Q+A: Trade Minister Todd McClay interviewed by Corin Dann
Q+A: Trade Minister Todd McClay interviewed by Corin Dann
Trade Minister Todd McClay – not ruling out a conversation around Chinese workers coming to New Zealand to work on infrastructure projects as part of trade talks.
‘Yeah, well, that’s not something that’s on the table at the moment, but, look, what we’ve agreed as part of the, you know, when we start the upgrade negotiation, both sides can raise issues that are of importance to them. We’ve got a list of things we want to talk about. China may well have.’
Sorry to labour this point, but on the issue of
labour, of workers coming as part of those infrastructure
TODD I think I can foresee challenges around that at this time. But we also need to be mindful that as our economy grows, as we want to export more, we’re going to have to look for ways to meet the requirements of business and industry.
Trade Minister Todd McClay told Q+A that ‘China wants us to be part of the Belt and Road initiative, and we’ve signalled that we’re very interested in that.’
‘I would like us to play a very big role in that.’
Todd McClay also said that setting a very ambitious target of 90% of New Zealand’s goods… trade covered by FTAs by 2030 is something that we believe is achievable but it’s going to take a lot of hard work.
‘That means we’ve got to finish all the agreements we have under negotiation at the moment. We need to make sure that Japan and India are a part of that. We need the EU Certainly the UK when they’re in a position to do so. But, Corin, it does also mean that we’ll have to do a deal over the next 10 to 12 years with the U.S.’
Please find the full transcript attached and you can watch the interview here.
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Q + A
Interviewed by CORIN DANN
TODD I don't think protectionism is anything new. During the global
financial crisis, for instance, the G20 countries put in place about
1800 protectionist measures, and since then they've only taken 500 or
600 of those away, and so New Zealand's always had to deal with
challenges of getting good and fair access into markets. We need to be
very mindful that the U.S. is now suggesting they're going to go in a
different direction than they have previously. I think we still need to wait and see exactly what the U.S. trade... the administration's trade
policy will be because it's very early days. But I guess the launch of the Agenda 2030 strategy by the Prime Minister on Friday is a very clear signal of the importance of trade to New Zealand, and that the
New Zealand government is going to go out and look for new opportunities and fight for better access and rights for Kiwis overseas.
CORIN Sure. Let’s look at that. I’m sure many exporters will be very encouraged about the fact that you’ve got this goal where you want 90% of our trade covered by free trade deals. A bit like an insurance policy. But, surely, if you’re going to get 90%, you have to have America in there. Now, how is that possible, certainly in the next four years under Trump, but under an America that’s going in a different direction?
TODD Well, no, that’s right. So setting a very ambitious target of 90% of New Zealand’s goods… trade covered by FTAs by 2030 is something that we believe is achievable but it’s going to take a lot of hard work. That means we’ve got to finish all the agreements we have under negotiation at the moment. We need to make sure that Japan and India are a part of that. We need the E.U. Certainly the U.K. when they’re in a position to do so. But, Corin, it does also mean that we’ll have to do a deal over the next 10 to 12 years with the U.S. All I would say in trade terms, is nothing happens quickly including the unpicking of agreements. And the Prime Minister has asked me to get up to Washington as soon as my counterpart is in place to start building that relationship with the new administration and looking for opportunities.
CORIN Even Bill English has said that it’s unlikely the U.S. will offer us a deal that is acceptable to us. I mean, the TPP as it was caused huge controversy as it was. Surely, is it realistic to be thinking that we can ever get a deal with the U.S. that’s going to be acceptable?
TODD Well, New Zealand must be ambitious and the government must be. I think with the suggestion of greater protections coming out of the U.S., countries of the world have two choices. They can either give up and stop trading or do what the New Zealand government is going to do, is go out and look for more opportunities and push harder than we have ever done before.
CORIN But it does come back, ultimately, to what we can offer countries like the United States. So, surely, it only means that we can offer up Pharmac, more access in terms of their investment, those sorts of things, and New Zealanders are very uncomfortable about that.
TODD Well, I think that that demonstrates how challenging it is for a small country of 4.5 million people, a long way from the rest of the world; how difficult it is for us to go out and do deals because, largely, the size of our economy doesn’t add as much as it does for others when they want to do a negotiation. But if you look at China, they chose us as the first country in the world to do a high-quality FTA. If we look at our trade flows with the U.S. currently, it’s our number-one beef market, our number-one wine market, number-two dairy market. The trade balance is very, very good, but, ultimately, we’re going to have to work hard and find reasons for them to want to do a deal with New Zealand. You mentioned a couple of issues in TPP, Pharmac being one of them. We were very clear, and there are certain things that can never be on the table when it comes to a trade negotiation. That makes it more difficult when you want to negotiate with very large countries or groups of countries. But it’s a clear signal Trade Agenda 2030, on the part of the government, that we must be out there promoting the interests of Kiwis.
CORIN So you won’t give up on the U.S. Let’s talk about China, because we are looking at trying to improve our current free-trade deal with them. That will be a focus of Li Keqiang’s visit on Monday. Again, what can we offer China to encourage them to do a decent upgrade of that deal? What do we have to put on the table in return?
TODD Well, New Zealand has a very strong reputation around the world for being fair when it comes to trade. The reason, I think, China decided to do its first FTA with New Zealand was they knew that it would be one that they would be able to stand behind and use as a model going forward. They’ve now agreed at the end of last year, it’s another first with New Zealand - the first upgrade of an existing agreement. And so we’ve had officials going through a process to look at exactly what we might want to work through. My expectation is that it’s going to be about improving that agreement. And the focus of the New Zealand government, particularly, is going to be around these non-tariff measures. Not the tariff rates but all of the other things – the bureaucracy that gets in the way of Kiwis doing as well as we need them to do in China. And so our prime minister in meeting the premier of China over the weekend will be pushing pretty hard for a launch date for that negotiation.
CORIN I wonder, though, because we’re seeing out of Australia – just to give our viewers some context – China is pushing a thing called the ‘One Belt, One Road’ strategy which is to build overland roads, rail, inland ports, all throughout its region, but down into the Pacific. It wants countries like Australia and, presumably, New Zealand to be involved in that. It’s a huge economic push out into our region, securing trade routes and investing trillions of dollars in ports and infrastructure.
Li Keqiang is going to come here, isn’t he, and he’s going to want us to be buying into that.
TODD Well, China wants us to be part of the Belt and Road initiative, and we’ve signalled that we’re very interested in that. We’ve got to be careful that we don’t just think it’s about building roads. Actually, it’s about connectivity, it’s about goods and services flowing in and out of China, and further afield, through all the way to…
CORIN So, are we going to be part of it?
TODD Well, I would like us to play a very big role in that. Think about the digital economy and its increasing importance to New Zealand. You know, if you look at the way that New Zealanders buy and sell goods and services over the Internet, the modern Belt and Road initiatives, or The Silk Road, actually can be about better connectivity and digital connectivity. All parts of New Zealand, by the way, can then play a part or benefit from trade agreements. So I look forward to the conversations, and I think that we can get to a position where it’s beneficial for New Zealand.
CORIN Does it mean that Chinese government, companies, would come to New Zealand and help build our infrastructure and ports?
TODD Well, already we look around the world to different companies to come and partner with New Zealand, both in construction…. We have in some cases looked towards PPP’s. You know, whenever a company wants to come to New Zealand…
CORIN So there will be opportunities for China to do that?
TODD Yeah. I think there could well be. Now, it’s not the government itself in China that might come and do that, but, you know, where there are opportunities to grow our economy and infrastructure from anywhere in the world, I think, as an open economy, we should consider that conversation.
CORIN So that’s interesting. We’re open to talking to the Chinese about them investing…
TODD As we’re open to people from around the world.
CORIN I guess the issue that might worry some New Zealanders is if the Chinese do come, would we allow for their labour to come as part of the deal?
TODD Yeah, well, that’s not something that’s on the table at the moment, but, look, what we’ve agreed as part of the, you know, when we start the upgrade negotiation, both sides can raise issues that are of importance to them. We’ve got a list of things we want to talk about. China may well have. But, actually, the focus for me will be about how we can grow the economy. So if we step back from that at the moment, there are from all around the world, including China, people coming here wanting to build hotels, high-quality hotels. We know that as tourists grow… as export income from tourism grows, we need more infrastructure. That’s something we should seriously consider.
CORIN I agree. So we clearly need their expertise in certain areas, but, I guess, in that discussion that you will have around the trade, is it fair to say they will likely want to talk about labour; workers coming here? Are we going to have that conversation, at the least, if not necessarily agree to anything?
TODD Well, whenever we sit down and have a trade negotiation… So we’re about to launch on with the European Union soon. There’s a very wide range of things we consider. One of the things I’m keen with the European Union is to make sure that Kiwis continue to have good access to those markets and can get to work there. So, you know, if China wants to raise,… as we’ll raise issues as well, we’ll just have to make sure that our settings are fit for purpose in New Zealand and that whatever we agree is in the interests of New Zealand. But that’s not something that’s directly in front of me at this time.
CORIN But are you open to that idea? Do you think that that makes sense?
TODD Well, I’m open to having a conversation with China, the EU, the US, with others about how we can arrange our trade deals that are beneficial to the two sides in New Zealand.
CORIN Sorry to labour this point, but on the issue of labour, of workers coming as part of those infrastructure projects…
TODD I think I can foresee challenges around that at this time. But we also need to be mindful that as our economy grows, as we want to export more, we’re going to have to look for ways to meet the requirements of business and industry. First and foremost, we look towards Kiwis for that. That’s why the government has put a huge amount of effort into training, apprenticeships and so on. But, look, these are conversations that we should have over time. Putting the China upgrade aside, Agenda 2030 is about a 10- to 15-year strategy. It’s directional. We will have an opportunity to talk about the detail of what agreements should look like as we go forth.
CORIN On the China issue, I mean, the One Belt, One Road strategy, it’s seen by some as about Chinese influence in the region, as well. I mean, does that create problems? Because we are seeing reports in Australia where there is a little bit of reluctance than New Zealand to, sort of, buy into that idea because they’re worried about how that might upset the US. And, I guess, it comes back to that issue. Do we have to choose sides here?
TODD No, we don’t have to choose sides. I think we want to be cautious and we want to understand any new initiative well before we make decisions around it. But, no, New Zealand not only doesn’t have to take sides and discussions of this type. I don’t think that we should. We should be looking for economic opportunities that will deliver for New Zealanders and the New Zealand economy, and wherever there is an agreement or an opportunity that delivers a greater fairness for New Zealanders in the US or China, where others will join us to show leadership internationally on the discussion/debate around opportunities of trade that can deliver for our citizens, then New Zealand will look at that… we’ll welcome that partnership and that conversation.
CORIN Looking at your goal, we haven’t had a lot of free trade deals signed, really, have we, in the last few years. There’s been a few disappointments. Obviously, TPP, but there’s also Russia. I don’t know where that’s got to. Is that completely dead?
TODD Well, we’re going to have to work through a bit more process with Russia. We took a stand insofar as the FTA was concerned, that while sanctions remained in place around the world, and whilst Europe, particularly, with Russia, we were looking at what was happening on their borders, we wouldn’t go forward with that trade agreement, but we keep in touch with the Russian government.
CORIN So not completely dead?
TODD I guess the point here is, you are correct that it takes a long time to negotiate trade agreements and lots of things can happen to get in their way.
CORIN One last question on TPP In your heart of hearts, do you really think that this deal can survive; that you can come up with a TPP minus the U.S., and that we will actually see New Zealand exporters benefitting?
TODD I was pleased two weeks ago when all of the remaining TPP ministers, including Japan, met in Chile, and we published a declaration that says we stand behind the benefits of the agreement. We need a common set of rules in the Asia-Pacific, and that they are all open to exploring opportunities for TPP to go forward. It’s too soon to know what those opportunities, those steps might be, but it’s also too soon to say that that deal is dead. For New Zealand, it is imperative that whenever there’s an opportunity, we’re out pushing for that, and it’s part of the reason that the P.M.’s told me to travel so extensively in the first part of this year. I can’t tell you that there will be something that looks like TPP at the end of this process, but I can absolutely guarantee New Zealanders and exporters will put every effort in that we can because it would still be a common set of rules that will give us better access and fairer access to a number of countries. You know, our economy depends upon that type of work.