What industry will Labour throw under bus for Korea?

We reported yesterday that Labour will renegotiate our Free Trade Agreement with Korea.

This is all so they can chase their populist policy of banning foreigners from our housing market. There is now growing concern at the implications of this decision.

New Zealand Institute of Economic Research deputy chief executive John Ballingall said the ban would not be permitted under the current Trans Pacific Partnership (TPP) text.

Nor was a ban possible under the Korea-New Zealand FTA, the provisions of which also now applied to the China FTA.

Possibly not only the Korea-New Zealand FTA either. We have other trade agreements that Labour has not considered. This slap-dash approach to policy runs the risk of running us into a wall.

Trade Minister Todd McClay said Labour needed to explain its plans to renegotiate the Korean FTA which was worth billions to New Zealand’s economy and supported thousands of jobs.

Korea is going to want something in return. Jacinda Ardern can’t just march up to the table and demand a one-sided change to the agreement. This isn’t a union negotiation.

So what would Labour trade away? What industry will Labour throw under the bus? They will have to make some sacrifices to get what they want.

Let’s look at sticking points for Korea. What might they want?

Under the terms of the Korea-New Zealand FTA Korea is still to cut tariffs on:

  • Cheese
  • Butter
  • Beef
  • Infant formula
  • Meat extracts
  • Liquid milk

These are things Korea wants, ideally, to protect. They’ll eliminate tariffs on cheddar cheese and butter within 6-10 years of signing, all other cheese, beef and infant formula within 11-15 years, and liquid milk tariffs within 16 to 20 years. Combined, when the FTA is fully in effect, this will save New Zealand exporters hundreds of millions in dollars.

So anyone want to guess now what Labour might trade away?

It makes sense that Korea will try and gain leverage for sticky points. And Labour has already shown through the ETS and water tax that it isn’t interested in the rural vote. It also makes sense that the easiest thing to negotiate away is a tariff reduction we haven’t even seen yet.

So will Labour’s senseless attack on 3% of Auckland’s property market result in yet another blow to our farming community?

Of course, not all of the above is at risk. What she pulls the trigger on is up to Jacinda Ardern. Now she has raised the topic of renegotiating our FTAs, journalists need to be asking Jacinda what her bottom lines are and what she’ll be willing to trade for her slap-dash policy.

We the voters deserve to know.

You can read about the Korea FTA and all the benefits from the Auckland Chamber of Commerce.




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