Trade Update – May

China FTA Upgrade

The outcome of the Prime Minister’s discussions in Beijing with Xi Jinping was that Trade Ministers would discuss next steps for the FTA upgrade when they met in Lima at the APEC Trade Minister’s meeting. This meeting is on this week but signs of progress are not good. China chose not to send its Minister to the meeting (China is being represented at Vice-Minister of Commerce level). This is a worrying (but not altogether unexpected) signal. While it is doubtful that the Minister of Commerce would be able to agree to the inclusion of dairy safeguards in the “upgrade” negotiations (this is an Agriculture Ministry issue and the Agriculture Ministry don’t like the idea) the chances are much lower that a Vice-Minister of Commerce will be able to make any traction.

It would seem that China has no intention of including the Safeguard issue in this negotiation. This puts New Zealand in a tough position. If this is indeed the case we will have to decide whether we actually want an upgrade negotiation. And if we do, what are the other issues that would be make this worthwhile both for China and New Zealand? If we don’t see value in this process we should put it behind us quickly as there is a risk that it will become the issue against which progress in the overall relationship is measured. Those outside the dairy sector with issues that they would like to see on the negotiating table with China should be signalling this now to MFAT and Minister McClay.


Ministers are increasingly confident that Saudi opposition to the FTA with New Zealand has been overcome and that the process is back on the tracks. This would be very positive if true.


Iran used to be our fifth largest export market. Sanctions destroyed most of that trade. Resumption of this trade and being able to be paid for it could be as significant for New Zealand exporters as a major FTA outcome. Minister McCully is in Tehran this weekend to continue to pursue this matter and there is talk of Trade Minister McClay leading a trade delegation to Iran later in the year.

Non-Tariff Barriers

Officials have been working on a list of non-tariff barriers facing New Zealand goods and services exporters. The idea is that the identified issues will become a greater focus of the Government’s trade policy agenda in years to come. We understand that an initial cut of this was shared with Business Growth Agenda Ministers recently and that at least one Minister was underwhelmed. If your business is experiencing difficulties with regulations or laws in other countries it is important that you let MFAT know. Detail of the dollar impact of these barriers is particularly helpful.


The Australian High Commission has begun consultation around New Zealand with Export New Zealand on ideas that could be picked up in any review of the CER agreement. The meeting in Wellington was well attended and a number of issues were identified – including government procurement at state level, and impediments to employment of skilled staff in trans-Tasman projects when these staff are seeking permanent residency in each jurisdiction, the need to mutually recognise security clearances and attitudes of the Australian owned banks to Iran trade.

It is interesting that the Australian High Commission seems more proactive on this matter than MFAT.


The Waitangi Tribunal report on TPP is well worth a read. While the Government will be pleased with the outcome there are some strong messages on MFAT’s consultation performance. It is also interesting to count the number of times that Auckland University Law professor jane Kelsey’s comments were simply noted – in contrast to the treatment given to the other two “expert witnesses”.

The enabling legislation for TPP has been introduced into Parliament with the Government appearing to have the support necessary to pass it. Phil Goff’s crossing the floor has added to this comfort level.

The best hope of US ratification remains the “lame duck” period immediately after the November Presidential election.

18 May, 2016
| News

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