Trade Minister Todd McClay has apologised to Prime Minister John Key for making misleading statements in response to questions about potential trade retaliation against New Zealand by China.

Key said today that McClay had given the wrong impression of the facts in some of his answers last week.

He accepted his apology.

Labour leader Andrew Little has called for McClay to be sacked but Key said he would not have expected him to offer his resignation and it hadn't been.


Key and McClay answered reporters' questions in Indonesia last week after Fairfax reported that China could be considering a "Trade War" with New Zealand in retaliation against a possible official investigation into alleged steel dumping.

It turns out that the source of the fears was not from Government officials but from a conversation between a Zespri manager in Beijing, Matt Crawford, with a member of a trade association, which had been conveyed to the New Zealand embassy.

McClay told reporters he had been briefed about that conversation by embassy officials the previous week, and that it had been checked out with China's Ministry of Commerce but officials had been assured there were no threats of retaliation.

Key said today that while that might have been technically correct, it left the impression that that was the only discussion that had taken place.

"That is not correct."

McClay's answers had been "dancing on the head of a pin."

In a clarifying statement, McClay said: "I want to make it clear today that there have been discussions and limited correspondence over the past few months as the Ministry of Foreign Affairs and Trade has endeavoured to assess the veracity of these reports."

McClay said in a statement today: "At the time I should have requested a more thorough briefing before I responded to questions on this issues."


"I have apologised to the Prime Minister for not being able to provide more details at the time."

Little said Key should sack McClay "for failing to do his job as Trade Minister and be on top of a significant potential threat to some of our biggest exporters."

"McClay is clearly out of his depth."

McClay emphasized in his statement today that the Chinese Government has assured New Zealander there would be no trade retaliation.

"The Government has sought and received assurances from the Chinese Government that any competition issues [on steel] would not impact on trade between the two countries."

"I would like to reiterate that through our engagement on this issue we have sought and received assurance from the Chinese Government that any concerns around retaliatory actions are unfounded."

The Ministry of Business, Innovation and Employment is thought to be undertaking preliminary inquiries to determine whether a formal inquiry into alleged steel dumping should occur.

McClay has been Trade Minister only since December when he took over from Tim Groser who was appointed to Ambassador to the United States.

When later asked at what stage Key found out that discussions had been going for months, he said through a spokeswoman: "The Prime Minister was made aware this morning [July 25] by his office."

A spokeswoman for McClay said the minister "first learned of the allegations in late May.

"However, it was not until 8 July that he was briefed by the New Zealand Embassy in Shanghai on an industry-specific threat."

He had been questioned about the issue by media in Indonesia on July 18.

"He sought clarification from his office that evening, and informed the Prime Minister and the media about the industry-specific advice on 19 July."