Trade

Parker hopeful of Latin American deals

Nervousness in Latin America about rising protectionist sentiment could help New Zealand to secure a better trade deal as the region's countries look towards the Asia-Pacific, Trade and Export Growth Minister David Parker says.

Parker has been in Mexico to attend a summit for the Pacific Alliance, a Latin American trading bloc made up of Chile, Colombia, Mexico and Peru.

Speaking to Newsroom from Mexico, Parker said he was positive with the progress of FTA negotiations, first launched in June 2017.

“We’re getting to the formal part of negotiations where the more difficult pieces of market access, tariff rates are negotiated.

“As with all negotiations, there are certain issues for some countries, but we have impressed upon the others that we need to have better market access offers.”

New Zealand trading access with Chile, Mexico and Peru is already set to improve when the CPTPP trade deal is ratified, while Colombia has also expressed an interest in joining the 11-nation deal.

'CPTPP Plus' needed

However, Parker said the Pacific Alliance countries wanted more diverse trading relationships that pushed into the Asia-Pacific, which meant any agreement would need to be high quality and improve upon the CPTPP.

“If it’s ‘CPTPP Plus’ then it’s more likely to have relevance to other countries as well, and given the experience and the nervousness that there is in Latin America as a consequence of what’s happening with this rising protectionism and their desire to avoid the effects of that on themselves, they want the Pacific Alliance to be relevant.”

Also of interest to New Zealand was the Pacific Alliance’s attempts to build bridges with the Mercosur trading bloc - comprising Argentina, Brazil, Paraguay, and Uruguay.

“It’s hard for us to judge, but it is a live issue and it’s an issue that Mexico and others have been putting energy into.”

Change has been in the air in Latin America, with a new Government in Chile and recent elections in Colombia and Mexico.

Parker said he could “feel the nervousness in the air about rising protectionism” in the region and its neighbours, including the United States.

While Mexican president-elect Lopez Obrador has raised some fears he could clamp down on trade progress, Parker said a meeting with on of the likely ministers had allayed some fears.

“They were taking some care to emphasise that Mexico will remain upon a similar trajectory in respect of trade, so if we take that at face value then not much will change.”

Parker may have had some cause for concern about how he would be received on the trip: in 2012, Mexico’s ambassador told him off for suggesting New Zealand could become “Australia’s Mexico” as foreign firms took advantage of low wages.

However, it appears time has healed all wounds, with the minister saying his jibe had not been mentioned: “I’m glad no-one remembers that.”

US farm subsidies 'another bad step'

Trading relationships north of Mexico have also been warming, with the US restarting bilateral talks with New Zealand last week.

Parker welcomed the resumption of the Trade and Investment Framework Agreement meetings, which had “gone into abeyance” as CPTPP discussions took place.

“Given that the US remains the largest economy in the world, we wanted to have a route for positive bilateral discussions, so that’s the reason why that has been reinvigorated.”

However, he was less complimentary of American plans to provide US$12b in subsidies to the country’s farmers to help them deal with a tariff “tit-for-tat” initiated by the US.

“At one level, the need for him to introduce these subsidies proves our point about wanting to have more open trading relationships with the rest of the world.

“In respect of the effect of those subsidies, it’s another bad step for the world because...what happens is the open trading relationships unfold, so the cost to taxpayers are going up in the US, the distortions for trade increase, and that’s not good for anyone - including New Zealand.”

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