Fran O'Sullivan: After TPP - fine-tuning to get full value

Trade Minister Todd McClay has put New Zealand's trade policy settings up for review to ensure the country achieves full benefit from the various trade deals that are notched. Photo / Supplied

Trade liberalisation is an ongoing process and there is still much for NZ to aim for.

Trade Minister Todd McClay has put New Zealand's trade policy settings up for review to ensure the country achieves full benefit from the various trade deals that are notched.

McClay is also looking to extend the consultative net when it comes to negotiating future preferential trade agreements at bilateral and regional level.

He cites the process European Union has adopted as it moves to scope the planned comprehensive free trade agreement with New Zealand.

"I'll be looking at how the EU engages civil society," says McClay, suggesting that while New Zealand negotiators make a strong fist out of consulting with business the consultative net could be spread wider.

The Ministry of Foreign Affairs and Trade (MFAT) says that over the past 20 years New Zealand has taken the following approach to free trade by focusing in four areas:

• Making domestic reforms such as removing tariffs.

• Working for better rules for global trade through the World Trade Organisation (WTO).

• Pursuing bilateral trade agreements such as the China free trade agreement (FTA).

• Pursuing regional and plurilateral agreements such as the Asean Australia New Zealand FTA (AANZFTA).

MFAT also notes that while FTAs are very important, New Zealand considers the WTO to be the best first option for trade liberalisation.

"Because most countries in the world belong to the WTO, it offers the greatest potential for progress," says MFAT.

"Its large membership means any trade-related reforms agreed in the WTO are effectively applied on a global basis."

One of the key issues concerning McClay is New Zealand's prowess in attending to "behind the border" issues that arise.

The Trans Pacific Partnership for instance will (if ratified) achieve a reduction in tariffs for NZ exporters in several key areas - particularly, agricultural exports.

But while tariffs will be reduced (over time) in some key markets there will also need to be strong vigilance on NZ's part to ensure the reductions are passed through to Kiwi exporters.

Another issue which has arisen is the propensity of trading partners such as China to make major domestic reforms to consolidate their own industries and reduce domestic cost structures which can make it frankly uncompetitive for smaller NZ exporters to compete. NZ's infant formula industry is a case in point.

McClay has already started liaising with iwi over the impact of the TPP for Maori. He met the Iwi Leadership Group last week. Upcoming roadshows - which will get under way after this week's formalities around the signing of the TPP agreement on Thursday - will also include separate meetings with iwi.

They will be opportunity focused as the TPP deal itself has been done.

At NZ's last policy review at the WTO in 2015, New Zealand was commended for its good economic performance "despite the strong headwinds it faced" and for its "sound macroeconomic policies that underpinned GDP growth".

But the WTO members acknowledged that New Zealand still faces certain important challenges, including a high foreign debt, weak external demand, low labour productivity, volatile international commodity prices and their effects on the country's terms of trade. They encouraged New Zealand to continue efforts to diversify its economy and export base, improve productivity and increase its participation in global value chains.