Free trade deals just the start

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OPINION: The trade breakthroughs are coming thick and fast. In just the last few weeks we've signed free trade deals with Malaysia, six Arabian Gulf countries and Hong Kong.

And we have just learned the good news that President Obama has thrown his weight behind an agreement between the United States and Brunei, Chile, Singapore and New Zealand. Australia, Peru and Vietnam will probably join this group.

Forget the excitable babble about foul-mouthed politicians and sporting victories, this is the real news. These deals will keep us from sliding into economic obscurity. They will put bread on our table. They will shape our future.

They are also a credit to the hard work of the silver-tongued devils at several ministries, notably Foreign Affairs and Trade and Agriculture and Forestry. These negotiations are never straightforward. There's a lot gone on behind the scenes that we may never hear of. But I do know, for example, that a big influence has been a computer system developed by the Food Safety Authority that allows border control agencies to track incoming consignments.

Having a trade minister who has been the bureaucrat leading such negotiations in the past is also a big help. Tim Groser is personable, shrewd and hard-headed. We are lucky to have him.

It is no coincidence that Asian countries feature in these deals. Asia is vital to our trading future. It is a market so big we would be crazy to ignore it - since last year's free trade deal, exports to China have leapt 62 per cent - and it is growing, both in population and in the numbers whose food choices are changing as their standards of living rise.

That doesn't mean we ignore our longstanding British and European markets. There's really nowhere else to sell our lamb - the American market is only slowly growing despite the hard work of many - and fortunately we have guaranteed entry.

However, even though they give us the best prices, British and European consumers are becoming harder to please. Our claims of being clean and green are being put to close scrutiny, and we have to continually battle willful disinformation.

Which brings me to what happens next. Once the negotiators have pushed aside the trade barriers, it is our exporters' turn to go in and make deals with their new customers. And in Asia, they are dealing with cultures they don't know very well.

According to Horticulture NZ director Debbie Hewitt, who visited China on a trip sponsored by the Agricultural and Marketing Research and Development Trust, "guanxi" is at the heart of a successful relationship. "It is a type of social skill you need to learn. Put simply, it involves reciprocal favours and gift giving, but is more subtle and complex. Without an understanding of guanxi, you won't survive."

Our points of difference are the high quality and safety of our food. In China, we had a huge scare with the melamine scandal and one that would have been a mammoth setback if our milk was involved. But it was not, and the Chinese people's faith in our milk was not shaken.

This incident underlines other advice from Mrs Hewitt: "You need people on the ground there and you need to validate what the Chinese tell you. They expect this and will not be offended." She also advises partnering with Chinese who have local knowledge and experience and says they can even be found in New Zealand, such as Chinese students who can go on to be lifelong friends.

It also emphasises the point that the customer is the new regulator. This is a theme of Mr Groser's. Global retailers, acting on behalf of the customer, control what products they sell by imposing standards of food safety and environmental stewardship.

With New Zealand as a world leader in this, you wouldn't think it would be a problem. But, as Mr Groser pointed out in a recent speech to farmers, we are not as clean and green as we like to think. He gave the example of our practice of bottom- trawling for hoki, which was exposed in the Wall Street Journal and cost us Waitrose supermarket sales this year.

He also links this to our stance on climate change, a point that did not go down too well with his audience. Though current debate about a treaty is between nations, it is shoppers and their representatives, the retail chains, who are deciding the outcome. If we are seen to be an underperformer, we will be punished, he warns.

So, though we have won the first and toughest battle, that of unfettered market access, with these recent trade deals - with the promise of more to come - the struggle is just beginning.

Much hard work lies ahead, understanding cultures, building partnerships and establishing supply lines, but ultimately the hardest will be winning the hearts and minds of the shoppers.

- © Fairfax NZ News