US-China

As this trade update goes to press senior officials from Chain and the United States will be back around the negotiating table in Beijing.  The fact that they are talking is a good thing.  Part of the reason that this is happening, however, is that China has agreed to resume purchasing US agricultural products.  We are monitoring closely the direct and indirect impacts on New Zealand interests.

Whack-a-mole?

The US tariffs on Chinese products and on steel  and aluminum have now been in place long enough for patterns of trade diversion to become apparent.  Most noticeably we are seeking a blow out in the US trade deficit with Vietnam.  This has not gone unnoticed in Washington DC. Watch this space…

Decisions on action against Europe were delayed for six months but anti-EU rhetoric is increasing in Washington DC.  Things will come to a head again just as Brexit is about to occur in October.  Could we see tariffs on EU automobiles applied just as negotiations begin on a FTA between the US and UK?

Bojo in Number 10

Boris Johnson is the UK PM and he is putting a new team of Ministers around him.  There is a new Foreign Secretary and Liz Truss has been announced as UK Trade Minister.  Truss has not got a strong trade background but she studied economics and is committed to the free market. She has been a strong supporter of Brexit.

In his first speech as PM Johnson emphasized his commitment to negotiating new free trade agreements.  He also made it clear that the UK will Brexit – with or without a deal.

A negotiation between the UK and New Zealand, formerly beginning before the end of the year is now a real possibility.  Informal talks have been underway for some time.

Exporters with shipments due to arrive in the UK or Europe in late October/early November should begin/resume contingency planning in case there are some delays at both the UK and EU border.

There is still no resolution of what will happen to New Zealand’s meat and dairy quotas into the EU post Brexit.

NZ-EU

As many were predicting the NZ-EU FTA has not been plain sailing. Indeed progress seems to have halted the moment substantive negotiations began on market access.  As expected agriculture is a major stumbling block.  Outside of market access the EU position on Geographical Indications is also causing difficulty for New Zealand negotiators.  It is good that New Zealand is showing resolve and is not simply agreeing to a quick but poor quality deal for largely political reasons.

NZ-US

Foreign Minister and Deputy PM Winston Peters made a strong call for a FTA between New Zealand and the US the focus of his speech in Washington DC and his talks with senior US officials, including Vice President Mike Pence. He has returned reporting that his views were received positively in Washington DC.  There is still no official US response to his request for a negotiation.

RCEP

New Zealand is still part of this negotiation.  India and Australia have also not been expelled.  There is no sign of any progress beyond this from the last round of negotiations.

ASEAN FTA Upgrade

MFAT continues to be keen to hear exporter views on a proposed update of the AANZFTA, the FTA linking Australia, New Zealand and ASEAN.

Pacific Alliance

Minister Peters also travelled to Chile for talks with Latin American Ministers recently. There are some positive signals from the region that indicate that negotiations on the expansion of the Pacific Alliance might be possible.  Colombia remains the main stumbling block.