New Zealand looks to UK and EU to diversify market beyond China

By on June 17, 2021 0

New Zealand aims to strike free trade agreements with the UK and the EU this year in a bid to diversify its export markets amid mounting tensions with China, the trade minister said of the Pacific nation.

But Damien O’Connor insisted that Wellington would continue to expand its trade relations with Beijing despite the “cuts” which strain the links between its Australian and Chinese neighbor.

“Any country engaged in trade sees the benefit of having a diversity of markets, especially in a world increasingly challenged by disruptions, climatic events, geopolitical events or the like,” he said. at the Financial Times.

“Obviously, China for Australia is also an important market. And while we are concerned about some of the cuts that are occurring, we are only making progress and capitalizing on the strengths between our two nations. “

China is New Zealand’s largest trading partner, accounting for NZ $ 19 billion (US $ 13.5 billion) in exports through the end of March, or a quarter of its total exports.

Wellington managed to avoid the diplomatic disputes that have marred Sino-Australian relations for more than a year, prompting Beijing to impose punitive tariffs on Australian imports of wine and barley.

“We have always been simple in our relationships [with China], which has been incredibly valuable, ”said O’Connor, when asked how New Zealand avoided this fate.

Wellington was the first developed country to sign a free trade agreement with China in 2008, and in January it agreed to improve the pact to expand market access.

Nonetheless, Wellington has quietly stepped up efforts to diversify its trade relations in order to reduce its dependence on China.

As part of the process, O’Connor will meet with Liz Truss, UK Trade Secretary, in London on Thursday to speed up negotiations on a free trade agreement with the UK. He will later travel to Brussels to discuss a deal with the EU.

Truss has set his sights on New Zealand as the next target of a major post-Brexit trade deal. An official from the International Trade Department described the talks as “the next big game in town.”

But UK officials have warned progress will depend on O’Connor’s meeting with Truss. “New Zealanders will have to give us more on investment, mobility and services if they want a deal. They have been slow to move forward on these issues so far, ”said a senior Whitehall official.

New Zealand Trade Minister Damien O'Connor

New Zealand Trade Minister Damien O’Connor denied Wellington had been lenient on China © AP

O’Connor said a deal between New Zealand and the UK would likely be similar to the UK-Australia trade deal, which was agreed in principle this week. Tariff cuts on New Zealand’s agricultural exports, including dairy, lamb and beef, would be among Wellington’s demands, he said.

He added that British farmers should not fear New Zealand imports. Most of its agricultural products were destined for Asia, the United States and other markets, while the volume available for the United Kingdom and the EU was small. New Zealand products, however, could play a role in meeting off-season demand, he said.

Analysts said Wellington’s efforts to diversify its trading partners could help protect its economy in the event of a breakdown in relations with Beijing, although there was little economic justification for doing so at present.

“Diversification is always about protecting against risk,” said Rob Scollay, associate professor at the University of Auckland. “But I’m not sure, in the absence of some sort of political collapse, that there are good reasons to diversify away from China.”

New Zealand has been criticized by Australian politicians, analysts and media for what they see as its intimate relationship with Beijing, which has been accused of violating human rights in Hong Kong and Xinjiang.

Wellington has resisted the expansion of the mandate of the Five Eyes Intelligence Alliance, a network that includes Australia, the United Kingdom, Canada and the United States.

Last month, 60 minutes broadcast a documentary titled Dollars for decency: is China taking over New Zealand? who criticized O’Connor for saying Australia must “follow us and show respect” to Beijing.

“Probably in hindsight I shouldn’t have put it that way,” said O’Connor, adding that he has a positive relationship with his Australian counterpart.

He also denied that Wellington has become lenient with China. “We speak up when necessary and continue to create business opportunities where there is value for the supplier and the customer. “

Trade secrets

The FT has revamped Trade Secrets, its go-to daily briefing on the changing face of international trade and globalization.

register here to understand which countries, companies and technologies are shaping the new global economy.

Source link