Trade weariness on show in McClay’s Europe talks

Countries concerned about China flooding their markets with an oversupply of electric vehicles and solar panels should engage in dialogue rather than imposing tariffs, Trade Minister Todd McClay says.
McClay was in Italy last week after New Zealand secured a rare invite to take part in a meeting of G7 trade ministers.
McClay told Newsroom there was a sense of weariness about challenges facing trade around the world, with a lack of progress at the World Trade Organisation and US presidential candidate Donald Trump campaigning on a policy of unilateral tariffs.
However, all the countries there were committed to working together to bring down barriers to like-minded countries so it was easier to trade.
With supply chain resilience among the themes of the meeting, McClay said there were ongoing delays for New Zealand exporters sending their products to Europe due to attacks on commercial ships in the Red Sea.
He had used the meeting to make a wider pitch about the importance of improving the WTO and reducing non-tariff barriers, citing the CPTPP trade deal and some of New Zealand’s other trade agreements as examples of what was possible.
“Take the case of India as an example … there was a barrier in place around the log trade, it was actually put in place by New Zealand by changing the rules [under] the previous government and we’ve worked with India and they’ve found a way to recognise the changes that we made, and now logs are flowing again…
“We all focus on bringing down the tariffs, which is also important, [but] we estimate there’s about $12 billion lost to the New Zealand economy [from] non-tariff barriers. Some cases are differences in standards, and that’s acceptable, but [we made] a very big push and suggestion to all the countries that we need to find ways to simplify rules for businesses, not create more complex and more difficult rules.”
The official statement from the G7 trade ministers after the conclusion of talks included a call for a level playing field, with concerns expressed about “harmful non-market excess capacity” – a thinly veiled reference to claims that China is flooding international markets with an excess supply of subsidised electric vehicles, solar panels and other products, leading to retaliatory tariffs from the US and the European Union.
McClay said New Zealand was largely unaffected by such issues as it did not produce many of the relevant items itself, but was concerned about both protectionist sentiment and the distortionary impact of state subsidies.
“We would advocate more broadly across the board … that subsidies for production are harmful, but I think the countries that are facing that, between Europe and particularly China at the moment, that dialogue is the way forward as opposed to increasing tariff rates.”
The G7 statement also called on countries to refrain from using economic coercion and “weaponising economic dependencies”, and McClay said the Government was continuing to push for new deals to give exporters increased choices for markets and avoid overreliance on any one economy.
The G7 invite had been an opportunity to speak to a number of busy foreign counterparts, including Canadian trade minister Mary Ng, with New Zealand still pursuing action against Canada over the country blocking dairy exporters’ access to the market in breach of its CPTPP obligations.
McClay said he had made it clear to Ng that New Zealand expected Canada to meet those commitments, but also noted that the two countries remained friends and would continue to cooperate closely on trade and foreign policy issues.
The Government was still waiting on full legal advice about the next steps it could take, but was likely to ask Canada to take part in a formal consultation process.
McClay had also met Indian commerce and industry minister Piyush Goyal, and said the catch-up was another positive sign when it came to the Government’s aspirations of signing a free trade deal with India this term.
Goyal had invited him to New Delhi next month to discuss potential areas of cooperation in trade and agriculture, while he was also “popping into Delhi” this week for further talks on his way back to New Zealand.
He did not expect India’s surprise election result last month to make trade talks more difficult, with Narendra Modi’s BJP forced into coalition with other parties, noting the Indians were already tough negotiators but bilateral talks continued to grow.
McClay is currently in Dubai, where formal negotiations for a trade deal with the United Arab Emirates launched earlier this year, and he said negotiators had made good progress to date.
“Ministers decided to come together because there are a few areas that were challenging, and so we’ve come in to take some time to talk through those at a ministerial level,” he said, with the main issues around reconciling different language related to investment and rules of origin.
With New Zealand businesses speaking positively about the UAE’s economic growth, McClay was hopeful an agreement in principle could be reached by the end of the year but offered the caveat: “There’s a saying in trade that nothing’s ever agreed until everything is agreed.”