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Pressure builds to seal trade deals

Dominion Post, Wellington

Pressure builds to seal trade deals

10 April 2006

By Sue Allen

New Zealand could be sidelined from trading with some of the world’s fastest-growing economies if it fails to push ahead with a network of Asian free trade deals, Associate Minister for Trade Negotiations Jim Sutton says.

His warning came as business leaders, politicians and academics gather in Auckland today to discuss the potential for business and trade opportunities in the 10-member Association of Southeast Asian Nations.

New Zealand, Australia and Asean agreed to launch negotiations for a free trade deal after a 2004 summit.

Asean comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Mr Sutton said a deal with Asean would help deal with the major issue of "trade displacement", which was creeping up on New Zealand.

Free trade deals are designed to encourage the free flow of goods between countries by removing barriers such as tariffs and quota limits.

Mr Sutton said a good example of how trade displacement worked could be seen in a recent free trade deal signed between Korea and Chile.

New Zealand had spent years developing Korea as an export market for kiwifruit.

When the FTA between Chile and Korea comes into force, kiwifruit exports from New Zealand will attract a 40 per cent tariff, while those from Chile will be tariff-free.

"This could mean the New Zealand kiwifruit industry could potentially kiss the Korean market goodbye," Mr Sutton said.

Korea was also looking at free trade deals with the United States and Canada, which could similarly affect New Zealand meat and dairy exports.

The way around displacement was to try and get involved in more free trade deals with more countries, like that with Asean.

"The reason we want to be in a trade area with Asean and Australia is that it would make us a sufficiently large trade bloc that we couldn’t be ignored in trade deals in the region."

Between them, Asean, Australia and New Zealand have a combined population of more than 500 million people.

The fifth round of formal Asean trade talks finished in Rotorua on Friday. Lead negotiator Martin Harvey said talks were on target to be completed by March 2007. He said the network of trade deals was growing in the South East Asian region, and interest was growing in building an overarching trade agreement.

Last week, Japan said it was considering sponsoring a vast free trade area, including most of Asia, New Zealand and Australia.

Mr Sutton said it was important New Zealand was a part of discussions on any deal.