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Trade talks make progress

21st November 2011 by Andrew Matheson, | 6 Comments

Good news for consumers and businesses.  Trade negotiators around the world are scoring some big wins, as they work on agreements to make it easier for businesses to succeed internationally and give consumers better access to products and services.

The circle is now complete for the ASEAN Australia New Zealand Free Trade Agreement, or AANZFTA, which New Zealand and the Philippines are both members of.  The agreement came into force almost two years ago and both countries were in it from the beginning.  More countries joined later, and membership is about to be completed following the annoucement that AANZFTA will soon enter into force for Indonesia .  This is important news.  Indonesia is the world’s fourth-most populous country, and its economy accounts for more than one-third of ASEAN’s gross domestic product.

Auckland city and port

International trade drives the New Zealand economy

AANZFTA is a high-quality agreement that benefits all countries in the region.  Now negotiations are over and membership is complete, businesses in the region have to make the most of the opportunities this free trade agreement presents.  I’ve enjoyed working with colleagues in the Australian embassy, the Philippine government and business groups to help spread the word about AANZFTA in the Philippines.

The month of November has also seen good news about the Trans-Pacific Partnership or TPP.  This is a free trade agreement being negotiated by nine countries in the region, including New Zealand which was one of the architects of the original Trans-Pacific Partnership agreement.   The leaders of the nine negotiating countries announced that they had agreed on the broad outline of the agreement, and that the detailed negotiations would be completed within a year.  It’s an ambitious target, just as the leaders have set an ambitious goal of a high-quality, comprehensive trade agreement.

Japan has now said that it wants to join the nine countries negotiating the TPP, something New Zealand’s trade minister has welcomed while restating our goal of a comprehensive and high-quality agreement.  Canada and Mexico have also announced their wish to become part of the negotiation.   It’s hoped that the TPP will eventually expand to include other Asia-Pacific countries, potentially including the Philippines, if they share the goal of shaping a regional agreement with the high standards worthy of a 21st century trade agreement.

Container ship

Connecting New Zealand (photos by Ports of Auckland Ltd)

And let’s not forget the World Trade Organization either.  The Doha round might be moving more slowly than WTO members originally expected, but the organisation is still making progress.  After 18 years of work on joining the WTO (yes, accession negotiations can take a long time too), the terms for Russia to join the organisation have been agreed so the country can become a WTO member next month.   This means all the world’s major economies will be part of the trading rules system that the WTO establishes.  For New Zealand, Russia joining the WTO is particularly important as we are negotiating a free trade agreement with Russia and its customs union partners Belarus and Kazakhstan.

The WTO is not only for larger countries, and two tiny countries in New Zealand’s part of the world are on the verge of joining.  Samoa should become a member at the meeting next month of WTO trade ministers.  The accession package for Vanuatu has been agreed by WTO members, and if ratified by Vanuatu by the end of December the country will become the WTO’s 154th member.

Free trade agreements may seem like dry stuff, and reading the text of one would give most people a headache.  But the end result is that they can make a real difference to ordinary people’s lives — businesses and consumers alike.  As a member of the Association of South-East Asian Nations the Philippines has a ringside seat as the economies of this region become more closely integrated, a process New Zealand is certainly a part of.

6 Responses to “Trade talks make progress”

  1. Walter Ty Walter Ty says:

    All these recent developments of free trade agreements among various countries is interesting but I wonder if the Philippines is willing or up to the task considering various vested interests either aren’t prepared or aren’t willing to join – in short, they’re scared of foreign competition threatening the status quo (i.e. protected markets). Just witness the recent incident in the South Korean parliament when an opposition lawmaker threw tear gas to protest Seoul’s signing of an FTA with the United States.

  2. Andrew Matheson says:

    Walter

    Thanks for your comment. There are challenges for every country in liberalising trade (or protecting the local economy against imports, for that matter), and governments and legislators have to listen to varying views, consider the issues and reach a decision. We also have debate within the New Zealand parliament on the merits of trade liberalisation.

    Andrew

  3. Financial planning Financial planning says:

    Keep working, nice post! This was the information I had to know.

  4. Walter Ty Walter Ty says:

    Andrew, it’s good to know that the unicameral parliament in Wellington conducts heated debates on trade liberalisation. Just look at the situation in India – PM Manmohan Singh had to backtrack on opening that country’s retail sector to foreign entities like Walmart. I find it rather ironic after reading the conditions for liberalising the Indian retail sector is that the Philippines enacted similar legislation some years back albeit with a “window” clause in which foreign retailers have a certain time period in which to invest & to find suitable local partners. The political situation at that time spooked investors like French retailers Carrefour & Casino Monoprix from venturing into the country. I just read in the Philippine Star today that you’re ending your Manila posting along with your Australian colleague Rod Smith when you received the Order of Sikatuna. Pity we couldn’t get together for lunch. Any idea of where you’ll be posted next? Wellington HQ?

  5. Andrew Matheson says:

    Walter

    Thanks for being such an active provider of comments on this blog. Yes, I’m heading back to the foreign affairs and trade ministry in Wellington, but hope to manage one or two more posts before I depart.

    Andrew

  6. Neil Warren Neil Warren says:

    I found your website through a random stroke of luck. It helped me do my research on this topic. I have spent lots of time looking through your site. You have something good going here, keep it up!

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