Our trade minister is hard at work in the quest for more FTAs – but several factors are frustrating his efforts

The government’s trade policy is running into quicksand. Reports from London and European capitals indicate there is little chance of immediate progress with free trade agreement negotiations with the UK or the European Union.

Don’t blame trade minister Damien O’Connor, a genial fellow who has generated much enthusiastic support from embassies around the world for his willingness to travel and engage with his counterparts.  Likewise, with MFAT trade supremo Vangelis Vitalis, highly regarded around the world for his trade craft.

On the other hand, there is a growing mood of desperation in the business world and other sectors at the reluctance of ministers, from the PM downwards, to travel offshore.  The PM delivered her annual address to the UN General Assembly by video.

Observers say whatever message she conveyed was simply lost in the electronic blizzard. Nothing replaces a personal appearance.

Prospects are firming for the first overseas trip by the minister of foreign Affairs, Nanaia Mahuta, principally to Doha where she will lead a troupe of singers and dancers to perform at the New Zealand pavilion of the delayed world trade expo. All have been guaranteed MIQ spots on return home as they are “representing New Zealand”.

Put the lack of movement on the trade-policy front down to several factors.

First, the state of politics in both the UK and the EU. Capitals have been hit hard by the Covid-19 pandemic and economies are only now beginning to recover.

There is alarm in the EU at the return of inflation. Prices, led by gas and electricity, are surging.  While France is likely to support an FTA with NZ, other support can be counted on the fingers of one hand.

London is looking to import turkeys from Poland and France for the Christmas trade because UK farmers had to curb production because of labour shortages. The Johnson government has been forced to reverse its policy of limiting 5,500 emergency work visas for the poultry industry to the turkey sector.

Visas will be available to any poultry workers after poultry producers, which previously relied on labour from eastern Europe, warned of threats to Christmas and potential overcrowding on chicken farms because of a lack of workers.

Britain is facing a series of crises ahead of Christmas. A shortage of heavy-vehicle drivers has led to the army delivering petrol.

Gas is short because of low stockpiles and a summer of lighter than forecast winds reduced wind-generated power supplies. Across the EU energy supplies are reaching crisis point as Russia appears reluctant to provide more than contracted gas supplies.

Second, the UK and EU have no appetite for new trade pacts, fearing a political backlash from electorates wearied by Covid.  As we have already noted, the UK-NZ FTA was driven in London by Liz Truss, now the UK foreign secretary.  Now there is a different mood in the British capital where the Johnson government has been badly bruised by farmer reaction, especially in traditional Conservative-voting electorates, to the UK-Australian FTA.

In recent decades, NZ prime ministers have always declared, amidst crises and dramas, that “this is not a good time to be in government”. Trade minister O’Connor may well say the same.

Lower the drawbridge – the PM is planning to bust out of the NZ bubble to talk trade (among other things) in Europe

PM Jacinda Ardern is planning a major visit to Europe next month. Details have yet to be announced but she is expected to visit Paris, Brussels and possibly Berlin.

She is heading NZ’s campaign to secure a free trade agreement with the European Union. First visit is likely to be Paris where she will have a warm welcome from President Emmanuel Macron. This couldn’t come at a more appropriate time.

The French are feeling bruised over the Australia-UK-US nuclear submarine agreement and the cancellation of the $80 billion contract to build French nuclear submarines converted to diesel-electric power in Adelaide. France has already signalled it would not impede a NZ-EU trade pact.

European countries generally are concerned at the new nuclear submarine pact.  EU capitals had no prior warning despite President Joe Biden’s expressed desires to repair relations bruised under Donald Trump.  It was also angered by Biden’s failure to alert Europe of his withdrawal from Afghanistan despite the presence of European forces in that country. Continue reading “Lower the drawbridge – the PM is planning to bust out of the NZ bubble to talk trade (among other things) in Europe”

A NZ-UK trade agreement will be another – albeit small – step in the re-ordering of global trade

There is increasing chatter in London that the NZ-UK trade deal will be announced in days, with invitations to briefings being diaried for Tuesday.

But it’s worth noting that the UK commentators seem to be excising the prefix ‘free’ from the ‘trade agreement’, perhaps reflecting better understanding that these days there is no free trade without a substantial regulatory component.

While NZ’s producers will no doubt be grateful if they get an Australian-style phased reduction of tariffs and quotas as has been briefed, the non-tariff/quota regulatory barriers will be just as important in the long run.

That at least would seem to be the view of the eminent organ, the Irish Farmers Journal, in its assessment of the currently-fraught implementation of free trade arrangements between the EU, Ireland, Northern Ireland and Great Britain (ie, the UK minus Northern Ireland).

Continue reading “A NZ-UK trade agreement will be another – albeit small – step in the re-ordering of global trade”

The omens look good for exporters wanting a better deal from FTA with the UK – but not so good for endangered albatross

Trade Minister Damien O’Connor kicked off our day with the cheering news that New Zealand and the UK have committed to accelerating their free trade agreement negotiations with the aim of reaching an agreement in principle this August.

This compensated for the news that the first day’s play on the scheduled first day of the cricket test between the Black Caps and India had been abandoned.

“We’ve held constructive and productive discussions towards the conclusion of a high-quality and comprehensive FTA that will support sustainable and inclusive trade, and help drive New Zealand’s economic recovery from COVID,” Damien O’Connor said.

He will leave the UK on Monday morning for Brussels where he will meet with his trade counterpart to advance NZ’s FTA negotiations with the European Union.

His good news landed in our in tray on World Albatross Day but the news from the Beehive for the endangered Antipodean albatross was ominous. 

Their numbers are declining at an alarming rate.

Albatrosses feed on fish near the surface, making them vulnerable to being caught on fishing lines or in nets.

Acting Conversation Minister Ayesha Verrall said the government has a plan aiming to reduce domestic bycatch to zero and is funding a wider roll-out of cameras on inshore fishing vessels. Continue reading “The omens look good for exporters wanting a better deal from FTA with the UK – but not so good for endangered albatross”

Immigration policy changes to be announced soon (presumably before the Productivity Commission has reported back)

The Productivity Commission will hold an inquiry into immigration settings to ensure New Zealand’s long-term prosperity and wellbeing.

This was announced today in a statement which signalled changes would be made to immigration rules this year, as the government prepares for the opening of our borders and aims to tilt the balance further away from low-skilled work, by attracting high-skilled migrants and meeting genuine skills shortages.

“I expect to announce the direction of more immediate changes in the coming weeks,” Immigration Minister Kris Faafoi said.

This statement – which he made in tandem with Finance Minister Grant Robertson – was the only item containing hard news to be posted on the Beehive since we last reported.  The other items were speeches, two of them delivered (by the PM and by Trade Minister Damien O’Connor) to the China Business Summit.

The inquiry announced by Grant Robertson and Kris Faafoi will be the first under the new Productivity Commission chair, Dr Ganesh Nana.

It will focus on immigration policy as a means of improving productivity in a way that is directed to supporting the overall well-being of New Zealanders. Continue reading “Immigration policy changes to be announced soon (presumably before the Productivity Commission has reported back)”

The view of Mahuta’s speech from across the Tasman: we are selling out our neighbours – and the West – to pander to Beijing

Foreign Minister Nanaia Mahuta was  probably expecting  her speech this week  on New Zealand’s policy  towards  China  to be  widely  read, but not to have  produced  the  savage   reactions  it  did in some  quarters.

In our examination  of  the  speech, Point  of  Order  drew  attention  to how  Mahuta  had  delivered  a  poke  in the  eye  to  NZ’s  allies — and  sure  enough,  this  was  the feature   which got most  attention  across the  ditch.

At  home  the ACT  party was  fired  up by  praise  for the  speech  from  China.  It  found this approval,  coming from a communist dictatorship, as “deeply concerning”.

ACT’s Foreign Affairs spokesperson Brooke van Velden says it’s hard to imagine how Nanaia Mahuta could fail harder than being praised by a communist dictatorship and shunned by  democratic allies.

She  noted international media are commenting that NZ has “broken with its Five Eyes partners as it pursues a closer alliance with China” and that “Five Eyes becomes four”. Continue reading “The view of Mahuta’s speech from across the Tasman: we are selling out our neighbours – and the West – to pander to Beijing”

Some Christmas cheer from the Brits – their trade deal with the EU is as good as we could have expected

As readers well know, we at Point of Order never rest. So, we break your post-Christmas reverie to report some very good news for New Zealand from Britain’s exit from the European Union. 

The Christmas Eve deal ensures there will be no tariffs and no quotas on British-EU trade.

Neither side will impose tariffs on goods being traded and a zero quota agreement  means there will be no limits on the quantity of any type of goods that could be traded.  Furthermore, the UK will be able to strike free trade deals with other countries including NZ.

In essence, with both sides agreeing there will be no tariffs and quotas, NZ avoids the worst-possible alternative which would seriously impact NZ exports into the EU and Britain. Exporters trading across the UK and the EU may still face issues.  It’s as good as NZ negotiators hoped for. Continue reading “Some Christmas cheer from the Brits – their trade deal with the EU is as good as we could have expected”

The 15-nation RCEP – if that’s a secret agreement, someone should tell MFAT and the PM

The secret – or so-called secret – is out.  New Zealand has signed the Regional Comprehensive Economic Partnership, then proclaimed the fact very publicly on the Beehive’s web-wide bulletin board.

The partnership encompasses Japan, China, South Korea, the 10 members of the Association of Southeast Asian Nations (ASEAN), Australia and New Zealand and creates “a free trade zone” which covers nearly a third of the world’s trade and economic output.

The word “free” is much more open to challenge than the claim about secrecy.

The piles of documents which set out the rules and regulations make nonsense of any notion this is a free trade zone for the signatories.  It’s an  easier trade zone for them, perhaps, but free? No.

The announcement of the public signing was one of just a few Beehive released in the past few days.  The others tell us – Continue reading “The 15-nation RCEP – if that’s a secret agreement, someone should tell MFAT and the PM”

While malcontents assail historical links with Britain, Parker puts NZ on course to shape a trade partnership through an FTA

Latest from the Beehive

The best news from the Beehive since we reported yesterday is that New Zealand and the UK have formally launched free trade negotiations.

At least, it’s the best news from a national perspective.  Farmers in drought areas may well be more heartened by the government’s decision to pump an extra $3 million into the Drought Recovery Advice Fund.  This is designed to help hundreds of farmers and growers recover from drought “and prepare their businesses to better meet future needs”, Agriculture Minister Damien O’Connor reminded us.

Significant drought has affected many parts of New Zealand and this fund will provide relief across all of the North Island, the Chatham Islands, Christchurch, Marlborough, Nelson, Tasman, Selwyn, Kaikoura, and Waimakariri districts and regions.

But farmers should be just as delighted by Parker’s announcement that New Zealand is among the first countries to negotiate a trade agreement “with one of our oldest friends”. Continue reading “While malcontents assail historical links with Britain, Parker puts NZ on course to shape a trade partnership through an FTA”

What we call our cheeses is among the several daunting issues facing Trade Minister

At this time of yuletide cheer we might pause and reflect on the gathering issues confronting Trade Minister David Parker.   While New Zealand  has the CPTPP under its belt and showing results, the wider prospects are daunting with serious challenges arising principally from the European Union on top of the erosion of the capabilities of the World Trade Organisation.

For years   while the EU has uttered endless bromides over prospects for a free trade agreement with NZ, the reality is somewhat different.  There have been some steps forward but no breakthrough. Now the going will become harder, especially as the question of how current NZ exports into the EU are divvied up between the Continent and the UK.

Firstly, for the next 12 months (that is, beyond the general election) the EU will be preoccupied with Britain’s exit and fashioning a new trade agreement across the English  Channel. This will take up most of London’s trade negotiating bandwidth as it will prioritise other trade deals in terms of economic significance.

This suggests NZ will fall well behind, lagging after the United States, Australia and Canada.  President Trump has already tempted UK Prime Minister Boris Johnson with the world’s greatest FTA, or words to that effect. Continue reading “What we call our cheeses is among the several daunting issues facing Trade Minister”