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The Nation: Patrick Gower interviews Todd McClay

On The Nation: Patrick Gower interviews Todd McClay
The US is part of the Govt’s plan to get 90% of goods covered by FTAs by 2030 - but McClay acknowledges that with Trump’s protectionist policies it’s going to be a hard road. “We’re going to have to work very hard to do so and it’s not going to be easy.”
Wants to restart trade negotiations with Russia “at an appropriate time when things are possible. At the moment, that’s not of the space that we’re in. But over a 10- to 12-year period, lots of things may well change.”
Says it’s too soon to say the TPP is dead.
Will be meeting US Trade Representative nominee Robert Lighthizer within a month, so long as he is confirmed by Congress.
Expects the Gulf States trade deal to be across the line this year.

Todd McClay: Protectionism is not new. Some of the things we’re seeing out of the US gives us reason to be more concerned and to pause for a moment. But New Zealand has always gone out to find better access and negotiate high quality deals for Kiwis overseas, and we must continue to do so, and Trade Agenda 2030 says this government unapologisingly is going to go out and actually find greater opportunities for Kiwis.
Patrick Gower: Yeah. 90% of trade agreements will be FTAs under what the Prime Minister-
Good by 2030.
Yeah, so America is part of that 90% goal.
It will have to be.
You’ve got to get America across the line, right?
It will have to be.
Yeah, so how much of the 90% do they make up?
They’re around about 10% at the moment, maybe a little bit less. So, a couple of things will happen. So it means that all the negotiations we have underway need to be completed. We do need to launch and finish negotiations with the European Union. They’ve announced progress this year.
If we stick with that 10% of the United States, which is part of that 90%, 2030 is 13 years away. Donald Trump is in for four, maybe eight of those. So getting the United States across the line, you’re being pretty optimistic, aren’t you?
Well, I think we need to be ambitious, most certainly, but, look, we’ve always had a very strong relationship with the US, and in trade we’ve worked very well together. We can work with the new administration in the US on trade. We’re going to have to build the relationship, as we have every time there’s been a change of president-
Yeah, but you’re not seriously saying we’re going to get a free trade deal with Donald Trump’s administration. You’re not seriously saying that, are you?
So, what I’m saying to you is that trade with the US is important to New Zealand, as is trade with China and the European Union and all of the other areas of the world and that we’re setting an ambitious target of 90% of goods trade being covered by FTAs by 2030, and America will have to be part of that. Now, we’re going to have to work very hard to do so, and it’s not going to be easy-
It’s going to be very hard.
But if the government’s not being ambitious about trade on behalf of New Zealanders, Paddy, nobody will.
Yeah, and on that ambition, is Russia part of the 90% goal?
Well, that’s one of the agreements that we have in place that would have to be finished, yes, and we’ve got some way to go there.
Does that mean restarting negotiations with Vladimir Putin?
Right, so, do we want to do a deal with Russia? Yes, we do, at an appropriate time when things are possible. At the moment, that’s not of the space that we’re in. But over a 10- to 12-year period, lots of things may well change, and the Russian market is a priority for New Zealand exporters, therefore it must be a priority for the New Zealand Government.
So will we wait until after Putin has gone to restart things, or could we get those negotiations going there? Because they started under him. Could we get them going again?
No, it’s not about any personality, as far as the government’s concerned and my approach to this.
Now, looking at the global trade picture, we’re literally in the middle, aren’t we, of China on one side and the United States on the other. Now, what happens if America uses protectionist policies against China and China retaliates? A trade war. For the average Kiwi, what would that mean if China and the United States start acting like that? Because that has to be a concern.
I think there’s a little way to go in all of this international trade policy before we can say that we’re likely to see that, but any protectionism that’s put in place around the world is not good for New Zealand, and that’s because our economy relies upon our ability to export. Part of the reason Agenda 2030 says we want to be ambitious around who we trade with is so that we’re not reliant on any one part of the world.
So where do we go now with this ambition on trade? Is the big goal TPP without the United States? Is that the big and most available goal now?
No, there’s lots of them out there. I mean, the European Union is $20 billion worth of two-way trade without an FTA. Of that, the UK is $5 billion. I’m very pleased to have announcements from both the EU and the UK about prioritising New Zealand in free trade deals. We need to get that done. India is a huge opportunity for us. It’s going to be very difficult to get that over the line, but we’ve got to put effort in. But in as far as TPP’s concerned, I was pleased two weeks ago when I was in Chile, we met with other TPP ministers. They, along with New Zealand, agreed that the benefits of the agreement are important. A trade liberalisation delivers for our economies. Having a common set of rules across the Asia-Pacific is also very important, and they’ve agreed that they want officials to look at what steps there may well be still for TPP. It’s too soon to know what the outcome is, but it’s also far too soon to say the agreement’s dead. And for the New Zealand Government, we think it’s imperative we put effort into what would deliver better access for Kiwis to a number of important countries.
So, this one isn’t the most sort of technical trade term or diplomatic one, but is TPP without the United States a goer? A potential goer?
For New Zealand, it still offers opportunity, and there’s still value in it. Each of those countries will have to decide. But, look, New Zealand doesn’t go out to do deals to close the door on others. The US has said it’s pulling out of TPP. You know, disappointing but not surprising. They have always shown leadership on trade. I believe they will because, actually, they will have to, because where one group doesn’t, someone else could well step up. And, you know, that means there will be ongoing opportunity for New Zealand. When I go to Washington and sit down with my counterpart, I will probably spend most of my time telling him or talking about the great trading relationship and we have and why I think it’s imperative that the US finds a way to show leadership so we can have stability on trade.
How quickly do you think you can get there, to the States?
Well, the Prime Minister said to get on a plane as soon as I’m able to. Ambassador Lighthizer’s not through the confirmation process yet. Our embassy’s been in touch and said we want to get there. He’s said he’ll meet, but he has to be confirmed so he formally has the job. So I would hope that could be during the course of this coming month, but it’s up to the US process.
So you could be there meeting Ambassador Lighthizer within the month?
Oh, as long as he gets through the confirmation process, we’ll try and line that up. It’s important to us to continue to build that relationship and to reinforce it. It makes sense to get there when he’s in place so I can talk to him.

The Prime Minister in his speech today said the government wants to do a better job of giving the public information on trade. Is that an admission that you got it wrong on TPP, that you lost that argument?

No, it’s not. I don’t think we did lose the argument. Indeed, since the US pulled out of TPP, we’ve seen New Zealanders’ businesses up and down the country saying they want us to go out and fight for TPP-
Did Jane Kelsey win, is what I’m saying to you.
No, not at all. I don’t think it’s about winning or losing. By the way, the US pulling out of TPP is not a win for New Zealand. It actually means that we have less access to an important market. But it is a recognition by me as a new minister over about 13 or 14 months that all New Zealanders should benefit from trade. They have the opportunity to, but we do need to find ways to talk with them better about it, and that’s why I’m so pleased that a group of representatives, including unions and NGOs and iwi have agreed to join the ministerial advisory group on trade I’ve set up. We can talk about the big picture, we can talk about the detail, we can do that over the next 10 to 15 years so we can make sure we get it right for every New Zealander.
There’ll be more transparency around trade deals, basically, though this advisory group. Is that the-?
Well, I’ve already been looking during the course of the last year to make more information available where we can. I need to protect the things that if we put them in public will make it more difficult for us to get the best deal we can for Kiwis in a negotiation, but I also think there is a lot more information that we should think about making available.
Yeah, well, let’s look at RCEP now, because we’ve got Premier Li coming here this weekend, and RCEP is, of course, the deal. It’s got China, it’s got Japan, it’s got India, it’s got some Asian countries in it. How much potential does that have? How realistic is that?
It has the potential to be very important for the Asia-Pacific region. Really important for New Zealand, but the only that that opportunity can be delivered is if it’s a high quality outcome. And so every time negotiators and I go to these meetings, we talk about having to use TPP as what we should be trying to achieve in as far as liberalisation, open economies is concerned. It’s been pretty tough going, and I’m on record saying unless there are benefits for New Zealand, it would be hard for us to go ahead. But ultimately, a deal of 16 countries in Asia, where their economies are growing so very, very quickly, means that we have to get it right, and we will, and New Zealand must be part of that.
Now turning to Brexit and Europe and the United Kingdom, the reality is even though you’ve got the symbolic agreement with the UK, it can’t start until it’s out of the EU. We can’t do anything until they’re gone.
They can’t take on legal obligation until they’ve left the EU.
So that’s years away.
Well, no. So, I expect Prime Minister May, the UK Prime Minister, probably next week to announce the formal start of the divorce process, and that’s a finite two-year period. In the meantime, we can be very well prepared. So, last year-
So that’s two years away. Turning to the EU, how close could things be with the EU in terms of something?
With the European Union, we’re quite well advanced. We’ve been working on the scoping of the negotiations for the last 18 months. Two weeks ago, the trade commissioner and I announced that that’s finished and both sides are seeking mandates. When Prime Minister English was in Brussels in January, the president of the commission said he thought a deal between New Zealand and the EU could be done in two or three years. Now, two years is very optimistic. With hard work and commitment, three is possible.
Yeah, now, turning to – and this is an important one – the Gulf States deal. The deal that Saudi Arabia has said is a goer. Now, when can we get some pen on paper about that? Do you think we can get pen on paper for the Gulf States and Saudi Arabia this year?
So, when I was there, I met with the Saudi Trade Minister last year. He and I made a joint public statement that said that we are ready to go to the next stage of including that agreement. Officials are working at the moment, they’re looking at the legal text to see whether it’s still is okay or, after five or six years, needs changing. I am saying to them we must sign it this year. They’ve indicated that they would like to do that, but let’s let our officials finish that work before I give you an exact date.
But you think this year? You’re just waiting on a date now.
I’m confident that we can get to the point of signing this year.
All right. That’s a good place to leave it, minister. Thank you very much.
Pleasure.
Transcript provided by Able. www.able.co.nz

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