New Zealand needs to look outside the agriculture sector for deals that will boost economy and create jobs
Here's the challenge for Prime Minister and Tourism Minister John Key when he hosts President Xi Jinping in New Zealand next week.
How about seeing if the Chinese President will offer New Zealand a matcher for the 10-year business visas that Barack Obama and Xi announced at Apec.
This simple step is being promoted by Obama as an incredible job opportunity for America with projections that by 2021, Chinese travellers to the United States will contribute nearly US$85 billion a year to the economy and support up to 440,000 jobs.
That's way above the US$21.2 billion Chinese travellers injected into the US economy last year supporting 109,000 jobs.
Right now New Zealand businesses benefit from three-year multiple entry visas to China.
But the big beef when it comes to bilateral tourism is the price of visas - nice little earners for governments but irrelevant if the market shifts.
The point of this illustration is that New Zealand cannot sit on its laurels when it comes to trade - as we tend to do by repetitively plugging our historic deals (like China) while staying oblivious to the different ways that other nations can steal a competitive march.
On the broader front, Trade Minister Tim Groser is plugging the mantra "the finish line is in sight" when it comes to the Trans Pacific Partnership (TPP) negotiations.
Groser does hang a caveat on that forecast that unexpected reversals can still happen. He has toned his own rhetoric down from "optimistic" to "hopeful" over the time he has been in Beijing for the Apec leaders' meeting.
But it is increasing obvious that when it comes to TPP - a sub-optimal deal is more likely than the gold standard high-quality and comprehensive agreement the US plugs - and that the NZ dairy sector will be (if this is not already underway) quietly prepared to accept that zero dairy tariffs (even over lengthy phase-out periods) are unlikely to be cemented through TPP.
The big question now is whether New Zealand should be pursuing some big - but potentially very lucrative - one-off trade deals that will boost our companies that sit outside the agricultural sector. Such as a high-tech agreement with India that might boost our niche manufacturers' fortunes rather than waiting for years for progress on the agricultural front.
The view that zero agricultural tariffs will not be the endpoint in TPP was publicly emphasised by World Trade Organisation director-general Roberto Azevedo at the Apec chief executives' summit in Beijing this week.
Azevedo reckons comprehensive agricultural liberalisation is only possible through a bigger multilateral solution.
And with competitors - like Australia - pocketing negotiating wins in bilateral free trade agreements (Australia's recent deal with South Korea is a case in point) the upshot is that New Zealand is already beginning to quietly adopt a more flexible approach. But not so flexible that significant gains will not be recorded for NZ businesses. It's just the "dairy first" approach that has characterised (fairly or unfairly) NZ's trade negotiating stance is being modified.
It may seem trite. But there is some validity to the jibe that is sometimes heard in business (for example, does Mfat stand for Ministry of Fonterra and Trade) that the dairy sector has taken up considerable diplomatic resources in recent years. Not just on the trade negotiations front. But dealing with the various food safety issues that have bedevilled the company in recent years.
It's not a healthy situation long-term for the NZ economy to be overly reliant on dairy returns. NZTE is doing a lot to help build-up other companies on the exporting front. But while the high-tech sector is growing fast there are no companies that look likely to grow to Fonterra's size in the medium-term.
When it comes to the final trade-offs to secure new trading agreements, Key's influence is being quietly brought to bear. Key is pragmatic and does not want to see New Zealand miss out by adopting an overly purist approach while countries like Australia. which are less hardline. achieve preferential deals that give Australian companies a competitive advantage versus their Kiwi competitors.
The test of just how well NZ's trade negotiators balance the drive by politicians to get deals in place versus making sure real gains are chalked up will be illustrated by the forthcoming free trade deal with South Korea.
There's a certain amount of realpolitik to this. But the big question is does it really matter if New Zealand's South Korean deal does not end with our companies stealing a major march on their Australian and Canadian competitors who are also poised to benefit from their respective FTAs with Seoul?
Here's the thing.
Increasingly, tariff reductions - which are critical in those instances where NZ's trading partners are still applying tariff rates that are frankly protectionist - are not necessarily the top priorities for businesses in the Asia Pacific.
At the CEOs Summit, the behind-the-border barriers were repeatedly cited as the major issues blocking regional business. For instance, when it comes to doing business with China the singling out by Beijing of "anti-competitive practices" by foreign companies across a range of sectors has played a significant role in the rebalancing the leadership is undertaking to assist its domestic companies come to the fore. Conversation on this score was relatively muted on the floor of the conference. But in discussions with Western business executives outside it was a major concern.
Elsewhere in Asia - like Indonesia - the linkage is being made that investment goes hand in hand with trade. Companies that wish to prosper through exporting should be looking to local partners and/or building plants there.
Then there are the realities of global value chains.
Increasingly it is going to take capital and scale to play in major supply chains which presents a challenge not only for NZ policy-makers but particularly business - something which may be offset by the realities of supply and demand posed by the major increase in global population and the growth in middle-class consumers.
Finally, there are the realities of just how quickly fortunes can be affected by opting for quick but significant one-off sectoral gains over the more thinly spread results from regional deals like TPP and the broad brush comprehensive high-quality deals NZ favours which play to the agricultural sector as our source of comparative advantage.
Case in point - the huge boost the US economy will get through its 10-year visa deal with China and the decision by China and the US to eliminate tariffs on many technology products - a move which could add US$190 billion to global GDP and create 60,000 jobs in the US alone.
These quick strokes will have a galvanising effect ... meantime the trade agenda slugs on.
Food prices continue to rise but the rent increases are now the lowest in a decade.