APEC: Key tackles farming subsidies

VERNON SMALL AND CATHERINE HARRIS
Last updated 11:34 07/09/2012
john key std3
GRAHAME COX/Fairfax NZ
JOHN KEY: To meet with Russian president Vladimir Putin.
Tim Groser
REUTERS
TIM GROSER: Previously said that agriculture was a sensitive part of free trade agreement talks with Russia.

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Prime Minister John Key has used the debt crisis facing developed countries to renew calls for the removal of agricultural subsides.

He told the opening session of a meeting of chief executives at the APEC summit in Vladivostok that Japan, the United States and the EU were facing challenges to get their debt under control, and the level of subsidies they paid were neither sustainable or affordable.

"Now is the time for leaders to be bold ... and start reducing costly and distorting subsidies."

He said governments could not sell austerity alone long term.

"Deleveraging has to happen but there has to be a growth story in the mix."

The 11 member trans-Pacific Partnership free trade grouping, which includes New Zealand, offered the greatest promise for a region wide free trade deal and it had strong momentum.

The aim was a a "club with high standards and stringent dress codes" but there had to be an honest debate about what it and other trade blocs could achieve.

Only the World Trade Organisation could ensure all economies, including  developing nations, get the benefits of trade liberalisation.

It could take on the high level of domestic support in some countries, Key said.

Earlier this week, it emerged that New Zealand's free trade agreement with Russia and two of its neighbouring states was taking longer than expected and was unlikely to be signed this week.

Negotiators were originally aiming to have the deal ready for the APEC leaders meeting.

But a Foreign Affairs and Trade Ministry spokesperson said on Monday that there was still some work to be done.

"While we would like to see the negotiation concluded as quickly as possible, New Zealand's over-arching objective is the conclusion of an ambitious, high quality agreement, and we will not allow a timeline to compromise this objective."

The proposed trade deal is with the "Customs Union" nations of Russia, Belarus and Kazakhstan.

Joining Key at APEC will be Trade Minister Tim Groser, who has said previously that agriculture was a sensitive part of the talks.

Russia has a large dairy industry of its own, as does Belarus which is a major dairy exporter to Russia.

Stuart Prior, a former New Zealand ambassador to Russia, said Belarus had initially been intimidated by the thought of Fonterra having better access to the Russian market.

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But a flurry of delegations from Belarus to New Zealand this year had shown they were willing to talk and even explore joint ventures in areas like beef and dairy.

"There's certainly a feeling on the Belarusian side that the FTA could pose a threat to existing trade to Russia, but I think they also see some significant positive possibilities."

The APEC meetings are particularly significant for Russia, which was admitted to the World Trade Organisation last month.

New Zealand's exports to the Customs Union countries are currently worth a modest $280 million. MFAT says a free trade deal will improve this by removing tariffs and facilitating trade.

But beyond this, it would help position New Zealand alongside an emerging regional actor. Getting "first mover advantage" would place New Zealand in an emerging trading bloc within the Asia-Pacific and Europe. It would also help mitigate the risk of trade dependence on New Zealand's existing key trading partners. 

- Fairfax Media

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