Chinese dairy giant Yili will pay $588 million for dairy co-op Westland Milk, it was announced overnight.
They believe there is the possibility our wine exporters may be caught in the crossfire … and that would not be good at all for our sector.
Driving the increased tension is the new, aggressive ‘America first’ trade policy from President Trump combined with steadily increasing uncertainty over Brexit.
As an industry the situation we face is simple:
We are a small industry in a small country. As such we have little if any power to influence the big global trade picture.
If New Zealand as a country has any power it is as a leading good citizen in the rules-based trading system that has developed since WW2 and which frames New Zealand’s trading relationships. It is that system which now seems under threat.
As an industry we are overwhelmingly export dependent - over 80% of our total sales are to export markets, most notably to the EU and the USA which import over $1 billion of our wine per year.
It is unlikely that New Zealand will be targeted in any trade war (because we are not important) but it is for that very same reason that we might get caught in the fray.
From our perspective it is very concerning that two of the major players in the current skirmishes are the USA and the EU, and New Zealand does not have a Free Trade Agreement with either of them.
So there is real and rising risk here and there is little if anything we can do about it. What we can and are doing is:
Lobby the government to ensure it is aware of our concerns and that it engages to the fullest extent possible in the international trade dialogue.
Continue to be involved with the domestic trade policy-setting agenda both on our own and in concert with like-minded parties eg the International Business Forum of which we are a member.
Actively support government efforts to deepen international commitment to the rules-based trading system (CPTPP, EU and UK FTAs, Pacific Alliance, RCEP)
Continue to work with our intentional colleagues, both bilaterally and through fora such as FIVS, WWTG, OIV etc to continue to promote adherence to a rules based trading system.
As to what is actually going to happen in coming months that is anybody’s guess. … so carefully watch the trade space with much interest and some trepidation as well.