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Free trade agreements (FTAs) have been coming thick and fast in the last month. Firstly, John Key signed off a deal with Malaysia. Then last week, Trade Minister Tim Groser announced negotiations had been finalized for an FTA with Saudi Arabia, Kuwait, the United Arab Emirates, Oman, Qatar and Bahrain – the Gulf Co-operation Council. We have been invited to open negotiations with India.
It’s insightful to look at some of the numbers surrounding these landmark deals:
- NZ exports to Malaysia were worth $1 billion last year (having grown 80% since 2004)
- 99.5 per cent of NZ exports will be duty free within seven years.
- Kiwifruit exports will be duty free by 2012 – current tariff is 15%
- A “most favoured nation” clause which means Malaysia will automatically extend to New Zealand exporters the benefits of any other concessions it makes in subsequent free trade deals with other partners.
- As for the Gulf states, they are New Zealand’s seventh-largest trading partner with bilateral trade worth $3.85 billion.
We’ve come a long way since 1882, when the sailing ship Dunedin left Oamaru with the first exports of sheep meat and butter.
Our trading partners are changing too. Since signing the FTA with China, our exports to that nation have risen by $1.5 billion in a year.
Free trade agreements, as John Key has noted, are a vital move towards lifting our economic performance. The best place to target our exports is to those countries that are showing growth and demand for our products.
The Malaysia deal opens doors for Southland too. Not only will dairy products, maritime services, and other exporters get more access, but a key part of the agreement was to put New Zealand’s education providers in front of Malaysian consumers.
The Southern Institute of Technology has a renowned record in a short time for working with overseas partners, and this deal opens another door for them.
In essence, these deals have solved the problem that New Zealand has been struggling with in recent decades – getting access to markets. There is a worldwide demand for what we produce, and our reputation for high quality and value products puts us in an excellent position.
We face incredibly favorable long-term prospects for NZ agriculture and trade: We are a world class agricultural player in a world that has to grow food supply by 50% in the next 20 years.
Our Free Trade Agreements put us ahead of our competitors – but we can’t rest and take this position for granted.
Eric Roy 