WEBVTT - Oliver Hartwich: "We can't risk angering the Americans"

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<v Speaker 1>You're listening to the Weekend Collective podcast from News Talks EDB.

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<v Speaker 2>Trade Minister top and Play has met with his United

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<v Speaker 2>States counterpout, jameson Grea to discuss the trade relationship between

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<v Speaker 2>New Zealand and the US. Remember this is in the

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<v Speaker 2>context of Trump's twenty five percent tariffs on Canadian and

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<v Speaker 2>Mexican goods, as well as a threat to impose a

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<v Speaker 2>two hundred percent tariff on European wine, champagne and alcoholic products,

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<v Speaker 2>and the threat of reciprocal tariffs on allies and adversaries alike.

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<v Speaker 2>So in the forty five minute meeting, Maclay stressed the

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<v Speaker 2>importance it stressed the importance of an open market between

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<v Speaker 2>the countries and an agreement to continue dialogue across throughout

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<v Speaker 2>the changing trade policies. Foreign Affairs Minister Winston Peters he's

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<v Speaker 2>still in the States discussing trade, among other things. And

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<v Speaker 2>Oliver Hartwich is the executive director of the New Zealand

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<v Speaker 2>Initiative and he's with us now.

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<v Speaker 3>Good afternoon, Good afternoon.

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<v Speaker 2>So I see the report. Just the report of their

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<v Speaker 2>meeting mentions how they talked about the importance of open,

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<v Speaker 2>fair market access between the two countries. In the context

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<v Speaker 2>of what we're reading, that sounds like meaningless words given

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<v Speaker 2>the contact of the States recently, isn't it.

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<v Speaker 3>It sounds like a softly softly approach from our government.

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<v Speaker 3>They want to play it very diplomatically, very carefully, because

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<v Speaker 3>they know how easy it is to anger the Americans.

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<v Speaker 3>And of course New Zealand's position in the context of

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<v Speaker 3>the trade relationship is a bit difficult because we are

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<v Speaker 3>running a trade surplus with the United States and as

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<v Speaker 3>we all know, of course Donald Trump wants to change that,

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<v Speaker 3>so he wants to actually correct that, and so we

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<v Speaker 3>have to be very careful in how we approach these talks.

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<v Speaker 2>How bad could it be for us?

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<v Speaker 3>Potentially it could be very bad, because I mean, first

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<v Speaker 3>of all, the Trump administration is a bit unpredictable when

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<v Speaker 3>it comes to trade. We have seen what they're doing

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<v Speaker 3>to other countries. We have seen it in a Canadian example,

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<v Speaker 3>We have seen it with Mexico, with the European Union,

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<v Speaker 3>and of course China as well. So it could be bad.

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<v Speaker 3>It could be that they're targeting our agricultural exports. That's

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<v Speaker 3>where we're extremely vulnerable. We haven't got an easy way

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<v Speaker 3>to switch these exports around and send them to other

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<v Speaker 3>countries instead. So if they're really pulling through and they're

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<v Speaker 3>putting the twenty five percent tariffs on our agricultural product produce,

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<v Speaker 3>then that would hit us really hard. And there are

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<v Speaker 3>other dangers as well, of course, because you might have

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<v Speaker 3>seen there was a I think it's still called tweet

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<v Speaker 3>these days from Malcolm Turnbill talking about that America now

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<v Speaker 3>targets Australia's pharmaceutical import scheme and we've got our own,

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<v Speaker 3>of course, we've got farmac. And one of the contentious

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<v Speaker 3>points in the trade relationship between our countries could be

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<v Speaker 3>that the Americans perceive they're not getting the right price

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<v Speaker 3>for their pharmaceutical exports touwizialand which is a significant part

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<v Speaker 3>of American exports to mwisium. So there are many ways

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<v Speaker 3>in which America could really hurt us if they wanted to.

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<v Speaker 2>As a speaking of Malcolm Turnbull, that's one of the

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<v Speaker 2>dangers for US is having one of our own politicians

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<v Speaker 2>or ex politicians go off sort of the go off

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<v Speaker 2>the script and catch the President's attention in the wrong

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<v Speaker 2>way because he hasn't done Australia any favors.

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<v Speaker 3>Well, I think that was the reason why Phil Golf

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<v Speaker 3>is no longer the High Commissioner to London. I mean, frankly,

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<v Speaker 3>that's exactly the same kind of talk that we now

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<v Speaker 3>get from Malcolm turmul except we got it from someone

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<v Speaker 3>who was still in a government official position. No, we

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<v Speaker 3>have to be extremely careful if we anger the Americans,

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<v Speaker 3>if we provoke them, we might trigger even worse response.

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<v Speaker 3>So this quietly, quietly approach that we now get from

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<v Speaker 3>Todd McLay seems to be exactly the right way to

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<v Speaker 3>go about it.

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<v Speaker 2>Are there particular arguments that we mount or is it

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<v Speaker 2>just a case of keeping our head down, being as

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<v Speaker 2>diplomatic and treading gently and trying to charm the other side.

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<v Speaker 3>Well, the arguments that Todd mclay's making is a sensible one.

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<v Speaker 3>He says, we're exporting stuff to America that they could

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<v Speaker 3>not potentially supply themselves. So he mentions beef exports. A

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<v Speaker 3>lot of New Zealand beef goes into American hamburger production,

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<v Speaker 3>basically into fast food, and they wouldn't be able to

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<v Speaker 3>replace that, perhaps in a similar kind of way that

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<v Speaker 3>they're currently finding they haven't got enough ex and they

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<v Speaker 3>even trying to get them from the European Union that

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<v Speaker 3>they've just slapped tariffs on. So there are some arguments

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<v Speaker 3>Tot maclay can make to the Americans that actually the

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<v Speaker 3>trade relationship is complementary. So we're importing stuff from America

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<v Speaker 3>that we don't even produce ourselves, like pharmaceuticals, and meanwhile

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<v Speaker 3>they're getting high quality produced from US that they would

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<v Speaker 3>struggle to source if they put teriffs on us.

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<v Speaker 2>Has the trade war impacted us at all yet or

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<v Speaker 2>is it more just it Probably it's just impacted us

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<v Speaker 2>because of the stock prices.

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<v Speaker 3>It is certainly impacting us via the stock market, and

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<v Speaker 3>everything else will take a little bit longer because until

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<v Speaker 3>we have these trade effects materialize, that can take a while.

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<v Speaker 3>But what's already happening is, of course, that we see

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<v Speaker 3>a massive amount of uncertainty created in international markets for

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<v Speaker 3>companies planning their value chains, for companies and planning to

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<v Speaker 3>locate their future factories and distribution centers. This is a

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<v Speaker 3>massive headache now because you can't rely on stuff anymore.

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<v Speaker 3>I mean we've seen it with Canada last week. I

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<v Speaker 3>mean this was probably of world first. We haven't in

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<v Speaker 3>twenty tariff chart. So starting the morning with twenty five percent,

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<v Speaker 3>then going up to fifty percent, and then going down

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<v Speaker 3>to twenty five percent after six hours. I've never seen

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<v Speaker 3>anything like it. So it's that kind of behavior, that

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<v Speaker 3>kind of uncertain to create it that is really damaging

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<v Speaker 3>to everyone.

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<v Speaker 2>Does it somewhere? I'm not sure if I heard Todd

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<v Speaker 2>McLay talking about potential for flexibility with other markets, but

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<v Speaker 2>there are there potentially opportunities that might pop out as

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<v Speaker 2>a result of other companies. I'm sorry other countries have

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<v Speaker 2>been hard hit by these tariffs. Maybe cooperating more with

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<v Speaker 2>the likes of US and each other.

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<v Speaker 3>That will be a positive outcome. But again, all of

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<v Speaker 3>this takes time. I mean, we all know how long

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<v Speaker 3>it takes to negotiate free trade agreements. They are sometimes

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<v Speaker 3>going through ten, twelve, fifteen rounds until they get anywhere

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<v Speaker 3>closer to a solution. That can drag over years and

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<v Speaker 3>sometimes decades. I mean, just look at how long it

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<v Speaker 3>took us to negotiate that free trade agreement with the

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<v Speaker 3>European Union, for example. So this is not something you

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<v Speaker 3>could switch overnight.

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<v Speaker 2>No, I guess, well, actually on that then it can

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<v Speaker 2>take years and years and years, is it? Likely to

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<v Speaker 2>speed up or is that a possible if I was

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<v Speaker 2>going to be naively optimistic, is a possible side effect

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<v Speaker 2>that we might actually find that we can expedite some

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<v Speaker 2>of these agreements that we've been struggling to get for

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<v Speaker 2>years and years.

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<v Speaker 3>Well, that would be a positive effect. I mean, so far,

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<v Speaker 3>I haven't really seen much of that. It's pretty much

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<v Speaker 3>the same, of course, in the military space. I mean,

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<v Speaker 3>where the whole world order is now in question. You

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<v Speaker 3>see now that countries will try to find different defense partners,

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<v Speaker 3>different allies, and we see exactly that in parallel happening

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<v Speaker 3>in the trade world. But all of this will take time.

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<v Speaker 3>I mean, as you say, it would be nice if

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<v Speaker 3>it could be sped up a little bit because times

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<v Speaker 3>are urgent and Trump doesn't waste any time, and it

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<v Speaker 3>might actually surprise us several times over the next few weeks.

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<v Speaker 3>So it will be nice to speed that up. But

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<v Speaker 3>it's not the way we've operated so far.

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<v Speaker 2>Do you hold out any sort of hope that we

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<v Speaker 2>can sort of emerge unscathed by just being very clever

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<v Speaker 2>and diplomatically not being big enough to worry about.

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<v Speaker 3>No, because it's quite the opposite, actually, where more countries,

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<v Speaker 3>we haven't really got a massive opportunity to turn things

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<v Speaker 3>around and really have an influence on what's happening in Washington,

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<v Speaker 3>so we will be a price taker. And I have

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<v Speaker 3>seen some modeling suggesting that our GDP, if it really

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<v Speaker 3>comes to a global trade war started by the US,

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<v Speaker 3>might go down by about a percent of GDP and

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<v Speaker 3>that's a massive hit to the economy. So unfortunately, that's

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<v Speaker 3>just a scenario we have to be prepared for.

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<v Speaker 2>Well, Oliver, I really appreciate your time this afternoon, and

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<v Speaker 2>we'll just keep our fingers crossed over. That's Oliver Hart.

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<v Speaker 2>Rotchie is the executive director of the New Zealand Initiative.

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<v Speaker 1>For more from the Weekend Collective, listen live to news

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