New Zealand should grab the opportunity to be at the forefront in creating the new narrative for global trade.
Right now globalisation is under attack. Any number of hypocrites ranging from Donald Trump through to Hillary Clinton are pandering to fear.
Protectionism is on the rise, ironically at a time when the impulse towards economic integration has never been stronger.
It’s in New Zealand’s interest to continue to make the case for trade – not just domestically where the record has been pitiful in recent years. But also on the international stage.
And with the architecture for global trade changing, it is important that New Zealand not only crafts a story that inspires our smaller companies to use e-commerce platforms to reduce the challenge of NZ’s distance from markets (what used to be called the “tyranny of distance”) but also takes a leading role in the World Trade Organisation to develop the new e-trade global architecture and work with other nations and private sector players to create offshore e-marketing platforms to sell more NZ product in market.
One opportunity is to back the Electronic World Trade Platform or e-WTP initiative promoted by Alibaba founder Jack Ma which is designed to connect global SMEs through logistics and inclusive financing. Ma reckons the WTO – as it operates now – is really only for the “big guns”.
But New Zealand has been silent on this initiative. In the new trade language what is now important is “market success” not simply “market access”. Trade Minister Todd McClay is expected to stake out the rationale for a trade strategy refresh in an address to the Trans Tasman Business Circle today.McClay notes that the current strategy is 20 years old. It’s worked well when it comes to opening markets and smashing through the high-tariff barriers which historically stood in the way of New Zealand exporters reaping the full returns from their products.
TPP should have been high up the list for questions at the joint press conference held by Biden and the Prime Minister. Photo / Greg BowkerFran O’Sullivan: Never mind the warships – passing the TPP is what matters now
New Zealand now has free trade agreements with other nations that take 52 per cent of our exports.
McClay makes the point that if the US does pass the Trans-Pacific Partnership legislation during the “lame duck” session – and is ultimately brought into force by all the other TPP signatories – then NZ would have FTAs with 72 per cent of our export markets. That would increase to 90 per cent in the event that all other FTAs currently under negotiation (including one with the EU ) are cemented.
Officials are getting input from the business community as they put some flesh on the bones of a trade strategy refresh. McClay says he is looking for an “evolution” not a “revolution”. The question has to be why not continue to evolve the bilateral trade agreements while at the same time pursuing revolution on other fronts. The upgrade of the China-NZ free trade deal is a case in point. New Zealand wants China to ease safeguards which bump up tarrifs for our milk powder exports once certain thresholds are passed.
What would be bold is to develop a strategy that aligns with China’s own “One Belt, One Road” initiative beginning with the development of a free trade zone in New Zealand.
Developing strategies for NZ firms to play in global value chains should also be a priority. New Zealand has been served well by its ministers and officials when it comes to crafting the global trade architecture. But we are now in a world where technology is increasingly shaping our future. In this world it is important to be driving the bus – not to be thrown under it.