Speaker 1: You're listening to the Weekend Collective podcast from News Talks EDB.
Speaker 2: Trade Minister top and Play has met with his United
Speaker 2: States counterpout, jameson Grea to discuss the trade relationship between
Speaker 2: New Zealand and the US. Remember this is in the
Speaker 2: context of Trump's twenty five percent tariffs on Canadian and
Speaker 2: Mexican goods, as well as a threat to impose a
Speaker 2: two hundred percent tariff on European wine, champagne and alcoholic products,
Speaker 2: and the threat of reciprocal tariffs on allies and adversaries alike.
Speaker 2: So in the forty five minute meeting, Maclay stressed the
Speaker 2: importance it stressed the importance of an open market between
Speaker 2: the countries and an agreement to continue dialogue across throughout
Speaker 2: the changing trade policies. Foreign Affairs Minister Winston Peters he's
Speaker 2: still in the States discussing trade, among other things. And
Speaker 2: Oliver Hartwich is the executive director of the New Zealand
Speaker 2: Initiative and he's with us now.
Speaker 3: Good afternoon, Good afternoon.
Speaker 2: So I see the report. Just the report of their
Speaker 2: meeting mentions how they talked about the importance of open,
Speaker 2: fair market access between the two countries. In the context
Speaker 2: of what we're reading, that sounds like meaningless words given
Speaker 2: the contact of the States recently, isn't it.
Speaker 3: It sounds like a softly softly approach from our government.
Speaker 3: They want to play it very diplomatically, very carefully, because
Speaker 3: they know how easy it is to anger the Americans.
Speaker 3: And of course New Zealand's position in the context of
Speaker 3: the trade relationship is a bit difficult because we are
Speaker 3: running a trade surplus with the United States and as
Speaker 3: we all know, of course Donald Trump wants to change that,
Speaker 3: so he wants to actually correct that, and so we
Speaker 3: have to be very careful in how we approach these talks.
Speaker 2: How bad could it be for us?
Speaker 3: Potentially it could be very bad, because I mean, first
Speaker 3: of all, the Trump administration is a bit unpredictable when
Speaker 3: it comes to trade. We have seen what they're doing
Speaker 3: to other countries. We have seen it in a Canadian example,
Speaker 3: We have seen it with Mexico, with the European Union,
Speaker 3: and of course China as well. So it could be bad.
Speaker 3: It could be that they're targeting our agricultural exports. That's
Speaker 3: where we're extremely vulnerable. We haven't got an easy way
Speaker 3: to switch these exports around and send them to other
Speaker 3: countries instead. So if they're really pulling through and they're
Speaker 3: putting the twenty five percent tariffs on our agricultural product produce,
Speaker 3: then that would hit us really hard. And there are
Speaker 3: other dangers as well, of course, because you might have
Speaker 3: seen there was a I think it's still called tweet
Speaker 3: these days from Malcolm Turnbill talking about that America now
Speaker 3: targets Australia's pharmaceutical import scheme and we've got our own,
Speaker 3: of course, we've got farmac. And one of the contentious
Speaker 3: points in the trade relationship between our countries could be
Speaker 3: that the Americans perceive they're not getting the right price
Speaker 3: for their pharmaceutical exports touwizialand which is a significant part
Speaker 3: of American exports to mwisium. So there are many ways
Speaker 3: in which America could really hurt us if they wanted to.
Speaker 2: As a speaking of Malcolm Turnbull, that's one of the
Speaker 2: dangers for US is having one of our own politicians
Speaker 2: or ex politicians go off sort of the go off
Speaker 2: the script and catch the President's attention in the wrong
Speaker 2: way because he hasn't done Australia any favors.
Speaker 3: Well, I think that was the reason why Phil Golf
Speaker 3: is no longer the High Commissioner to London. I mean, frankly,
Speaker 3: that's exactly the same kind of talk that we now
Speaker 3: get from Malcolm turmul except we got it from someone
Speaker 3: who was still in a government official position. No, we
Speaker 3: have to be extremely careful if we anger the Americans,
Speaker 3: if we provoke them, we might trigger even worse response.
Speaker 3: So this quietly, quietly approach that we now get from
Speaker 3: Todd McLay seems to be exactly the right way to
Speaker 3: go about it.
Speaker 2: Are there particular arguments that we mount or is it
Speaker 2: just a case of keeping our head down, being as
Speaker 2: diplomatic and treading gently and trying to charm the other side.
Speaker 3: Well, the arguments that Todd mclay's making is a sensible one.
Speaker 3: He says, we're exporting stuff to America that they could
Speaker 3: not potentially supply themselves. So he mentions beef exports. A
Speaker 3: lot of New Zealand beef goes into American hamburger production,
Speaker 3: basically into fast food, and they wouldn't be able to
Speaker 3: replace that, perhaps in a similar kind of way that
Speaker 3: they're currently finding they haven't got enough ex and they
Speaker 3: even trying to get them from the European Union that
Speaker 3: they've just slapped tariffs on. So there are some arguments
Speaker 3: Tot maclay can make to the Americans that actually the
Speaker 3: trade relationship is complementary. So we're importing stuff from America
Speaker 3: that we don't even produce ourselves, like pharmaceuticals, and meanwhile
Speaker 3: they're getting high quality produced from US that they would
Speaker 3: struggle to source if they put teriffs on us.
Speaker 2: Has the trade war impacted us at all yet or
Speaker 2: is it more just it Probably it's just impacted us
Speaker 2: because of the stock prices.
Speaker 3: It is certainly impacting us via the stock market, and
Speaker 3: everything else will take a little bit longer because until
Speaker 3: we have these trade effects materialize, that can take a while.
Speaker 3: But what's already happening is, of course, that we see
Speaker 3: a massive amount of uncertainty created in international markets for
Speaker 3: companies planning their value chains, for companies and planning to
Speaker 3: locate their future factories and distribution centers. This is a
Speaker 3: massive headache now because you can't rely on stuff anymore.
Speaker 3: I mean we've seen it with Canada last week. I
Speaker 3: mean this was probably of world first. We haven't in
Speaker 3: twenty tariff chart. So starting the morning with twenty five percent,
Speaker 3: then going up to fifty percent, and then going down
Speaker 3: to twenty five percent after six hours. I've never seen
Speaker 3: anything like it. So it's that kind of behavior, that
Speaker 3: kind of uncertain to create it that is really damaging
Speaker 3: to everyone.
Speaker 2: Does it somewhere? I'm not sure if I heard Todd
Speaker 2: McLay talking about potential for flexibility with other markets, but
Speaker 2: there are there potentially opportunities that might pop out as
Speaker 2: a result of other companies. I'm sorry other countries have
Speaker 2: been hard hit by these tariffs. Maybe cooperating more with
Speaker 2: the likes of US and each other.
Speaker 3: That will be a positive outcome. But again, all of
Speaker 3: this takes time. I mean, we all know how long
Speaker 3: it takes to negotiate free trade agreements. They are sometimes
Speaker 3: going through ten, twelve, fifteen rounds until they get anywhere
Speaker 3: closer to a solution. That can drag over years and
Speaker 3: sometimes decades. I mean, just look at how long it
Speaker 3: took us to negotiate that free trade agreement with the
Speaker 3: European Union, for example. So this is not something you
Speaker 3: could switch overnight.
Speaker 2: No, I guess, well, actually on that then it can
Speaker 2: take years and years and years, is it? Likely to
Speaker 2: speed up or is that a possible if I was
Speaker 2: going to be naively optimistic, is a possible side effect
Speaker 2: that we might actually find that we can expedite some
Speaker 2: of these agreements that we've been struggling to get for
Speaker 2: years and years.
Speaker 3: Well, that would be a positive effect. I mean, so far,
Speaker 3: I haven't really seen much of that. It's pretty much
Speaker 3: the same, of course, in the military space. I mean,
Speaker 3: where the whole world order is now in question. You
Speaker 3: see now that countries will try to find different defense partners,
Speaker 3: different allies, and we see exactly that in parallel happening
Speaker 3: in the trade world. But all of this will take time.
Speaker 3: I mean, as you say, it would be nice if
Speaker 3: it could be sped up a little bit because times
Speaker 3: are urgent and Trump doesn't waste any time, and it
Speaker 3: might actually surprise us several times over the next few weeks.
Speaker 3: So it will be nice to speed that up. But
Speaker 3: it's not the way we've operated so far.
Speaker 2: Do you hold out any sort of hope that we
Speaker 2: can sort of emerge unscathed by just being very clever
Speaker 2: and diplomatically not being big enough to worry about.
Speaker 3: No, because it's quite the opposite, actually, where more countries,
Speaker 3: we haven't really got a massive opportunity to turn things
Speaker 3: around and really have an influence on what's happening in Washington,
Speaker 3: so we will be a price taker. And I have
Speaker 3: seen some modeling suggesting that our GDP, if it really
Speaker 3: comes to a global trade war started by the US,
Speaker 3: might go down by about a percent of GDP and
Speaker 3: that's a massive hit to the economy. So unfortunately, that's
Speaker 3: just a scenario we have to be prepared for.
Speaker 2: Well, Oliver, I really appreciate your time this afternoon, and
Speaker 2: we'll just keep our fingers crossed over. That's Oliver Hart.
Speaker 2: Rotchie is the executive director of the New Zealand Initiative.
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