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Molesworth & Featherston (Weekend) – Sept 23rd 200

Molesworth & Featherston - Weekend Update edition

Business and Political News
September 23rd 2006

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Thai loosened

The next phase of trade talks between New Zealand and Thailand is sure to be delayed at least following this weeks military coup d’etat.

New Zealand ambassador to Thailand Brooke Barrington was quoted in a Bankok paper a few days before the coup saying talks would shortly begin on fresh deals on trade in services and government procurement.

New deals must be off the table for now - New Zealand surely can’t negotiate a deal with a country under martial law. A deal on goods was signed in 2005, although it was a modest agreement. It provided for Thailand to keep some of its tariffs on New Zealand in place for another twenty years. Thai goods won’t have completely free access to New Zealand until 2015. A third of goods traded between both countries are currently subject to tariff.

A services agreement would probably cover telecommunications and financial services at least. Those were potential areas for New Zealand involvement because the Thai government had a substantial privatisation programme. It began to founder as political crisis weakened the government. Cancellation of economic reform policies would be a predictable way for the new gun barrel regime to attract some popular support. On the other hand, the deposed government couldn’t pass a budget. The military has more persuasive means to get its way, but foreign investors won’t be encouraged.

Thailand is our nineteenth largest export market, taking $375 million in the year to May. Over half that was dairy. It’s our eleventh largest import source, sending us more than a billion dollars of products last year.

New Zealand imports from Thailand grew by more than half in the year after the trade deal was signed, with increases in petroleum, trucks, food and computers, while - notwithstanding the freshly signed trade deal - our exports to Thailand fell.


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