforts which have been made by successive governments to encourage trade liberalisation globally.

"We have a very good relationship with the Minister and the Ministry of Foreign Affairs and Trade," Wills says.

"With the WTO's Doha agreement stalled at present, we are pleased with the progress on negotiating FTAs with important trading partners which has been made.

"Encouraging progress has been made in recent years, with the Trans-Pacific Partnership, and free-trade agreements with China, ASEAN, Malaysia, and Hong Kong."

The Federation also welcomes the work to secure agreements with countries such as the United States, Arab Gulf States, India, Korea, and Russia, as well the efforts to expand the Trans-Pacific Partnership.

Federated Farmers wants these agreements to be comprehensive and result in meaningful liberalisation of agricultural trade.

"The best way to promote economic growth, incomes, and jobs is to embrace trade not reject it," Wills says.

- Hamilton News

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