Trade!
The week was all about Trade! Again we were reminded that International Trade is our only path to prosperity – that we will not get rich just by selling things to other Kiwis. Powerful trade messages beamed in: –
- During a superbly orchestrated visit, Premier Li Keqiang made hugely encouraging statements about the closeness of New Zealand and China, reaffirming the target of NZD 30 billion in two-way trade by 2020, committing to an upgrade of our FTA, and inviting us to join China’s Belt and Road vision;
- By contrast, President Trump continued his jobs before trade policy – America’s protectionism most discouraging for smaller trading nations;
- UK Prime Minister May sent the Article 50 letter to the EU, triggering the 24 months until Brexit;
- Australia boasted of its FTA negotiation skills and condescendingly offered to share this IP with the UK;
- Minister McCully announced the opening of two new MFAT posts to strengthen our trade performance, in Sri Lanka and Ireland. Go figure!
- Of most direct relevance and practicality, Minister McClay announced our trade policy for the next 10-15 years – the “Trade Agenda 2030” https://www.mfat.govt.nz/en/trade/nz-trade-policy/trade-agenda-2030.
Trade Agenda 2030 links with the Business Growth Agenda 2015 and is equally ambitious while stronger on realities and implementation.
You may recall the BGA has a stretch target of lifting exports from 30% to 40% of GDP in nine years (2016-2025). The maths is the easy bit. To reach the target requires exports to achieve a Compound Annual Growth Rate which is 5% greater than domestic growth. E.g., a 2% domestic CAGR implies a 7% export CAGR, domestic GDP rising from $160 bn to $191 bn, while export GDP would need to rise from $70 bn to $129 bn. To belabour the point, demanded export growth of $59 bn is almost twice the $31 bn of domestic growth. A massive ask, when the bulk of our exports is still agricultural and subject to many access barriers!
Trade Agenda 2030 proposes four sensible strategy drivers:
- Shift focus to maximizing the benefits of the existing FTAs;
- Put greater attention upon the removal of non-tariff barriers;
- Emphasize the new growth opportunities of Services, Investment and Digital;
- Deepen and expand market success by helping exporters to succeed.
That’s all fine as far as it goes. I don’t expect a policy document to answer the How? question. But nor do I expect any substantive answers to come from a Ministerial Advisory Group, comprising 23 worthies representing “key export sectors, business, Māori interests and NGOs with an interest in trade, in order to reflect the overall priorities of New Zealand’s trade agenda and key national interests”. One could be forgiven for thinking the Flag Committee has been recalled from oblivion.
This body of Bugginses will meet twice a year, to the resigned tolerance of the professionals at MFAT and NZTE. And they are professional! While it is great sport to bag our dedicated and incorruptible civil servants, we are fortunate in the calibre of our diplomats and our trade negotiators particularly. What they have achieved in trade access over recent decades is almost miraculous. We must not forget that China bankrolled our avoidance of the worst of GFC. These people have equally tough challenges ahead as they work to steer a peaceful passage between the blocs – USA and China, UK and EU, Russia and the Wild West – while seeking to resurrect some form of TPP.
Was it ever easy?
