Philip Houlding is the Trade and Economic Counsellor at the New Zealand Embassy in Washington. He spoke on the country/diplomatic panel at GBD's May 20 conference on "Pacific Arrangements," and from the outset the audience knew it was going to be a fun presentation.
John Magnus, the moderator, said he would be "batting clean-up," his one baseball reference. Tongue in cheek, Mr. Houlding responded, "I don't know what you're talking about."
As they unfolded, Mr. Houlding's remarks were sprinkled with memorable, lighthearted phrases, each of which made a serious point. He underscored New Zealand's isolation, for example, by quoting the anonymous sage who described his country as "a strategic dagger pointed at the heart of Antarctica."
Any country's foreign policy - including trade policy - should begin, must begin, with a clear sense of that country's physical situation and domestic aspirations, and those elements were the foundation of Mr. Houlding's comment at last month's GBD event. Here is a bit more of what he said about New Zealand, her situation, her economy, and her challenges.
On Geography, Mr. Houlding said:
"There is one [challenge we face] we can't do anything about probably, which is our distance to markets. You know, we're moving at about a meter closer to Australia every thousand years; so that's a little bit of a challenge. ...
"Unlike our Singaporean friends, our great partners, we're not, sort of, geo-strategically right in the middle of the action. So we have to be closer to markets in a regulatory sense, in a trade sense."
To put some numbers to that observations, it is roughly 1,400 miles across the Tasman Sea from Wellington, New Zealand, to Sydney, Australia.
On Demography, after noting the size of New Zealand's population, roughly four-and-a-half million, Mr. Houlding said:
"We don't have scale. What we need to have is, therefore, again that closeness to markets, and in particular access to capital at a reasonable price.
"So anyway, for us, it's not optional, we have to be integrating into Asia where all the action is. You know, the Prime Minister [John Key] was here. So I am safe in saying this because I'm repeating what he said: ...all of the economic growth is coming from Asia during the next 20 years."
On Trade and Openness. New Zealand has now had some 33 years' experience with the process of continually opening its economy to trade. Mr. Houlding put that history in this nutshell:
"[New Zealand] was entirely reliant on the UK - not entirely but mostly - until they joined the EU in 1973. Then we tried to subsidize ourselves to maintain our lifestyle, and we ran out of money. Ambassador [Tim] Groser was then a senior official in our system, and [he] used closer economic relations - our first free-trade agreement with Australia - to reform what was a fortress economy.
"While my parents are here [in Washington - they were in the audience], I asked them the other day what the wine was like in New Zealand when they came back from Europe in the late '70s. It was pretty poor, I think. It was a great hardship for them.
"You know, there was a lot of fear in New Zealand about a free-trade agreement with Australia, particularly in the wine industry. Australia was good at wine. We weren't."
The Australia-New Zealand Closer Economic Relations Trade Agreement, ANZERTA went into effect on January 1, 1983. To continue with Mr. Houlding's comments:
"It's not an accident that we are very good at wine now. It is because we were forced to be exposed to the market and [to] create things that the customer wanted.
"So we are all in on trade. We are all in on an open economy."
New Zealand's Exports. As for what New Zealand trades. It is not all agriculture, but agriculture is important, accounting for more than 38 percent of the country's exports. Of the balance some 46 percent are services exports [think tourism]. The rest are non-agricultural goods. So trade in goods is dominated by agriculture - 70 percent - and the trade barriers to agriculture are still high. "FTAs and removing those barriers is very, very important to us," Mr. Houlding said.
On Trade Agreements and Negotiations. Two big agreements in particular were up for discussion at the GBD event on May 20:
RCEP, the Regional Comprehensive Economic Partnership, and
TPP, the Trans-Pacific Partnership Agreement. RCEP is still being negotiated. TPP is a signed agreement but needs to be ratified before it can enter into force. Before turning to those agreements, Mr. Houlding talked about the negotiating process. He said:
"We hear this rhetoric about who is going to write the rules. Frankly, it doesn't matter to us. We just have to be there when they are doing it. And I would just humbly suggest to the U.S. that you have to be in that room too."
If the U.S. is not in the room, he said, there will be rules that will be difficult for American businesses to comply with.
On RCEP. There was a question about RCEP in the Q&A session, and Mr. Houlding explained New Zealand's participation this way:
"I had the privilege of being involved at the start of RCEP, at least at the start of New Zealand's involvement in it. [I] went to brief then Minister Groser, and he basically said, 'Look, we send out all the boats, and we see which ones bring back the fish."
The bottom line, Mr. Houlding said is this: "
New Zealand will go with whatever models there are in the region for greater economic integration, whether the United States is in the room or not."TPP. This became, as it always was, a discussion about TPP, and Mr. Houlding amplified his comment on where New Zealand will go, saying:
"It's not meant to be a negative thing for the U.S., because this isn't like [TPP] is a bad deal for the U.S.. You will not find a sensible study anywhere that says that this free trade agreement will not add jobs, add exports, and add to your prestige in the region. Every single model out there - and we can quibble about the numbers, whether it's point 2 or point 5 or whatever, but the direction of travel is absolutely not in dispute.
"So, you know, you have a choice at this point. You can ratify TPP, continue to lead in the region, ensure the rules and the standards in the region suit your businesses, suit your workers, suit your exporters, [ensure] that some of the strong values here for environmental and labor protection are exported into the region, and you can make a concrete statement about your continued and on-going presence as a leader in our region. Or you can wait around for the perfect deal. And, with the greatest of respect, you don't have the time to do that."
