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Groser attacks US dairy industry’s ’rear view’ policy

New Zealand Herald, Auckland

Groser attacks US dairy industry’s ’rear view’ policy

By Audrey Young

15 June 2011

Trade Minister Tim Groser took a swipe at the protected United States dairy industry last night saying it was time they stopped "looking in the rear vision mirror."

He said the US "must have a trade policy that is more than purely defensive."

Mr Groser made his comments in a speech in Wellington on the Trans Pacific Partnership agreement being negotiated at present among nine countries including the United States.

He also said New Zealand would ditch the TPP if there was any "sniff" that it was turning into an anti-China vehicle.

He had said so recently at a think-tank in Washington, and so had his Australian counterpart Craig Emerson.

And in reference to United States concerns over the state drug-buying agency Pharmac, which the US sees as anti-competitive, Mr Groser said the New Zealand was not about to negotiate away its public health system.

He said Pharmac was not perfect "and we are always open to suggestions of change, but we are not about to adopt a health system, via a trade negotiation, that allocates resources according to capacity to pay."

Mr Groser said New Zealand was a small player in the global dairy industry with only 2.5 per cent of world production and despite having been described as the "Saudi Arabia of milk" New Zealand was actually the "Algeria of milk" (Algeria produces about 2.5 per cent of the world’s oil).

"We have no capacity to flood the American market with our milk. We can’t even keep up with the opportunities in China," he said.

It was the United States dairy industry, not New Zealand, that was poised to take the major share of future growth, as it had between 2005 and 2008, capturing 60 per cent of dairy growth.

"The US dairy industry is - let me be blunt - looking in the rear vision mirror," he told the New Zealand Institute of International Affairs.

"They need to look at where they are going, not where they have been."

Given that the TPP being negotiated among was seen as a step towards other trading nations in the region he could say "only a little mischievously" that the US had a greater interest in including a quality deal on dairy than New Zealand.

"We already have FTAs with most of these markets, they don’t."

Mr Groser said the TPP negotiations would not be completed by the time President Barack Obama hosted Apec in Honolulu in November but "solid progress" would be made.

The degree of progress would depend on what happened in Washington on the US’ existing trade agenda, specifically whether Congress approved the free trade agreements already negotiated with Korea, Panama, and Colombia.

"The political oil" to facilitate their passing were the payments known as Trade Adjustment Assistance to affected sectors.

"No TAA, no deal.."

At the same time the payments were part of a wider political debate about fiscal prudence.

Mr Groser nominated a 60:40 chance of Washington moving its current agenda forward.

"If they do then my estimate of what is possible on TPP by the Apec leaders meeting [in November] moves forward.

"If they don’t well a smaller step forward will be taken by the end of the year. This is not fatal to where we want to go long term. This is the nature of trade negotiations."

Regarding intellectual property clauses of the negotiation, Mr Groser said New Zealand was firmly in the camp that saw innovation as a key plank to stronger economic performance.

It wanted the people involved in cutting-edge innovation to have intellectual property rights backed up by effective enforcement.

He had seen estimates that pirated DVDs cost the New Zealand film industry $100 million a year.

"I make no apology for belonging to a Government that believes in intellectual property rights, as part of a commitment to innovation, and is committed to keeping the rules current and to enforcing them."

He said he understood the appeal of "freedom in the digital universe."

"But the idea that any enforcement of intellectual property rights is, by definition, antithetical to human freedom is naive and absurd.

"As one commentator put it recently, we are not operating in a’parallel universe where legal and moral rules, and all the basic principles that govern societies, do not apply."