Circumstances conspire to benefit NZ

Prime Minister Jacinda Ardern and her British counterpart Boris Johnson speak via...
Prime Minister Jacinda Ardern and her British counterpart Boris Johnson speak via teleconferencing. PHOTO: SUPPLIED
New Zealand can be well pleased with the trade deal in principle with the United Kingdom, announced last week.

Although scepticism about the alleged benefits of $1 billion a year is well-founded, this country’s trade access will improve once the agreement is finalised.

A minnow like New Zealand does its best with the likes of the Trans Pacific Partnership (CPTPP) and bilateral progress in a world where global trade progress has stalled.

This country unilaterally cut most tariffs and trade barriers in the 1980s in a worthwhile attempt to build prosperity.

But a drawback since is that New Zealand has little to trade-off in “free-trade” talks.

However, circumstances combined to make British Prime Minister Boris Johnson and his Government amenable to improving New Zealand access with relatively little in direct return.

For a start, Brexit Britain is eager to get runs on the board in trade deals with other countries.

That is what the pro-Brexiteers promised and that is what Mr Johnson wants to deliver — with Australia and now New Zealand.

There is also speculation that such deals help with Britain’s developing place alongside the United States and Australia vis-à-vis the might of China. It is seen as part of a Western orientation towards the Indo-Pacific.

At the same time, it could help Britain become part of the CPTPP. Eventually, there might be scope for the United States to join this as well.

The CPTPP already includes Japan, Mexico and Canada.

New Zealand has had every reason to smart from its trade treatment when Britain joined Europe in 1973.

The terms of this deal encourage this “betrayal” to be well buried.

The reaction from British farmers has, predictably, been negative, despite the fact it will take five years for most dairy and 15 years for sheep and beef tariffs to be phased out.

The years pass quickly, though, and New Zealand should be desperate to lessen its dependency on agricultural exports to China. Such diversification all helps.

Thanks to Brexit, New Zealand will, in time, be again able to export lamb and dairy products to Britain tariff and quota-free.

That is remarkable given the agricultural protectionism of the European Union and the power of the French farm lobby.

The price of a bottle of New Zealand wine in Britain could drop about 40c. Wine exports there are worth $463 million a year, second only to the United States. Annual tariffs of $14.1 million would be removed, making up somewhat for the huge freight increases being faced at present.

All up, the savings in tariff elimination are put at $37.8 million. Honey, kiwifruit, onions and mussels are in the mix.

The agreement in principle also covers environmental and animal welfare matters, Te Tiriti o Waitangi, telecommunications, digital trade, investment and reference to combating gender inequality and modern slavery.

The extension of copyright by 20 years for authors, performers and producers seems excessive. This could cost New Zealand in the long run.

Improvements in working holiday provisions — so much a part of young New Zealand middle-class overseas experience — are planned and are to be dealt with separately.

Britain receives minor final tariff eliminations on a handful of items, including gin. Its direct economic benefit is minuscule because New Zealand is so small and had so little to swap.

Britain as a trading partner is a shadow of its importance in the 1970s. Two-way exchange in goods and services, nonetheless, is worth about $6 billion a year.

The tariff reductions to take place immediately or soon after the final deal is signed are relatively small.

But, given time, the movement towards free access for dairy and then meat could be positive to New Zealand farmers and therefore the New Zealand economy.

Crucially, it is a small step towards reducing the vulnerable dependency on China.

Next, hopefully, comes a deal with the European Union and further diversification around the world for New Zealand’s primary exports.

Comments

The trade deal is good for our economy but could spell disaster for our environment and climate crisis commitments.
The UK's Climate Change Committee, said that the agreements were “entirely unacceptable for climate change purposes”. He told the Observer. “That’s why I’m so deeply opposed – and find totally offensive – the agreements with both Australia and New Zealand, which are entirely unacceptable for climate change purposes."
“You cannot ask farmers to do in this country what we are going to ask them to do and import goods from people who are not [meeting the same standards]. The government promised it wouldn’t do that – and it is doing it. It is entirely against its promise."
“I shall go on fighting until we stop it. There has to be, internationally, standards that enable you to carry through climate change rules.”

There are a couple of points. Firstly the hypocrisy of the brits, and others, who pretend to be free trade capitalist countries but impose socialist style tariffs to protect their home producers. This coupled with opposition based on poorly conceived notions of commitment to climate change initiatives.
Also you seem surprised that Canada, Mexico and jap@n are already members of the CPTPP. they are all pacific nations and have been key in the trade agreements development. Yet on the other hand you suggest the UK may join. They would hardly be eligible, they are definitely not a pacific nation.

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