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Economic issues dominated 2010

6th January 2011 by , | No Comments

2010 was even busier than I expected when I arrived¬†last January to take up the role of High Commissioner. It was however an exceptionally rewarding year. I have covered off on quite a number of activities in previous blogs, all of which are available on the archive. I will however repeat one: Prime Ministerial visits are always a big deal and John Key’s visit to Ottawa¬†last April was no exception.

With the last such visit being in 1999, we were overdue for a “Capital based” meeting of Prime Ministers. More importantly for me, however, leading the New Zealand Inc team on the ground everyday in Canada, was that having our Prime Minister in Canada brought a profile and increased focus to a relationship that has deep roots and much warmth, but some would argue needed a degree of modernising. That history and affinity had personal chemistry added to it: our two Prime Ministers get on very well. They meet in international fora (APEC, Climate Change, Commonwealth Heads of Government) which is great, but a dedicated bilateral visit means you really can focus on the bilateral relationship.

Economic issues were to the fore and dominated conversation between PMs Key and Harper. It is fair to say that our respective national preoccupations have remained in the economic and trade arenas and for good reason, as budget deficits and managing unemployment have become key challenges for Canada and New Zealand. That our respective fiscal books are in better shape than many other OECD members has been a relief but no cause for complacency. Both governments are heavily focussed on improving overall productivity within the economy and growing exports. Productivity and trade are fundamental to, and a key driver of, economic growth going forward.

In that regard, I recently attended a fascinating lecture on the issue of Canadian trade and whether more effort should be made to diversify away from a heavy reliance on trade with the US. That of course is a decision for Canadian business and facilitated by government through ensuring trade policy is an enabler rather than an impediment to trade.

My sense is that this debate is had every time the US goes into any sort of economic decline, and is quickly set aside once the economy south of the border comes roaring back. The level of integration between Canada and US economies is such that there can probably only be so much diversification in the medium term. Moreover, every other economy around the world covets the privileged place Canada has with regard to US market access. New Zealand is currently part of nine countries (all on the Pacific Rim) negotiating a free trade agreement, which its current members hope, in time, will grow to take in the wider Asia-Pacific region.

The reason the membership is currently restricted to nine countries is to try and avoid some pitfalls of becoming too big too soon, with an attendant watering down ambition with regard to breaking down trade barriers. The membership however is also committed to making the agreement a process that other aspiring members can “dock” onto, as long as they share the same level of aspiration as its existing membership. This group, known as the Trans-Pacific Partnership (TPP) is important to New Zealand as the majority of our global trade is within the Asia-Pacific. We have bilateral trade agreements with Australia and China (our two biggest trade partners) and TPP would also deliver, within a regional setting, an agreement with the US.

Canada has, over the past couple of years, been more focussed on completing a trade deal with the EU. I detect however some genuine interest in the progress that TPP is making, not least because it has the US as a current member, but also because over time there will be more TPP members from the Asia region than anywhere else.

While New Zealand’s economic fortunes have, for some time, increasingly become linked to our wider relationship with our Asia-Pacific neighbours, my sense is that within Canada the vitality of the Asia-Pacific has been embraced by Western Canada moreso than in the East, which has a predominant focus on the US and Europe. That seems to have changed in recent years. For that reason, my assumption is that Canada will become increasingly global in its trading orientation.

For Canada, the Trans-Pacific Partnership process would appear to be something worthy of ongoing consideration as a trade negotiating forum that could deliver tangible benefits to the Canadian economy in the 21st century.

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