Liam Dann: Asian trade negotiation come at perfect time

COMMENT

On Saturday 10 countries will join the European Union.

The expansion - taking the EU to the Russian border - is just one step Europe is taking to expand its free-trade borders. It is also negotiating with 12 southern Mediterranean states - from Syria and Jordan to Morocco - to eventually create a trading region of 40 states and 600 million to 800 million consumers.

Then there is South America, where Europe is close to sewing up a deal with Mercosur - a trade bloc that has Brazil, Argentina, Uruguay and Paraguay as full members, and Chile and Bolivia as associates.

The United States is, of course, also well-advanced in its own efforts to forge trade deals.

This is all rather ironic, given the role that both Europe and the US play in messing up multilateral trade negotiations at the World Trade Organisation.

And it has serious implications for New Zealand farmers. For example, what happens to our meat exporters if both Europe and the US give free-trade status to the beef producing countries in South America?

Thankfully some recent good news has highlighted the obvious answer: they go to Asia. The news that New Zealand will be the first developed nation to start free-trade talks with China and - almost as exciting - Friday's announcement that Australia and New Zealand have been invited to start free-trade talks with Asean (Association of South East Asian Nations) couldn't have come at a better time.

Leaving aside the pros and cons of any free-trade deal with China (although it's hard to imagine it could be any worse than the deal the Aussies got with the US), there is a real benefit in the status the deal could give us.

Suddenly New Zealand looks like a mover and shaker in trade negotiations. That can only help our progress towards other deals.

Bilateral trade negotiations appear to be accelerating, which could soon render the WTO negotiations redundant for all but the poorest African nations.

A cynic might suggest there won't be any major progress at the WTO until the US and Europe have finished carving the world into trading blocs on their own terms.

This Government has done its fair share of things to annoy farmers in its second term but its work in pushing for these deals is something to be thankful for.

Michael Cullen highlighted the Government's stance as sober realists on trade negotiation this week. He told a Hamilton business breakfast: "If the current WTO round fails to deliver, one scenario would be the creation of free-trade blocs in the Americas, Europe and Asia. An established FTA with China would ensure we are not locked out, if this eventuates."

Our farmers are the best in the world but they can't prop up the New Zealand economy if they don't have markets for their products.

After the hot air the Government emitted over the fart tax last year, it's great to see it taking a strong stance on an issue that really matters.