Fran O'Sullivan: Momentous events go almost unnoticed

Trade deals take much effort and diplomacy but get little recognition

China sees Taiwan as a province so the signing of the FTA with Taipei was deliberately low key. Photo / Thinkstock
China sees Taiwan as a province so the signing of the FTA with Taipei was deliberately low key. Photo / Thinkstock

New Zealand notched another historic world "first" this week in its relationship with Greater China with the signing of the Taiwan free trade deal. Have you heard about it yet?

Forging the deal with the politically isolated island will enable our dairy, beef, kiwifruit and apple exporters to gain greater access to what is already New Zealand's 12th- largest trading partner. John Key also launched the Asean strategy, which was well overdue given the ink on that particular deal is long dried.

It's all pretty important stuff when China is itself now navigating an economic slowdown and the Government and leading officials are starting to get rather concerned over New Zealand having all its eggs in one dominant trading basket.

But in a week when the Wellington Beltway has been captivated by the "Twitter-fed" claim that David Shearer was about to be rolled as Labour's leader and the nail-biting vote for the GCSB legislation, this latest deal got little aeration.

We should not be blase about New Zealand's trade negotiation successes.

A lot of work is going on right now to ensure that our business people do take advantage of the preferential access that this nation has gained to some of the fastest-growing markets in the world. For instance, the Asean strategy spotlights the potential for New Zealanders to sell their services and goods to high-potential markets like Indonesia and Malaysia and grow their own businesses off the doors that were opened to this country and Australia through an earlier free trade deal with the 10 Southeast Asian nations.

Alas for the Prime Minister, New Zealand's position on the world stage and its ability to earn an international crust was not top of mind for the reporters waiting for a "stand up" outside the launch. Inside the venue, Key had been upbeat about the prospects for this country's businesses to get a larger slice of the Asean consumer market. Indonesia and Vietnam, in particular, have very young populations who are among the world's most optimistic over their futures.

But Key did make one pertinent comment that is worth repeating.

That moves to push open doors to the Asean nations (and also newer frontiers like Taiwan) are important to this country. Not for retaliatory reasons - Key was very careful on that point - but because of the potential for a domestic slowdown in the Chinese economy to impact on our exports there.

So, while China is now our largest trading partner, this is strength but it is also a vulnerability.

Key says just reflect back to the 1970s when Britain was New Zealand's largest market, taking more than 70 per cent of our products.

The Chinese economic slowdown is already with us to some extent. China this week reported that exports and imports fell last month. This hasn't happened since October 2009 when the world was in global recession after the financial crisis. There'll be plenty of analysis on this front as the slowdown plays out.

But the Chinese middle class will continue to grow and while China will monster down some prices, including infant formula which is already happening, the long-term prospects remain positive.

The Government has been careful to stay on Beijing's right side. This was obvious from the low-key signing ceremony for the Taiwan deal.

For political reasons - China's sensitivity over "One China" - the Taiwanese deal goes by the humungous title of "Agreement between New Zealand and the separate customs territory of Taiwan, Penghu, Kinmen and Matsu on Economic Co-operation (Anztec)".

It's an extraordinary mouthful.

But New Zealand can't simply sign a straight-out free trade agreement with Taiwan, because mainland China already has one with us and while New Zealand has a closer economic partnership with the special administrative region of Hong Kong, in China's eyes Taiwan is a mere province.

Key is correct to say the deal is "momentous on a number of fronts".

Not only is New Zealand the only country in the world to have a free trade agreement with all parts of China - Hong Kong, Taiwan and the mainland; it is also a good opportunity for our exporters as bilateral deals with South Korea and India are still way down the pipeline.

Says Key, "Being able to navigate it shows you the depth of trust that mainland China has with New Zealand to handle what is a sensitive situation but with diplomacy and delicacy."

He even went so far as to describe it as a coup for Trade Minister Tim Groser.

"It's worth tens of millions of dollars from day one. Minister Groser has done an outstanding job, there are not very many people in the world who could negotiate that."

In fact, that it is a sexy deal which other Western countries - particularly Singapore, which is still waiting in the wings to get its own agreement signed - want to emulate.

The drum out of Wellington is that the deal was signed at a low-key ceremony at the local university to avoid upsetting Beijing. But who (seriously) believes that the ink would ever have been applied without Beijing's tacit approval.

New Zealand's trade negotiators, led by former diplomat Charles Finny, deserve congratulations.

Pity our politicians couldn't break out the champagne in public - but they have secured another deal where some of New Zealand's competitors can't.

- NZ Herald

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Head of Business for NZME

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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