Wednesday, 04 July 2018 07:55

Trading times get challenging

Written by  Pam Tipa
Stephen Jacobi. Stephen Jacobi.

A trade expert has backed up comments by agricultural trade envoy Mike Petersen, who says New Zealand is facing its most challenging time in trade in 30 years.

Petersen told Rural News that the established rules on trade via the World Trade Organisation, particularly for agricultural products, are at risk from the US-China trade war.

While the products being targeted now are not NZ products, the risk of spillover into our products is very high, he says.

A former diplomat and executive director of the NZ International Business Forum, Stephen Jacobi, agrees any trade war could be a big medium-term risk to NZ exports.

He says it is not a major risk currently but depending how it evolves further it could well be. 

“We don’t want the contagion to spread to other areas,” he says.

While Jacobi says the current situation is unlikely to directly affect our trade with the US, “you can never be sure”.

“The way global trade is so interconnected these days through global value chains you can never be sure. But I would think we are probably not going to get caught in that.

“In China we might benefit in the short term, because if China takes action against the American exports of meat products, dairy products, wine and things like that, they are all things we sell to China,” he adds.

 “So we could replace their products. But if we replace the products they sell to China, [those products] will need to go somewhere else so we may face increased competition elsewhere. 

“The bigger picture is that markets will very quickly become destabilised and that can’t be good for our exporters.”

Jacobi says there are questions about what happens in the inevitable trade dispute between China, the US and the WTO. Does New Zealand participate in that? 

“The US won’t appoint any appellate body judges in the WTO so what does the future of the WTO dispute settlement system look like? All these are big global strategic issues that will bite.” 

He says some agricultural sectors are very concerned it might cast a shadow over international trade.

“I don’t quite see it at that level, but it certainly could occur – depending on what happens.” 

NZ is already doing all it can. 

“We can maintain our lines of communication in China and the US, we can try to use opportunities we have to calm them down. I’m not sure anybody is particularly listening.

“We can make our voice known in the WTO. We can make decisions about whether or not to join actions against US protectionism in the WTO; I think we should be doing that. We can continue on the path we set which is to negotiate high quality, ambitious, comprehensive trade agreements like CPTPP and the one we hope to do with the EU.” 

Jacobi believes the best thing NZ can do is continue with partners who see the world the same way, to free up trade.

“For example the CPTPP – getting it into force as soon as possible, getting other countries to sign it, making it quite clear to the Americans what they are missing out on – all those things are important.”

But we must also keep our strong relationship going with the US, he says. 

“I am not suggesting we turn our back on them either. 

“There are important economic interests in the US that we want to try to maintain.”

» Connect with Rural News

More like this

Important trade milestone

Agreement by 15 participants in the Regional Comprehensive Economic Partnership (RCEP) trade negotiations marks an important milestone.

Four more years, mate

The NZ/China Free Trade Agreement (FTA) upgrade has brought little joy to the dairy industry.

Job hunting?

A mate of the Hound reckons outgoing special agricultural trade envoy Mike Petersen, who is due to finish his current role at the end of the year, is currying favour – and job prospects – with the Government by backing its moves to lump agriculture into the ETS.

US exports soar

US dairy exporters keep finding new markets for cheese and dairy ingredients despite facing trade tensions.

» The RNG Weather Report

Featured

What’s your favourite plant?

Forest owners are urging people to vote for tōtara as plant of the year in a poll being conducted by the New Zealand Plant Conservation Network.

 

Food bowl or toilet bowl?

New Zealand shouldn't become a 'toilet bowl' of trees for other countries' carbon dioxide commitments, explains John Jackson.

» Connect with Rural News

» Connect with Rural News

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Logging spin

OPINION: The Hound notes that the foreign-owned and controlled NZ forestry industry is starting to feel the pressure of the…

EU waste

OPINION: This old mutt was interested to read a recent New York Times expose of the European Union’s agriculture subsidy…

» Connect with Rural News