Trump may have killed our trade deal, but the door to more access has been left open – Stuff.co.nz

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As trade tensions rise between the United States and China, Beijing warns that US tariffs will not fix the problem.

OPINION: Last week New Zealand investors and entrepreneurs won a long awaited change to visa rules that will help them to expand their business interests into the United States.

E1 and E2 class visas will allow Kiwis to live in the United States while they work at extending their business operations or pursue investment opportunities, bringing their families with them.

It’s good news for New Zealand companies, especially the burgeoning numbers in the technology and the digital sector who find opportunities in the massive US market difficult to reach because of stringent US immigration rules. 

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The change appears to have given Foreign Minister Winston Peters hope that more is to come. Last month he even hinted that the two counties are moving once again toward the prospect of free trade.

If that’s true, it would mean that US president Donald Trump’s about-face on free trade has been as surprising and complete as Peters’. Peters originally opposed the Trans-Pacific Partnership that promised free trade with the US, though the New Zealand government ultimately endorsed it.

Trump, however, killed the deal on his first full day as US president in 2017.

Like the US in recent years, China also has a strong track record of using trade — generally impeding it — to achieve broader diplomatic and defence aims.

Like the US in recent years, China also has a strong track record of using trade — generally impeding it — to achieve broader diplomatic and defence aims.

There is nothing to suggest Trump’s softened his view. His administration has made trade fairness, particularly eliminating large trade deficits with its trading partners, its signature policy. To this end it is currently fighting the world’s second largest economy, China, with tariffs on a widening range of imports.

It’s also levied new tariffs on European steel and aluminium with the additional threat of new duties on vehicles, as it continues to try to agree better market access for US goods and services into the EU. And the latest trade focus is Japan with which the US runs a large trade deficit.

“New Zealand would not be high in the queue [for trade attention],” according to Edward Alden, senior fellow at the Washington DC-based Council on Foreign Relations.

But there are still reasons to keep the conversation going. For more than five years, China has been New Zealand’s single largest trade partner, and now accounts for 30 per cent of all our exports. Our reliance on China is also magnified through our second largest trading partner, Australia, which also counts China as its largest export market.

For more than five years, China has been New Zealand's single largest trade partner, and now accounts for 30 per cent of all our exports.

ANDY WONG/AP

For more than five years, China has been New Zealand’s single largest trade partner, and now accounts for 30 per cent of all our exports.

It’s a vulnerability that even staunch pro-China business figures recognise.

“You never want all of your eggs in one basket,” says Stephen Jacobi, executive director of the New Zealand International Business Forum. And while he doesn’t believe better US market access is in New Zealand’s near-term future, in the long run, he says, it’s still an important aim.

Like the US in recent years, China also has a strong track record of using trade — generally impeding it — to achieve broader diplomatic and defence aims.

Notable examples include a crash in Chinese tourist numbers to South Korea after it confirmed it would install an advanced US defense system known as Thaad in 2017. Still ongoing, China is putting up an array of barriers to Canadian goods following that country’s arrest of the chief financial officer of Chinese corporate darling Huawei.

There are plenty of flashpoints that could put New Zealand in a similar bind. The categorical exclusion of Huawai from New Zealand’s 5G network, or even the possibility that New Zealand finds its voice to criticise China’s persecution of minority Muslim groups including Uyghurs.

The US visa change appears to have given Foreign Minister Winston Peters hope that more is to come. Last month he even hinted that the two counties are moving once again toward the prospect of free trade.

Patrick Semansky/AP

The US visa change appears to have given Foreign Minister Winston Peters hope that more is to come. Last month he even hinted that the two counties are moving once again toward the prospect of free trade.

Equally, China’s slowing growth is another reason for New Zealand to diversify.

Our best hope in the US will likely come after the November 2020 presidential election; before then, neither Republicans nor Democrats will want to jeopardise votes in key agricultural states with talk of opening the home market to more competition.

Post-election is also the juncture at which the “spaghetti bowl mess of [trade] rules” currently developing will need to be resolved, says Inu Manak, an expert in trade and a visiting scholar at the Cato Institute in Washington DC. At that point it may make sense for the US to join key trade partners Canada and Mexico in the CPTPP, the successor free trade agreement to the TPP, of which New Zealand is a member.

For now, however, the US is electioneering and New Zealand has trade talks with the European Union to crack on with.

These will almost undoubtedly drag past their planned schedule and into next year as they bog down in the thorny question of European market access to New Zealand dairy goods, and the geographic rules of appellation that help protect European goods like parmesan cheese and champagne from competition. Post 2020 timing would be realistic for both New Zealand and the US.

Kate MacNamara has been a journalist for 20 years. She covered business and trade for the Canadian Broadcasting Corporation, and also as a contributor for the BBC.

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