Well done Goff
Phil Goff has done well. A US-NZ free trade agreement is now a real possibility with the announcement that the US will begin negotiations with the P4 group of NZ, Brunei, Chile and Singapore.
This doesn’t mean a full free trade deal is guaranteed. For now it only covers financial services and investments, but is has the potential to morph into a more comprehensive negotiation. A welcome step forward.
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February 5th, 2008 at 5:24 pm
This is great news! Perhaps it was an omen that I blogged a post this morning that it would be great for NZ if John MCain won the US election because of his stand on Free Trade issues. If he wins, this negotiation has an excellent chance of containing something substantial as David allluded to and a real win for NZ.
February 5th, 2008 at 5:41 pm
It’s just a bit of a shame that Clark fucked up the PR value of this coup fpr Labour by way of her childish tantrums over Waitangi. She must be very close indeed now to a challenge.
February 5th, 2008 at 5:44 pm
She must be going close to an aneurysm now that Titewhai has shepherded Key through Waitangi…
February 5th, 2008 at 5:46 pm
Remember our last really great Min. of Overseas Trade: Mike Moore.
February 5th, 2008 at 5:48 pm
Clark (and Labour) deserve everything they get “thrown” at them, every election they campaign heavily for the maori vote in a desperate attempt to steal votes from the maori party. Then the fools expect the Maori party to take them seriously when they claim they care about maori people.
Labour cares about power – nothing less, nothing more. They also do the same with the Green party – and rightfully they got served on that one recently as well.
February 5th, 2008 at 5:49 pm
I think an analysis of the benefits Australia has got from their FTA is in order before any celebrations, also remember they had to include parts of the DMCA in their FTA.
I used to think a FTA with the US was a good thing, but after what happened to Australia I’m not so sure anymore.
February 5th, 2008 at 6:28 pm
Well done Phil Goff. Pity your boss didn’t have a good day!
http://keepingstock.blogspot.com/2008/02/helens-bad-day.html
February 5th, 2008 at 6:28 pm
An FTA with China will be worth far more in the long run.
February 5th, 2008 at 6:38 pm
BBQ at Phil’s place?
February 5th, 2008 at 6:43 pm
There are a number of issues yet to be resolved before glasses can be raised on this issue. Politically, everything will have to wait the outcome of the US election. Although the predilection of most commentators on this blog is for a GOP victory, the hard fact is that this is an election for the Democrats to lose, not the GOP to win. Of the two Democratic candidates, Clinton is by far more free trade in orientation that Obama. McCain may be pro-FTAs, as is Romney, but appeasing that conservative christian wing may force them to compromise on economic liberalism as well as issues of personal morality. After all, the South has a strong protectionist streak and is directly threatened (as are Mid-Western producers) by cheaper agro-exports from places like NZ.
The second political issue is Congress. Although overshadowed by the Presidential election Congress is up for grabs yet again. A Democratic win could make it more, not less difficult to pass FTA enabling legislation. The problems with Colombia getting an FTA after years of effort–blocked by Congressional Democrats because of the failure to investigate unionists murders at a US company in that country–are an example of how hard it will be to get a 2/3 majority of both houses to pass any deal.
The good news is that NZ non-nuclear stance is no longer an impendiment to trade. It is about time.
The other issue is organisational. In trade negotiations the choice is to go bi-lateral or multi-lateral, issue-specific or comprehensive. To over-simplify, larger trading partners like bi-lateral deals because it allows them to bring their economies of scale and relative trade “weight” to bear on the smaller partner in order to secure favourable terms, if not outright advantages. Smaller trading partners usually prefer the comfort of multilateral agreements that codify uniform rules and spread the costs as well as benefits more equitably amongst partners. Larger countries are more indifferent to the scope of the agreement, whereas smaller countries tend to attempt to narrow the range of trade in order to protect strategic assets. The Australian-US FTA comes into focus in this regard (and we must remember that the apporval of the FTA by the US was a political sop thrown at the Howard government in return for its support of the US in the “war on terror”).
Then there is the issue of “depth.” Labour rights, environmental standards, gender issues–these are just a few of the substantive themes that can make or break “beyond the border” negotiations. Given the partners involved, there could be obstacles for NZ along these lines.
It is therefore very premature to laud anyone for the P4 negotiations just announced. To be sure, it is an interesting step, but taken in conjunction witht the purported deal with the PRC, it raises a number of questions about the NZ strategy vis a vis trade in what is essentially the second or third phase of trade talks with these partners.
And then of course there is the question as to whether the rising tide of FTAs does, in fact, lift all boats, at least with some degree of equality and fair distribution.
February 5th, 2008 at 6:51 pm
only of use if agriculture is included
February 5th, 2008 at 6:56 pm
“only of use if agriculture is included”
Not going to happen.
February 5th, 2008 at 7:17 pm
helmet said “BBQ at Phil’s place?”
Yep, and Chris Trotter has laid on the finest rib-eye steak!
February 5th, 2008 at 7:36 pm
Gosh that guy’s a greaser isn’t he?
February 5th, 2008 at 7:43 pm
I hope they read the fine print given some of the shit these clowns have signed us up for.
February 5th, 2008 at 7:50 pm
I’m not holding my breath on this one
February 5th, 2008 at 7:52 pm
Unless the Greens f**k it up of course.
February 5th, 2008 at 7:53 pm
When the skum or should i say skum-ess of NZ holds your hand and walks you to the grounds you better hope that it does not turn into a poisened chalis for JK.
He should make sure he does not turn his back to the old battle axe.
February 5th, 2008 at 7:53 pm
That wasn’t ver inclusive, john.
February 5th, 2008 at 7:59 pm
National could govern alone according to the latest TV3 poll
http://nzdebate.blogspot.com/2008/02/tv3-poll-says-national-can-govern-alone.html
February 5th, 2008 at 8:06 pm
Very good point Lee – how long until Keith “Get the map, I’ve got to find out where Chad is” Locke opens his big yap about an FTA with America…a press release using the words ‘trade’ and ‘waterboarding’ is being written as we speak, I suspect…
(PS John Dalley – see what happens when you mix your meds with alcopops?)
February 5th, 2008 at 8:30 pm
<p>dpf..are you on natty-hq orders to ‘talk’ up the possibility of a goff challenge..?</p>
<p>(just wondering..!..)</p>
<p>phil(whoar.co.nz)</p>
[DPF: I take my orders direct from Karl Rove, not from any middlemen.]
February 5th, 2008 at 8:34 pm
there seems to be a bit of it about..eh..?
phil(whoar.co.nz)
February 5th, 2008 at 10:03 pm
It is not well done. He has not managed to sell those skyhawkes and that is a more immediate test of his abilities. I think he is not that hot really.
February 5th, 2008 at 11:02 pm
I suppose it will weaken opposition on the right to doing a deal with China before the USA (because the USA could not be bothered doing a deal with us and Australia at the same time).
February 5th, 2008 at 11:06 pm
Pursuant to what I said above, it is clear that nations with complementary economies–say, Brunei and NZ in which oil-for-food swaps can be brokered–can embark on bilateral FTAs. Same goes for those of similar sized GDPs. But when the actors involved have very different resource endowments, then the issue of symmetry versus asymmetry in trade becomes real. This of course involves primary good versus value-added exchange ratios, currency exchanges and the like, but the fundamental issue is whether a small country like NZ can find leverage and advantage in trade with larger partners beyond contemporary export markets. Dairy is NZ trade’s tip of the spear–or perhaps, most of the spear–but places like the US are not as keen on that commodity because it challenges US producers–and those producers are voting as I write this.
The entire issue of FTAs has to be seen in “nested” game theoretic terms. At a meta-level the game is positive sum because partners exchange benefits previously not accrued. The macro-game can be even or positive sum depending on the trade balance, which is where product characteristics and economies of scale come into play. At the micro level for producers, the issue has to be positive sum; elsewise why would they play?
In bilateral scenarios, for trade to be beneficial to both sides in some measure, the payouts must be 1/1, 1/2, 2/1 or 2/2 . An even sum outcome at 1/1 is, in effect, positive sum in that all preferences are maximized, to wit, it is both Pareto optimal and Nash efficient. The 2/2 outcome may be Pareto optimal but not Nash efficient since any unilateral gain comes at the expense of the other actor and neither actor has maximised opportunities within the terms of trade (although it is better than nothing and neither side loses). Therein lies the dilemma, since FTAs negotiated today are not immune from the impact of future externalities, and countries with greater resource endowments have a better capacity to weather the changing winds of trade given uncertain market futures. Given NZ’s insertion in the international political economy, it is worth pondering if, over the medium to long term, multilateral deals with medium size complementary economic partners are the better way to go (as opposed to the bilateral deals with bigger partners like the PRC and USA).
There is more to it than this of course, both political and economic (and economists will clearly note that I am not one of them), but my general point is that we might lok at the intrinsic worth of operating within the structure of the P4 when trading with the US rather than trying to go it alone given our economic and trade profile.
February 5th, 2008 at 11:23 pm
Paul
Perhaps our immediate bi-lateral free trade future is with ASEAN?
As for China – their future lack of water must result in them accepting that they need our dairy. I hope our negotiators have belaboured this point. Cetainly it opens up the sort of phased in access that was part of the Australia-US deal.
As for the USA – the framework for full free trade is on the back of the realisation of the full access to Australian producers and developments within the APEC block.
That said, it would seem that demand (in the medium term) for food commodities is going to rise faster than the producers can meet it – thus as Australian supply flows into the US market opening up to them our supply will be catering to the rest of the world (and as Americans themselves realise that any loss of market share in the USA to Australians
does not mean a loss of buyers for their own products which will reduce their concern about imports from down under New Zealand).
February 6th, 2008 at 9:30 am
Thanks Paul for the very informative comments.
February 6th, 2008 at 11:11 am
Interestingly, in her state of the nation speech, Klark made a point of sayign that SHE would report progress on the China deal while she made no mention of the US deal which the New Zealand Government must have known about before the speech. Here in Wellington people are saying that Goff is in trouble with Klark for going public with the China deal before her – she wants to be the one who gets the kudos for signing it – which is why she made the point that SHE would report progress. Has Goff again pre-empted Klark by going public on the US deal. Something is definately up between these two.
February 6th, 2008 at 1:23 pm
I note the implicit point that SPC makes about the “back-door” benefits of working out second tier trade deals with partners who have FTAs with places like the US in a time of rising (food) commodity prices. In a sense NZ can have it both ways–work out back door deals to get into places it is shut out of, and negotiate directly with those who need our goods. If I recall correctly in the late 90s processed NZ beef was rebranded as Uruguayan to get around EU import quotas by taking advantage of the higher ceilings given to MERCOSUR partners (since Uruguay could not fulfill its own quota). It was cunning if a bit underhanded, and indirectly paved the way for the massive increase in NZ investment in that country (in land purchases for dairy and attendant industry-specific technology).
My concern remains about the structure and depth of NZ trade agreements and the volitility of commodity export dependence, particularly when dealing with larger trading partners. Certainly there are countries within ASEAN that NZ could profitably deal with on a bi-lateral basis.
I should point out that, assuming actors (firms) are non-altruistic maximizers of economic opportunities, in any bilateral framework they will initially adopt 4/1 strategies in order to fully realise potential gains. It will be the subsequent interaction between actors that leads the play to 2/2 outcomes or better. Thus the need to look past the immediate strategic posture based on current preferences and focus on potential outcomes given those preferences and the likely responses of others.
Finally–I promise this is it–we must remember that government (read political-diplomatic) preferences are not equal to those of economic actors. The former may enter into trade agreements that are sub-optimal from an economic standpoint because of the non-economic payoffs involved (say, in strengthening security ties). Again, the Australia-US FTA is a case in point. Thus economic agents need to step back and look at the geopolitical context in which trade negotiations occur so as to understand the web of motivations involved.
February 7th, 2008 at 5:07 pm
# Inventory2 Says:
February 5th, 2008 at 7:17 pm
helmet said “BBQ at Phil’s place?”
Yep, and Chris Trotter has laid on the finest rib-eye steak!”
No “train to Pyongyang” stuff for NZ’s Chardonnay Socialists, obviously. Do lower-income earners in NZ still not see anything sickening in the lifestyles of certain political animals who pretend to represent them?