Govt is chuffed with NZ-UK free trade agreement but Jane Kelsey has spotted some shortcomings (including the Maori chapter)

It’s  “historic”    and  “one  of  our  best  deals  ever”.  So  enthuses  the PM,  Jacinda Ardern, about  the  new free  trade  deal  with  the  United Kingdom.

She and British Prime Minister Boris Johnson spoke yesterday evening to mark this historic moment and its importance in forging a stronger and more dynamic future relationship between two close friends and partners, Ardern said.

“This deal serves New Zealand’s economy and exporters well as we reconnect, rebuild and recover from COVID-19, and look forward into the future.”

And:

“It’s one of our best deals ever and secured at a crucial time in our COVID recovery.” 

NZ is the second country to secure a new free trade agreement with the United Kingdom post Brexit. 

The deal substantially cuts costs for exporters and businesses and provides greater access to the United Kingdom’s market.  It  is  a  feather  in the  cap of  Trade  Minister  Damien O’Connor, who led the negotiation,  and the team  of  officials  who did the hard  yards..

UK  Prime Minister  Boris  Johnson also  thinks  this   is  important, or  (in his words) it is

 “… the cherry on the top of a long and lasting partnership between the United Kingdom and New Zealand.

“It is good for both our economies, boosting jobs and growth as we build back better from the pandemic. We already share deep ties of history, culture and values, and I look forward to the next chapter in our friendship.”

Damien  O’Connor can barely  contain his  excitement  at  his success.

“It was crucial our agreement needed to provide comprehensive and commercially meaningful access for New Zealand exporters and businesses, and especially to those sectors that are the backbone of New Zealand’s economy such as our dairy and meat producers. This deal achieves that,”   he  says.

“By removing tariffs and other barriers that have limited the growth of our goods and services trade, as well as our investment connections, our exporters and businesses can now enter a new era of market access they have never before had available.

“This FTA will also include the most ambitious commitments New Zealand has ever negotiated on trade and the environment, and is our first bilateral trade deal to include specific provisions on climate change.”

So   what  are  some  of the details?

First, the immediate elimination of all duties on 97% of New Zealand’s existing exports to the UK, including wine, honey, onions, a range of dairy products, and most industrial products – which once fully implemented is expected to save exporters $37.8m a year based on current export volumes.

Beef volumes will increase from 12,000 tonnes to 60,000 tonnes, and for sheep meat they will rise from 149,205 tonnes to over 164,000 tonnes, with free market access after 15 years.

O’Connor points  out  the UK was New Zealand’s seventh-largest trading partner pre-COVID, with two-way trade worth nearly $NZ 6 billion to March 2020.

Pre-COVID estimates also projected that NZ goods to the UK will increase up to 40% and that NZ GDP will benefit up to $970 million due to the FTA.

The agreement also recognises the unique and historical relationship that exists between Māori and the British Crown which is reflected through an indigenous chapter creating a platform for cooperation on a range of issues important to Māori. New Zealand is the only country globally to successfully include such a chapter in two Free Trade Agreements.

After  all  that rejoicing, Point  of   Order  looked  to see how the  new  trade  deal  had  been  received  in   NZ.

Professor  Jane  Kelsey, who  earned  a  reputation  during  her academic  career  as  a specialist on  trade  issues,  was  typically scathing  in  her  analysis.

She   says the always-over-optimistic economic modelling projects a maximum gain of $970m to New Zealand’s GDP in 15 years. That is about 0.3% of current GDP, or an increase on average of less than 0.02% per year over 15 years – “hardly an economic bonanza…”

“And that is without considering that increases in New Zealand’s trade with the UK are already happening without the FTA and that many of those exports will be diverted from other export markets”.

As   for references  to Maori  and  the  Treaty, she  says the UK merely ‘notes’ it was an original signatory to the Treaty, and then washes its hands of any ongoing obligations.

Every subsequent reference to the Treaty is confined to New Zealand.

Likewise, the Māori trade chapter is “ground-breaking” in name only.

Professor  Kelsey contends that not only is the Māori Trade chapter unenforceable, and limited to three areas they ‘may’ cooperate on, but the UK explicitly says that nothing in the chapter imposes an obligation on it to actually do anything.