Upgrade to China Free Trade Agreement


New Zealand and China have upgraded the Free Trade Agreement that exists between the two nations. The Agreement which was originally signed by Prime Minister Helen Clark and Chinese President Hu Jintao in 2008, was presented by the Chinese Premier Li Keqiang today as an agreement that deserved to be upgraded.

All very well. New Zealand has significant trade with China and has a $5.1 billion trade surplus which Mr Keqiang acknowledged in remarks following the announcement of the new deal, for which negotiations were started by the National-led Government of Prime Minister Bill English and concluded by Prime Minister Jacinda Ardern.

Concessions appear to have been made by China. In the previous version of the F.T.A. China permitted 98% of New Zealand exports to have preferential access, whereas this time it is 99%. As the last deal was about making sure that New Zealand had a working agreement with China, this was about enabling business to be more easily conducted.

New Zealand maintains the right to regulate for purposes of complying with Te Tiriti O Waitangi, as it also does for purposes of regulating public policy. China has agreed to allow products to enter and not have to be re-certified on entry, which has been a problem for exporters. New Zealand exporters will also be able to self declare their goods as products of New Zealand.

Notably though, the number of New Zealanders who can get visas each year has not changed.

These are however testing times. China’s growing ambition in the Pacific is expressed in military, foreign policy and economic development. It’s growing interest in the South Pacific should be noted by New Zealand and monitored closely. China’s lack of regard for human rights in a part of the world not known for strong human rights policy is of significant concern to human rights N.G.O.’s in New Zealand.

 

 

Brexit apparently good for New Zealand says British Minister


As we watch Britain lurch ever more unsteadily towards Brexit, arguing with itself and with the French and German officials at the same time, U.K. officials are already starting to think about the trade negotiations with various Commonwealth nations waiting to be started. Come whatever eventually will on 01 November 2019, there is a British Government official saying that New Zealand has nothing to fear from Brexit and that the United Kingdom wants rapid talks to get underway once the process is done.

That will depend on how well the next several weeks go and what kind of U.K. we have on 01 November 2019. Will it be a U.K. that has some how managed to secure a Brexit deal against the shadow of the infighting, the legal uncertainty and the politicking? Will it be a U.K. now on the cusp of falling to bits as it reckons with a dodgy new post Brexit reality? Or will something nobody has foreseen happen?

On one hand trade deal between the two countries would be great and I suspect conducted on far more friendly terms than an American trade deal – if we ever get one with Washington – is likely to be done. On the other, I cannot help but get the feeling that it will be lost in the hullabaloo that is going increase by orders of magnitude, drowning out rational conversations especially if there looks like being no serious prospect of an exit deal that Britain AND the E.U. can live with.

New Zealand needs to be realistic. As much as we are liked and respected in London, there are plenty of other bigger, more interesting fish for the U.K. to cook, which will compete with New Zealand for the attention of U.K. Trade Secretary Liz Truss. Canada, Australia, India among others are going to be actively seeking out U.K. officials to put a good word in their ears about doing a deal with their countries.

But before any of this happens, we need to know what form of U.K. we are going to wake up to on 02 November New Zealand time. We need to know that they will be in a position to negotiate, which might not be so easy if a no-deal Brexit occurs and they find hard borders springing up around them. And if they can start negotiations, will the terms of reference involve things New Zealand holds dear like Pharmac’s independence, whether there will be changes to visas for New Zealanders with U.K. connections and so forth.

Another question is whether Britain goes to the polls again or not. And after the votes are counted will it still be shades of navy blue of the Conservatives or the bright deep red of Labour, or will the Liberal Democrats have managed to smudge their colours all over the country?

Time will tell.

 

No favours for New Zealand in C.P.T.P.P.


Yesterday an unfortunate thing happened. New Zealand Parliament accepted the third reading of the Comprehensive and Progressive Trans Pacific Partnership Amendment Bill. It was passed through Parliament with only the 8 Green Members of Parliament voting against it. This now makes the passage into law of the C.P.T.P.P., which succeeded the Trans Pacific Partnership Agreement a virtual certainty.

I opposed this when it was the Trans Pacific Partnership Agreement (T.P.P.A.). I oppose this now when it is the Comprehensive and Progressive Trans Pacific Partnership (why negotiators feel the need to come up with such long, convoluted names is beyond me).

I opposed this when it was first conceived because there were – among other things – the following:

  • The possibility that New Zealanders would be made to pay more for medication from Pharmac, whose ability to negotiate good deals for New Zealand would be significantly reduced
  • The possibility that Investor State Dispute Settlement clauses would be inserted – and I think probably have snuck in despite the opposition that has been raised – which would potentially expose New Zealand to court action from multinationals for enacting laws that by their judgement somehow affect their ability (true or not) to make a profit
  • That New Zealand’s numerous international commitments, for which we earn much credit on the international stage, and our ability to uphold them would be undermined

I oppose this now for several reasons, not least because to the best of my knowledge and contrary to the statements from New Zealand First, Labour, National and A.C.T., the C.P.T.P.P. still has the contentious clauses that made it essential to resist in the first place. This is based on having searched through the Trans Pacific Partnership Agreement Amendment Act 2016 and the Comprehensive and Progressive Trans Pacific Partnership Amendment Act 2018. During that search I was looking for provisions specifically protecting the Treaty of Waitangi, eliminating Investor State Dispute Settlement clauses.

I found that much effort was given to provisions relating to copy right, performance.

There are other reasons why New Zealand has made a mistake passing this legislation into law:

  • Japan and the United States are highly protectionist, and to a lesser extent South Korea – for significant gains to be made there has to be changes in their domestic legislation and posturing around this
  • Philip Morris attempted to sue the Australian Government over tobacco advertizing; a mining company tried to sue Costa Rica over its attempts to protect its environment – whilst Philip Morris lost, there is a risk that despite assurances to the contrary such moves might be made by a multinational against New Zealand
  • I cannot agree with the claims that the Treaty of Waitangi is not impacted unless there are explicit clauses saying so in the legislation – I did not see anything of that nature

All trade agreements that go before Parliament should not become law unless they have the following guarantees:

  1. That a review clause becomes active after 10 years, at which point a select committee reviews the legislation and enacts any recommendations
  2. That its continuance can be voted on after 20 years, with a sun set clause tripping if the result is NO

A trade agreement is only as good as the people who negotiated it at the time. Like laws they can become dated or be found to be defective. No responsible Parliament or elected Government should ignore defective legislation or trade agreements.

New Zealand and European Union begin formal trade negotiations


Whilst most people were more interested in Prime Minister Jacinda Ardern’s baby girl being born, I was watching the arrival of the European Union chief negotiator Cecilia Malmstrom. Mrs Malmstrom is from and is visiting New Zealand to formally launch trade negotiations with a view to completing a trade agreement between New Zealand and the E.U.

I do have some reservations about the potential F.T.A. that the European Union is likely to seek. They include but are not limited to:

  • the concessions that New Zealand will be asked to make, and what we will be granted in return.
  • that the competing factions inside the E.U. will make it difficult for New Zealand to get a level deal across all of the E.U. member states
  • That provisions around the Euro will leave the New Zealand dollar at a disadvantage

In terms of the member states, there are 27 separate countries, each with their own agenda. Some like France will be highly unionized economies with a degree of reluctance to shed the protective cloak that tariffs and subsidies can offer sectors that are not performing so strongly – their propensity for a good riot when some decision or another goes against them is well noted.

I also wonder if Mrs Malmstrom is the best suited person for this job. The first is she had a major role in promoting the Transatlantic Trade and Investment Partnership (T.T.I.P.), which is the European equivalent of the Comprehensive and Progressive Trans Pacific Partnership. Like the T.P.P.A./C.P.T.P.P. it has run into significant opposition over issues ranging from enacting laws that are allegedly going to harm corporate profitability to human rights, the environment and international copyright laws. The second is that despite claims made by her that the European Commission for Trade has unprecedented transparency, it is not possible for many European politicians to read important documents.

The European Union, however, are serious. This is a serious chance for New Zealand to negotiate a trade agreement that can help the economic development of this country. The shared respect we have for human rights and environmental issues will hopefully help to undermine the concerns that are held about Mrs Malmstrom’s past record.

So soon after their role in negotiating the damaging Trans Pacific Partnership Agreement which will undermine New Zealand sovereignty, it is rather rich of National to be talking about the need for a “fair” agreement. This is all the more so when an interpretation of “fair” presumes to mean no undue concessions by either side, respect for the others negotiating position and understanding of public concerns. None of this was recognized by National or A.C.T. when they were leading the negotiations on the Trans Pacific Partnership between 2010-2017.

New Zealand is lucky enough that although we lack constitutional safeguards to stop the undermining of our natural sovereignty, we have a degree of transparency that is not enjoyed in other nations. Had we had the transparency of a country such as Singapore, a semi-authoritarian nation-state, I doubt New Zealanders would know nearly as much as they do because of the mechanisms that protect our right to know.

So, whilst there are potential opportunities for New Zealand, there are potential pitfalls as well. Due caution around these negotiations is well advised.

No winners when U.S. absconds on trade


A few days ago President of the United States, Donald Trump announced that he would be imposing trade tariffs on key allies including Canada, Mexico and the European Union. The tariffs which come as part of his hard line “America First” doctrine which puts American needs and wants over and above those of its allies were aimed at “protecting” America’s national security and infuriated those that have been affected.

The probability of a trade war resulting from the United States trying to bully other nations by slapping tariffs on them in an effort to protect American suppliers has increased substantially since Mr Trump announced the tariffs a few days ago. France, Canada and Mexico have all launched or are planning to launch retaliatory measures against the United States. Canada and Mexico are going one step further and launching legal action at the World Trade Organization citing what Canadian Prime Minister Justin Trudeau calls “completely unacceptable” measures.

11,000 kilometres from American soil, New Zealand should be concerned. Whilst not directly involved in the current round of trade tit-for-tats, it might get caught in the cross fire if some of our bigger trading partners, such as the European Union, Britain and China become involved in the fracas.

There are no winners in this nonsense. A lot of trust will be lost between America and  nations that are supposed to be good mates with the U.S. Divisions will be rent. WIth out doubt America’s rivals for geopolitical influence, China and Russia will be looking at ways of making those rifts widen and assert their influence in places that they currently have little to do with.

The Trump administration might well think that the tariffs address problems he has with how U.S. big business is being run. His primary concern is that trade with these countries somehow affects the national security problem that the United State finds itself confronting.

Yet the situation could not be more different. With Middle East allies fretting a major trade related conflict will eventually turn to and exacerbate overall tensions across Europe, Americans are being led up the Golden Path – perhaps to Dr Scrooge (from the programme “Duck Tales” and happily seen swimming in his vast fortunte. Flipping the bird at established norms, demonstrates that the very phenomena all countries fears in America is coming to pass.

Maybe it is time to stop being such close friends with the United States. Whilst the E.U. and so forth share much in common regarding security of the continent, the well being of its member nations America has always had demands emplaced at the last minute, which have left trading partners gnashing their teeth in frustration.