New Zealand calls for Australasian trade bloc

By Boyd Champness

AUSTRALIA and New Zealand may join forces to create a trade bloc that will give the two countries more leverage at this years world trade talks.

Federated Farmers of New Zealand executive director Tony St Clair believes the two countries should work together to strengthen the regions clout.

He told The Weekly Times that farmers from both countries could benefit from a closer working relationship.

“Our industry in both Australia and New Zealand is more complementary than different,” he said. “There would be a lot of pluses from working together.”

Australias trade representative Graham Blight has supported the idea.

“We are doing so much together now it may help both Australia and New Zealand,” he told the paper. “More and more trade blocs are forming and it could give us more pull internationally.”

Australia and New Zealand are already leaders among the Cairns Group of nations – a group of about 15 countries that would like to see free trade prevail – but believe a New Zealand-Australia trade bloc could bring further benefits.

The Australian Bureau of Agricultural Resource Economics (ABARE) says A$1.1 billion (£440m) in benefits flowed through to Australian agriculture following the Uruguay Round trade talks, which concluded in 1994.

This time Australia is hoping for even greater financial gains, and has formed an ambitious wish-list for the Seattle trade talks, which start in December.

Australia would like to see the total elimination of export subsidies, deep cuts in all tariffs, major expansion in market access opportunities and the elimination of all trade distorting domestic support.

American Farm Bureau Federation president Dean Kleckner was in Australia last week, defending on one hand the USAs subsidy program, while on the other calling for major change.

“Subsidies should be eliminated,” he told the National Press Club in Canberra. “Some countries place prohibitively high tariffs on our exports to block us from their markets.

We need trading partners to reduce their tariffs to our levels. And all WTO countries should eliminate tariff barriers within specified time frames.”

Mr Kleckner was confident the Seattle talks would bring major changes and said the upside about this years negotiations is that reforms will have to be implemented within three years as opposed to seven which was the case in 1994, the paper said.

But at the same time, Mr Kleckner defended the $20 billion in direct payments to US farmers last year – the second highest amount paid out to US farmers over the past decade.

He said the political reality was that agricultural support would continue but the US had a duty to tailor its subsidy program to ensure it had the least distorting impact on international trade.