McClay trades on NZ’s underdog status

The TPP's future is uncertain, but the Government has other irons in the fire - and Trade Minister Todd McClay is leading the way with a new trade strategy. McClay spoke to Sam Sachdeva about balancing overseas trips with issues closer to home, and the need for New Zealand to punch above its weight.

At the start of the week, Trade Minister Todd McClay was holding discussions with Vietnamese Prime Minister Nguyen Xuan Phuc and setting a goal of doubling two-way trade to $2.5 billion.

By Thursday afternoon, the Rotorua MP was heading back to his electorate to prepare for a day heading around rural areas in his mobile caravan.

On the agenda: one constituent wanting to discuss stock that jumped the fence into a different paddock, and another concerned about his rights to freedom camp.

It’s quite a change of pace, but one McClay says he appreciates as a chance to keep a sense of perspective.

“As my wife says, it’s very important: it helps drag me back down to earth after having meetings with prime ministers overseas.”

McClay has had big boots to fill as Trade Minister: his predecessor, Tim Groser, oversaw the TPP negotiations and ASEAN FTA signing during his seven years in the portfolio and is now New Zealand’s ambassador to the United States.

However, McClay did not come into the job as a novice, having served as head of staff to the European Parliament president, and then the Cook Islands’ ambassador to the EU.

He says he’s “very much enjoyed” the job, made easier by the trade team around him.

“We have some of the most exceptional, experienced trade negotiators in the world.

“When I go to international meetings, I never have more people than others - every country has more than us, even the countries smaller than us do, but negotiator for negotiator, we are respected and we pitch well above our weight and we deliver.”

The role has required a lot of work on his part: last year, he visited about 40 countries, some more than once, and held over 150 bilateral meetings with ministers.

McClay says the travel schedule is a necessary evil of the job, given New Zealand’s relatively small stature on the world stage.

“We’re a small country of four and a half million people and nobody owes us a living - if we’re not over there knocking on their door and talking to them and coming up with the reasons why we’re important and relevant to them, then we’ll very quickly be forgotten.”

Trade Agenda 2030

That assertiveness is demonstrated by a new strategy launched earlier this year which aims to have 90 per cent of New Zealand’s good exports covered by FTAs by 2030.

McClay says the Trade Agenda 2030 sets the course for the next 10 to 15 years, reflecting the fact that “the world’s a very different place than it was 20 years ago, and so is the New Zealand economy”.

Equally important to the FTA target, he says, is the focus on growing overseas investment, trade in services and the digital economy.

“It would be melodramatic to say it’s a living document, but it’s not an announcement this year and 15 years later we’ll come back and say: ‘Well that worked, here’s another one’ - it is actually directional and it gives us the opportunity to continue to look at the detail of what’s needed around trade policy as we go forward.

“It really sends a signal that every time we see opportunity, we're going to go invest time and effort in opening doors for New Zealanders.”

"You’re only as good as your next free trade agreement, not your last one, and it will mean sometimes we won’t be able to reach agreement because what’s on the table won't deliver for New Zealand businesses in the way that we want it to.”

However, McClay says that enthusiasm should not be misconstrued as a willingness to sign any deal going - despite what some critics say.

“If you go and have a look in there, there’s a quote, I think from me, that says: ‘We’re not going to let quantity get in the way of quality’.

“So we want to do more deals, but they have to be of a very high quality - you’re only as good as your next free trade agreement, not your last one, and it will mean sometimes we won’t be able to reach agreement because what’s on the table won't deliver for New Zealand businesses in the way that we want it to.”

McClay says the China FTA, signed under the previous Labour government, has shown the value of a comprehensive agreement, while a deal with South Korea has also performed well in its early days.

There are more to follow: the Government has finished scoping work on a possible FTA with the EU, with both sides now seeking a mandate to launch negotiations and wrap up a deal in two to three years “if we’re committed and work hard”.

While the UK is unable to commit to any detail until after it leaves the EU, discussions have taken place with confirmation New Zealand will be first in line post-Brexit.

McClay says there could also be significant progress this year on an FTA with the Gulf states, after negotiations finished in 2009 but the ratification process stalled.

And hopes of a TPP11 still live on: the fate of the deal will be discussed when McClay and Prime Minister Bill English visit Japan, while New Zealand has ratified the original deal despite uncertainty over how to adjust for the withdrawal of the US.

With the turnover of trade ministers around the world, McClay says he's no longer the newbie - and is keen to keep “making the decisions and creating direction” for New Zealand’s trade agenda in the months ahead.

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