Geopolitical fears over China not driving EU trade deal - O'Connor

Source: Q and A

Trade Minister Damien O'Connor says a new free trade deal with the EU is part of ongoing trade diversification efforts, but that ongoing tension with China was not driving a greater sense of urgency on the issue.

Speaking to Q+A on Sunday, he said the Government was intent on opening as many doors to free trade as possible through diversifying the country's overseas export markets.

"Over the last four years, we've been working pretty intensely on concluding this arrangement," he said. "We've been working on a trade diversification strategy post-Covid, so it's important that we open the doors and opportunities for our exporters and importers wherever we can," O'Connor said about the new deal.

But New Zealand's free trade deal with the EU comes amid global geopolitical tensions with China.

Last week, Jacinda Ardern told NATO leaders China was becoming "more assertive and more willing to challenge international rules and norms".

The comments were condemned as "not helpful", "regrettable" and "wrong" by the Chinese Embassy in New Zealand.

READ MORE: NZ secures historic free trade deal with European Union

O'Connor said New Zealand's economic relationship with its largest trading partner remained "strong".

"We have a mature relationship that says that they should expect our position as an independent nation to be able to speak out on these issues. But we have a strong economic relationship with China that will continue into the future.

"I guess, any country, any business that has, you know, reliance on one market of 30% to 40% has to ensure that it has other options should something interrupt or disrupt that relationship."

When asked, O'Connor rejected the notion there had been renewed urgency to diversify New Zealand's trade as a result of an evolving relationship with China.

READ MORE: Ardern denies NZ is asleep at wheel as China pushes into Pacific

"No, I think we've spoken to exporters; we've been talking for a few years on the need to ensure that we have got options in our markets. Diversification, you know, reduces the risks. We've seen geopolitical tensions around the world, and it's really important that we have as many places to sell our high-value products into.

"Obviously, Brexit created a division that we had to try and work through, and so we've concluded with the UK, we've concluded with the EU, and that offers options. It's up to the exporters to ultimately choose where they send their products."

Meanwhile, O'Connor said a free trade arrangement with the Gulf Cooperation Council (GCC) was his next priority when it came to diversifying trade access.

"These are countries that need food, in particular, and things like dairy and beef are less sensitive. They certainly have a big demand for them," he said.

"We will continue to develop relationships there, ultimately, with the aim of getting a trade agreement with the GCC."

In March, the Trade Minister visited the United Arab Emirates and Saudi Arabia - two countries in the GCC - to revive negotiations for a deal with the trade bloc.

READ MORE: Government signs 'modernised' free trade agreement with China

While a free-trade deal with the GCC was largely negotiated back in 2009, the arrangement was never finalised or ratified, according to MFAT. The 13-year-old agreement is now the basis of renewed discussions for the Government.

O'Connor also reiterated past statements that he wasn't expecting a deal with India to be struck in the short term.

"Dairy, it's a very sensitive issue in India, as it is in the EU and most of the markets that we trade into," he said.

"We don't have expectations of a trade arrangement in the short term because of that dairy sensitivity. I think there are opportunities in many other areas, and dairy ultimately has to be part of any trade agreement that we have with them. But quite a bit of work to do in that area."

Australia struck a deal with India in April which led to calls from the National Party, as well as business interests, to restart New Zealand's negotiations with the world's second-most populous country.