Trade transcends the election

28 Aug 2017

applestrade

Growth in horticulture, and the entire primary sector, is dependent on good trade access to countries that can afford to pay for our premium food.  Reducing tariffs certainly assists with the flow of export earnings back to New Zealand, but the real issue is what is called non-tariff barriers. Whether or not there is a free trade agreement in place, non-tariff barriers can result in few or no benefits coming back to New Zealand.

A prime example of a non-tariff barrier was Australia's quarantine measures that prevented New Zealand apples from being exported to Australia for nearly 100 years. The World Trade Organisation (WTO) Appellate Body found that the science presented was not sufficient to support Australia’s risk assessment and justify plant quarantine-related measures that stopped New Zealand apples gaining entry to Australia. This example underlines the importance of not only negotiating a free trade agreement, but also ensuring that it can be put into full action.

The next Government has a key role to play in ensuring the best access for New Zealand’s exports, with tariff reductions and the removal of non-tariff barriers as a free trade agreement comes into effect. The upcoming election is therefore, the time for political parties to explain their trade policies, and how those policies can support primary sector growth. Trade is very important to New Zealand. It is worth more than $70 billion to our economy and more than 620,000 jobs are dependent on it. 

Both National and Labour say they are committed to improving trade access. National has launched a very ambitious and forward focused policy. It aims to get the Trans Pacific Partnership 11 agreement, which drops the United States, over the line by 2020. If negotiations are successfully concluded, TPP 11 will add about $2.5 billion annually to our economy and eliminate costly tariffs. This will save New Zealand companies about $222 million each year, and open the door to dealing with non-tariff barriers.

Labour seems equally committed to trade, though there is no detail as yet. Labour has opposed signing TPP 11 in its current form, saying that a better quality agreement can be negotiated.

Whatever the outcome of the election, TPP 11 is vital for New Zealand’s continued export growth and prosperity. 

The reality is that a free trade agreement is only the invitation to a deeper trade relationship and then the real work for Government starts that is, negotiating not only tariff reductions, but also addressing non-tariff barriers. So whoever is elected as our next Government, we hope they will continue to work with the primary sector to deliver prosperity to New Zealand through negotiating quality free trade agreements.

Mike Chapman, CEO