What if NZ could replace huge amounts of paper documents that accompany every export transaction with data?! Going digital would be a win-win for exporters, consumers and governments. Read Glen Candy’s blog for TradeWorks.
Guest post: Challenges of negotiating trade liberalisation
Guest post from Stephen Hoadley, Associate Professor of Politics and International Relations
Given the number of free trade agreements that New Zealand has concluded during the past decade, from China to Taiwan to the Pacific islands to the Middle East, one might suppose negotiating new ones will get easier. Not so.
I have just published a book on New Zealand Trade Negotiations.* My survey from 1971 to the present shows just how drawn-out and difficult negotiations can be. The prospect is for future difficulties. There are at least five reasons why this continues to be so.
First, New Zealand has seven agreements pending that are proving hard to move to completion. The obstacles are often beyond our negotiators’ power to remove, for example in India’s ingrained protectionist inclination. As a small player New Zealand ministers and officials can only persuade, not oblige, their counterparts in larger trading partners to open their markets. Ministerial and officials’ energy is consumed in persuading reluctant partners such as the Gulf Cooperation Council to sign on the dotted line and, more important in the long run, fully implement the terms of the deal.
Second, negotiations with new partners must contend with economic uncertainties as the composition of trade shifts and new value chains adapt to changing consumer tastes, or to consumption slow-downs. The inclusion of services, investment, and intellectual property and biosecurity protection alongside traditional trade in goods adds new dimensions of uncertainties and complexities. Negotiation requires intelligence and attention to detail as well as persistence and stamina.
Third, scepticism about free trade is growing among people who lose out or fail to benefit. Consequently electorates are becoming volatile and demanding, and free trade is often identified as a cause of economic malaise. Prospective FTAs are facing renewed political resistance as electorates in the US, UK, South Korea and elsewhere reject familiar leaders and opt for protectionist policy changes. President Trump’s criticism of past presidents’ trade deals, and withdrawal from the TPP, have cast a long shadow, but not the only shadow. As established regimes are replaced by newcomers, as in the United States, New Zealand trade negotiators must scramble to identify new counterparts, establish relations of cooperation and trust, and persuade them that trade liberalisation won’t generate political opposition.
Fourth, ideologies of economic nationalism are on the rise. Pessimists are predicting a reversal of the recent trend to liberalisation and globalisation, and this can only be bad news for an exporting nation such as New Zealand. Legitimising trade deals among the wider public has become an essential element of the trade negotiation process, one not always successful as in the TPP. Leaders must now negotiate on two fronts, one international and the other domestic, a notion developed by Harvard University’s Robert Putnam and widely cited.**
Fifth, personnel skilled in trade negotiations are in demand and the supply is short. New Zealand’s Ministry of Foreign Affairs and Trade have a Trade Negotiation Division of nearly three dozen officials backing up the Minister of Trade but they are fully occupied with preparing feasibility studies, cost-benefit analyses, detailed proposals, and a repertoire of responses to partners’ requirements distilled from decades of experience. In addition, line diplomats are obliged to engage with trade issues, and even act as negotiators at short notice, in addition to their other duties. Trade ministers have dealt with this problem by seeking advice also from private sector producer and export leaders and associations such as the NZ International Business Forum. Trade Minister Todd McClay recently established a Trade Advisory Group which enlists members of civil society.
As I describe in New Zealand Trade Negotiations, a negotiation typically passes through eight phases: problem identification, diagnosis, pre-negotiation, negotiation, legitimation, ratification, implementation, and adjustment. Each phase requires special skills. The legitimation phase, so vital for national political consensus, now extends across all the other phases. The process as a whole may take as little as one year (with Singapore), or as long as eight years (with Hong Kong), or never get started despite persistent efforts (with the United States).
Is New Zealand’s position hopeless because of the diminutive size of its economy and consequent lack of bargaining chips? Fortunately, I found the opposite. New Zealand negotiators made up for clout by applying ‘issue power’, that is, focussing on specific issues and applying logic and evidence to persuade counterparts to grant concessions. They even cited New Zealand’s vulnerability and smallness as reasons why concessions could be made in the spirit of fair play at no cost or risk to the larger economies.
My conclusion is that New Zealand’s track record is commendable, and the ministerial and official time, effort, and costs have paid off in the form of steadily rising exports and incoming investments. Further evidence is that leaders in the EU, the UK, and the US, and of the Pacific Alliance in South America, have all indicated that New Zealand is near the head of the queue for negotiation of new free trade agreements. That New Zealanders are respected for their negotiation skill is indicated by the facts that the WTO frequently chooses them as chairs of the agricultural committee and successive disputes resolution panels, and that British Government has turned to New Zealand experts such as Crawford Falconer for advice as London prepares to conduct post-Brixit trade negotiations around the world.
But focus, persistence, and skill are still required by New Zealand negotiators, and support by the political parties and public are still required, so the Government can keep up the trade liberalisation momentum.
*published by the New Zealand Institute of International Affairs, c/o Victoria University, PO Box 600, Wellington 6140, 297 pp., RRP $40.
** Robert Putnam, ‘Diplomacy and Domestic Politics: The Logic of Two-Level Games’, International Organization, Vol 42 (Summer 1988).
The NZ Trade Negotiations book is distributed by the New Zealand Institute of International Affairs, c/0 Victoria University, PO Box 600, Wellington 6140 or order from Tina.vanErpersRoijaards@vuw.ac.nz or via website www.nziia.org.nz. Or phone Tina at (04) 463-5356. $40 inclusive of postage and GST. $30 for students.
REGISTER WITH TRADE WORKS
Register to stay up to date with latest news, as well as saving and discussing articles you’re interested in.
Latest News
Doubling our exports with zeroes…and ones!
The development of written language in the ancient world didn’t start with great poetry or literary epics. The catalyst for writing was the need to record the transfer of the ownership of goods from one person to another. Scribes did this by marking tablets of clay...
Asia-Pacific business leaders rally for robust global trade amidst rising protectionism
APEC NEWS RELEASE Issued by The APEC Business Advisory Council (ABAC) - April 2024 This week in Hong Kong, China, the APEC Business Advisory Council (ABAC) voiced serious concerns regarding the global shift towards protectionism and regional fragmentation, risking...
SUBMISSION TO THE MINISTRY OF FOREIGN AFFAIRS AND TRADE – APRIL 2024
NEW ZEALAND-UAE COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT NEGOTIATIONS This submission is made on behalf of the New Zealand International Business Forum (NZIBF), whose members are listed at Annex A[1]. NZIBF is a forum of senior business leaders working together...
NEW TEAM FOR AUSTRALIA NEW ZEALAND LEADERSHIP FORUM
Media release, 2 April 2024 The New Zealand Co-Chair of the Australia New Zealand Leadership Forum (ANZLF), Greg Lowe, welcomes the appointment of Stephen Jacobi and Simon Le Quesne to the New Zealand arm of the ANZLF Secretariat. The ANZLF brings business leaders,...
NZ/EU FTA A BONUS FOR SOME SECTORS – BUSINESS FORUM
Media release, 22 March 2024 The NZ International Business Forum (NZIBF) acknowledges the passage of the implementing legislation for the New Zealand/European Union Free Trade Agreement and looks forward to the FTA’s entry into force on 1 May. “This agreement was...
“MEAGRE OUTCOME” FROM WTO IN ABU DHABI – BUSINESS FORUM
Media release, 2 March 2024 Despite its overwhelming importance at the heart of the international trade system, members of the World Trade Organisation (WTO) have concluded their Ministerial in Abu Dhabi (“MC13”) with only a meagre outcome. NZ International Business...
To go or woe with the WTO?
We’ve been here before with the World Trade Organisation (WTO). The global trade body’s 13th Ministerial meeting (“MC13”) opens in Abu Dhabi on Monday 26 February, with Trade Minister McClay serving as Vice-Chair. In recent weeks diplomats, trade...
DCANZ – Agricultural Subsidy Distortions Must Be Addressed
23 February 2024 - Media Release by the Dairy Companies Association of New Zealand (DCANZ) As the world’s Trade Ministers head to a WTO meeting in Abu Dhabi, the Dairy Companies Association of New Zealand (DCANZ) is calling for an immediate capping of agricultural...
Asia-Pacific business leaders call for greater economic dynamism with people at the center of the APEC agenda
16 February 2024 - APEC NEWS RELEASE Issued by The APEC Business Advisory Council (ABAC) The APEC Business Advisory Council (ABAC), meeting this week in Kuala Lumpur, Malaysia, expressed deep concerns about the growing pressures of economic fragmentation and the risks...
SUBMISSION TO THE PARLIAMENTARY FOREIGN AFFAIRS, DEFENCE AND TRADE COMMITTEE – FEBRUARY 2024
NEW ZEALAND EUROPEAN UNION FREE TRADE AGREEMENT LEGISLATION AMENDMENT BILL Introduction and Summary This submission is made on behalf of the New Zealand International Business Forum (NZIBF) and Export NZ. NZIBF is a forum of senior business leaders working...
ABAC Statement on WTO MC13 – February 2024
Now, more than ever, the world needs a credible, relevant, and effective multilateral trading system, with the World Trade Organization (WTO) at its core. In this era of global challenges, the APEC Business Advisory Council (ABAC) recognizes that the WTO is...
Global Industry Statement on the WTO Moratorium on Customs Duties on Electronic Transmissions
NZIBF has joined 170 international business associations in calling for an extension to the current moratorium on tariffs applying to digital services (like Netflix) at the forthcoming WTO Ministerial meeting. The undersigned associations urge WTO members to support...
Resilient supply chains: Yesterday, today and tomorrow
Published by the Hinrich Foundation, Singapore, 23 August 2024 By Stephen Jacobi History has much to teach us about the way trade contributes to prosperity through the movement of goods, services, people, and ideas. Today, data can be added to this web of...
SUBMISSION TO THE MINISTRY OF FOREIGN AFFAIRS AND TRADE
GENERAL REVIEW OF THE COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANS- PACIFIC PARTNERSHIP (CPTPP) DECEMBER 2023 Summary This submission is made on behalf of the New Zealand International Business Forum (NZIBF). As individual NZIBF Members may make their own...
Todd McClay – your trade mission, should you choose to accept it …
As published by Newsroom 19 December 2023 By Stephen Jacobi “Twas the week before Christmas, When all through the house Not a creature was stirring, Except busy trade officials … ‘Tis the season to be “BiM-ing”* and the NZ International Business Forum has sent its...