A free trade agreement (FTA) between New Zealand and the United Kingdom will likely not be straight forward.
If there is a tariff on a product from the US into China, you’d have to question where that product will go, he says. It could displace NZ product in other parts of the world or it could find its way to NZ.
“The whole displacement effect could have a big effect on NZ as a country that relies very much on exporting and access to markets,” Petersen says.
“While it is not an issue directly impacting NZ, the spillover effects could be significant. They are the ones we have got to watch very closely.”
Petersen says several people suggest NZ may be advantaged by a US-China trade war.
“There may be a short term opportunity for some products into these markets as a result of the tariffs but the long term risk of it impacting on NZ products is far greater,” he says.
In some ways NZ needs to keep its head down; it does not need to join sides on any of this, Petersen says.
“We need to keep our head down – keep calm and carry on. But equally we need to make sure our voice is heard and that people understand the risks of the trade war that is looking increasingly likely.”