[asia-apec 1647] NZ - Chile free trade deal

[APEC Monitoring Group]

(from www.newsroom.co.nz)

Difficulty With Chile Free Trade Deal 
Staff Reporter Patric Lane 10/11/00 13:46:00 

Negotiating a free trade deal with Chile is likely to prove more difficult than reaching a similar agreement with Hong Kong, according to the Trade Negotiations Minister Jim Sutton. 


Earlier this week, a visiting senior Hong Kong official indicated the North Asian hub economy was interested in looking at forming a trade pact similar to the NZ-Singapore Closer Economic Partnership (CEP) to be signed next Tuesday. 


South America's most open economy, Chile, also appears receptive to such an idea, with Prime Minister, Helen Clark, and Chilean President, Ricardo Lagos, due to meet this weekend to discuss the prospect of that country joining the CEP agreement. 


Mr Sutton said that talks with Chile were at an earlier stage than things were with Hong Kong, although New Zealand and Singapore officials had been to South America to brief their counterparts on the pending treaty. 


"It's really up to the Chileans - both Singapore and New Zealand would be open to exploring this idea further," said Mr Sutton. 


However, Mr Sutton said the Chileans were very sensitive about dairy products and would see New Zealand as a threat to their industry. 


If and when things moved forward, he expected negotiations to be more difficult than with Hong Kong, which doesn't have a dairy industry, let alone a protected one as in Chile, and provision would have to made for the South American country's "sensitive areas". 


While New Zealand would not be prepared to cut dairy produce out of a deal, the Government could be prepared to be flexible to give the Chilean industry - which had signed up to the APEC Bogor agreement to free up trade in goods between member economies over the next two decades - time to get competitive, said Mr Sutton. 


Presently, the trade scales with Chile hang in New Zealand's favour, with their economy soaking up $58.8 million worth of our exports in the year to June while $24.1 million worth flowed this way. 


Like New Zealand, the Chilean economy has a strong agricultural focus, counting fisheries, forest products, apples and kiwi fruit among its major exports. 


But Mr Sutton rejected any suggestion they are more competitive than compatible and that a trade deal would have little to offer. 


"They're probably our biggest southern hemisphere competitor, but on the other hand it's a bit like Singapore - the greatest opportunity for expansion is probably in the services sector because so many of our skills are relevant to their needs. 


"I think we're not potentially going to have a large trade in agricultural products between Chile and New Zealand but there could be a very considerable trade in services because we are capable of providing a lot of them." 


Mr Sutton also said that setting an example of an enlightened trade relationship involving agriculture would be a useful thing to do. 


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