Thursday, 02 May 2024 14:17

McClay ready for trade fight with Canada

Written by  Sudesh Kissun
Trade Minister Todd McClay. Trade Minister Todd McClay.

Trade Minister Todd McClay says New Zealand has no intention of backing down in a trade dispute with Canada over dairy products.

McClay has called Canada’s refusal to comply in full, with a Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade dispute ruling in NZ’s favour as cynical.

New Zealand initiated the dispute because Canada was not complying with Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) rules, blocking dairy exporters’ access to its market.

A CPTPP arbitration panel ruled decisively in New Zealand’s favour. Canada had until 1 May to change how it administered its tariff rate quotas - to stop giving its own domestic industry priority access, and to allow exporters to benefit fully from the market access negotiated in good faith between Canada and New Zealand.

New Zealand dairy exporters are estimated to have lost $120 million worth of trade opportunities due to Canada breaching its commitments during the first three years of CPTPP.   These losses continue to grow in the absence of Canadian quota administration that provides importers the opportunity to fully utilise the available volumes.

McClay says he has asked for urgent legal advice in respect of our ‘next move’ and says the Canadian government still has time to honour its obligations to New Zealand both in the spirit and substance of the agreement.  

“The changes Canada has published today do not comply with the ruling. Canada’s ongoing failure to meet its legal commitments is disappointing, but we have no intention of giving in on this. We back our exporters, and we will defend hard-won free trade agreement commitments,” McClay says.

“New Zealand's prosperity depends on international trade, making up 60% of the country’s total economic activity. It is only through a strong economy that we can reduce the cost of living and afford the public services Kiwis deserve.

“We continue to engage in good faith throughout this process and I’ve asked officials to provide advice on next steps. I will be making an announcement on that in due course.

 “New Zealand supports trade rules and takes seriously its obligations to trade partners. We expect others to show us the same courtesy,” he says.

The ACT Party, part of the Coalition Government, says Canada’s refusal to comply with the terms of a trade agreement is a betrayal of our friendship.

ACT Trade spokesperson Dr Parmjeet Parmar says it’s hard to think of two countries with warmer relations than New Zealand and Canada.

“Our shared history and cultural similarities ought to be the basis of a close, good-faith relationship. But on trade, Canada is shutting us out.

“Canada signed the CPTPP knowing their exporters would benefit from reduced barriers to trade. But free trade is meant to go both ways, and Canada has so far failed to remove barriers to our dairy exports as agreed.

In September, Canada was told by the CPTPP Panel that it was failing to keep up its end of the deal. Canada was given a deadline of this week to comply with the terms of the deal, but their new tariff rules continue to shield the Canadian dairy sector from healthy competition.

“Free trade is a win-win. Kiwi dairy farmers are happy to send competitively priced products to Canada, where consumers would enjoy the benefits of greater choice and competition. And we happily accept imports from our Canadian friends, knowing that when two friends trade, both are better off.”

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