Grosser misses WTO job

Trade Minister Tim Groser is out of contention for the Director General of the World Trade Organisation.

Only two candidates, Mexico’s Herminio Blanco and Brazil’s Roberto Azevedo, remain in the running to replace outgoing Director General Pascal Lamy after two of three election rounds, Reuters reports.

Groser was well qualified for the position and a determined advocate for free trade.

He will continue to put his talents into working for New Zealand’s interests in trade.

Rural round-up

Forestry helps economy grow at fastest pace in three years – Paul McBeth:

The New Zealand economy grew at the fastest quarterly pace in three years in the tail end of last year as demand for forestry exports underpinned gains in the primary sector. The kiwi dollar climbed on the figures.

Gross domestic product grew 1.5 percent to $36.81 billion in the three months ended December 31, from a 0.2 percent pace in the September period, according to Statistics New Zealand.

That is almost twice the 0.8 percent pace of expansion predicted by the Reserve Bank in its latest forecasts published last week and the fastest pace since December 2009. . .

Dairy price rise not the breaking dawn:

Federated Farmers is warning against overstating the 14.8 percent rise in the latest GlobalDairyTrade online auction, saying the increase is driven solely by supply and demand.

“New Zealand’s drought needs to be taken with the one that the United States suffered and unexceptional production out of Europe,” says Willy Leferink, Federated Farmers Dairy Chairperson.

“When you look at the global picture it is no wonder prices have spiked upwards. Westpac is forecasting New Zealand’s production may actually decline for the first time in years. The truth is that the supply of milk and global demand is finely balanced.

“This makes markets skitty and while any increase in international price is welcome, it is moot when you are yet to be fully paid-out for what you have produced. In the North Island many herds have either stopped production or are in the process of drying off early. . .

Local TBfree stalwart retires after three decades:

Well-known Helensville farmer John Glasson will retire from the TBfree Auckland Committee this month after 30 years at the forefront of the region’s mission to control bovine tuberculosis (TB).

Mr Glasson played an important role in reducing possum numbers and cattle and deer herd TB testing requirements in the South Kaipara Head area. “I recall my first experience with bovine TB in 1953 when 48 out of my father’s 100 cattle tested positive to the disease,” said Mr Glasson. These kinds of figures are unheard of today in the Auckland region.

His father’s encounter with the disease, and the experiences of others, prompted Mr Glasson to become involved with the TB control programme as a member of the Regional Animal Health Committee in the early 1980s. He recalls large numbers of possums that were passing the disease to farmed cattle and deer in the region. . .

East Coast still dry – 11mm not enough Fed head says – Kristen Paterson:

The huge low that spread across New Zealand days ago brought rain and relief to most areas of the country but the East Coast is still dry after a minimal fall.

The region is in the grips of what is a 70-year serious drought event, Federated Farmers President Bruce Wills told BusinessDesk.

“There’s a long way to go yet. All the rain did was give us some hope and a bit of a reprieve,” he says. But even after the rain it’s going to take two to three weeks to grow grass on the dry, parched paddocks. . .

Kiwifruit helps maintain muscles at optimum levels -

Researchers at the University of Otago, Christchurch, have found a daily vitamin C intake equivalent to eating two kiwifruit a day is required to ensure muscles maintain optimal levels.

Professor Margreet Vissers and her team at the Centre for Free Radical Research gave 54 males aged 18-35 either half a kiwifruit or two kiwifruit a day over a six-week period.

They then measured the vitamin C content in muscle and elsewhere in the body. . .

Lincoln University experts on tourism and water:

Potential water shortages and water stress will present a significant threat to the future growth and development of the tourism industry in the Asia Pacific region states a white paper on Tourism and Water released today in Singapore.

The international white paper was prepared by a leading research consortium supported by the EarthCheck Research Institute and EcoLab international a global leader in water, hygiene and energy technologies.

Susanne Becken, Adjunct Professor at Lincoln University and Professor of Sustainable Tourism at Griffith University, together with Dr Raj Rajan, Vice-President of Global Sustainability for Ecolab, presented the findings of the white paper at the Singapore International Water Festival.  . .

World Wine Trade Group conclude Treaty Protocol on wine labelling:

Trade Minister Tim Groser has welcomed the new Treaty Protocol on Wine Labelling, agreed today by members of the World Wine Trade Group (WWTG).

In 2007, the WWTG negotiated a Treaty on Wine Labelling which set new standards in the field. The Protocol takes this further by requiring participant countries to allow the importation and sale of wine from other signatories, provided it meets minimum standards for labelling (relating to alcohol tolerance, variety, vintage and wine region), and the exporting country’s laws and regulations.

The key benefits of the Protocol for New Zealand producers are that, once in force, it should provide enhanced access to overseas markets, enhanced predictability about regulation in key markets; and will set a useful benchmark for WWTG observer countries and other non-members. . .

Waikato Times letter of the month: runner up – Quote Unquote:

Another drought-related letter, this time blaming gay marriage rather than PKE, as the winner did. From yesterday’s issue, 21 March:

God and the drought

I have a thought about the drought in this country, which affects our country at its grass roots.

Perhaps a contributing factor is the new marriage law proposed in Parliament. . .

Rural round-up

Groser welcomes new OECD-WTO report on international trade:

Trade Minister Tim Groser has welcomed the OECD-WTO’s estimates of “Trade in Value-Added” at the launch of the new database in Paris.

“This new data estimates trade in value-added terms, which helps convey the interdependencies of global value chains and reveal who ultimately benefits from trade,” Mr Groser says.

“Engaging internationally is crucial to all countries’ future prosperity. New Zealand is especially well connected to global value chains in the agriculture and food sectors.”

According to OECD estimates, 81 percent of New Zealand exports’ value is created domestically. This is higher than the OECD average of 72 percent, reflecting both our geographic distance and the importance of agricultural products to our exports. . .

Fonterra trading scheme adds new dynamic for farms -

The introduction of Fonterra’s Trading Among Farmers (TAF) share trading scheme has added a new dynamic to the market for dairy farms, and has potential to put downward pressure on farm values, Real Estate Institute of NZ rural market spokesman Brian Peacocke said.

The introduction TAF last November has been a spectacular success and probably far greater than Fonterra could ever have have anticipated, according to market participants.

The units, which do not carry voting rights and which can be owned by the public, last traded at $7.45 – a 35.5 per cent premium their $5.50 issue price. The success of the units has rubbed off on the value of Fonterra shares, which can only be traded by farmers. The shares last traded at $7.42 compared with a pre-TAF “fair value” share price – set by Fonterra – of $4.52. . .

Depression in rural communities a concern:

With a disproportionate number of suicides in the rural sector, Federated Farmers is calling for a proactive approach to solve the problem.

Hawke’s Bay farmer and the province’s Dairy Chairperson, David Hunt, has experienced depression first hand. He knows just how frightening and lonely it can be. Here is his story:

“A farmer suicide recently compelled me to come forward, as I have great respect for what John Kirwan has done for mental health and I wanted to share my experience to help farmers. What helped me accept my depression were the people opening up to me about theirs. There is no shame in it, depression is a hereditary illness that causes a chemical imbalance in your brain, there’s no choosing what illness you get,” he says. . .

Education will help quad bike safety – Jeanette Maxwell:

Quad bikes have been in the news following two deaths and several injuries over the Christmas and New Year period.

Most incomprehensible was the incident in which 6-year-old Ashlee Shorrock suffered serious injuries after being flung from a quad bike that veered off a Hawke’s Bay road late at night. What were she and the four adults also injured in the crash doing on the bike in the first place?

However, while it may not seem like it from the intense media coverage, quad bike deaths and serious injuries remain relatively rare despite the 100,000 machines in New Zealand.

While quad bikes are dangerous if mishandled and the farm toll is serious and must come down, we fear that politicians will respond to the media coverage by jumping at ”solutions’ . . .

Chance to win a free paddock and boost productivity:

Federated Farmers hopes all farmers will enter the Pasture Renewal Charitable Trust’s (PRCT) ‘Win a Free Paddock’ competition which begins on 20 January and runs through to 28 February.

All farmers are eligible to enter for three chances to win $8000 worth of products and technical advice used in the pasture renewal process.

“Federated Farmers is proud to support PRCT’s work in this area because pasture renewal is a core farming activity improve pasture quality, which in turn brings greater productivity, increased returns, improved animal health and more farm management options,” Federated Farmers board member and New Zealand Grassland Association executive member Anders Crofoot says. . .

Seafood New Zealand Chief Executive announced:

The chair of Seafood New Zealand, Eric Barratt, today announced that Tim Pankhurst has been appointed chief executive of Seafood New Zealand effective from April 2013.

Mr Pankhurst is currently the general manager of the Communications and Media Industry Training Organisation (CMITO) and Print NZ, as well as having an advisory editorial role with the Newspaper Publishers’ Association (NPA). He was previously chief executive of NPA and is a former daily newspaper editor of The Dominion Post, The Evening Post, Waikato Times and The Press. . .

Husqvarna joins the Sponsor Family of the ANZ Young Farmer Contest:

New Zealand Young Farmers are proud to announce Husqvarna NZ have partnered with the ANZ Young Farmer Contest as prize sponsors of New Zealand’s Ultimate Rural Challenge.

Husqvarna is a leading manufacturer of outdoor power equipment, designed to work in the toughest of conditions. One of the oldest industrial companies in the world with more than 300 years of history and experience, the Husqvarna Group today is the global leader in outdoor power products for forestry, lawn and garden care. . .

Diplomacy in words

It’s far too early to award the diplomatic line of the year award, but this from Rotorua MP Todd McLay has to be a contender:

I don’t think anybody could do Tim Groser’s job but I would love an opportunity to do more in an area I have done a bit of work in before.

He was replying to Audrey Young who asked him if he would like Trade Negotiations Minister Tim Groser’s job.

 

 

Groser nominated for WTO DG

The government has nominated Trade Minister Tim Groser for Director General of the World Trade Organisation.

His experience and achievements before he entered parliament and in the last four years as Trade Minister more than qualify him for the position.

However, the DG is chosen by consensus by WTO members and politics may well carry more weight than ability and suitability.

If memory serves me correctly former PM Mike Moore held the position for half a term, with another nominee serving the other half because members couldn’t choose between them.

 

NZ to lead methane emissions research

New Zealand is to join the Climate and Clean Air Coalition a new initiative focussed on climate pollutants such as black carbon, and greenhouse gases including HFCs and methane that have potent but short-lived effects on climate, human health and agriculture productivity.

Climate Change Issue Minister Tim Groser says:

“This new group is not a substitute for action on the real climate change problem, carbon dioxide, which remains in the atmosphere for around a hundred years,” says Mr Groser. “But moving quickly to reduce emissions from short lived climate pollutants is part of a coherent strategy to tackle the challenge of climate change.

“The Coalition is focussed on reducing methane emissions from industry which complements work that New Zealand is leading in reducing methane emissions from agriculture. We have been asked to lead an agriculture initiative in the CCAC that will add to our work in the highly successful Global Research Alliance on Agricultural Greenhouse Gases initiated by New Zealand in 2009.”

Mr Groser says that international action on climate change requires effort on multiple fronts. Work that the CCAC is doing, along with work in the Major Economies Forum, the Global Research Alliance, and the reform or fossil fuel subsidies that New Zealand is coordinating will add value to global agreements negotiated under the UNFCCC.

“New Zealand is active internationally on all these fronts. These efforts demonstrate on-going action on climate mitigation during the transition period to the post-2020 global climate agreement that will be negotiated by 2015.

“We have a long-term and coherent strategy in place and we are on track to deliver what most New Zealanders have voted for – a balanced approach to climate change, playing our part while avoiding imposing excess costs on households and businesses while the Government focuses on jobs and strengthening our recovery,” Mr Groser says.

The CCAC is a United States initiative and the invitation to lead it recognises New Zealand’s strength in agriculture and agricultural research.

Most of our emissions are from livestock so it makes sense to put more effort into research in that area which could not only reduce emissions but increase agricultural productivity.

Looking to long term

New Zealand has been criticised for its decision to opt out of a further commitment to the Kyoto Protocol. But, Minister for Climate Change Issues Tim Groser and Associate Minister Simon Bridges say in doing so they are looking to the long term.

“While the formal agreements are extremely technical, the bigger picture both internationally and specifically for New Zealand is clear. Internationally, the key requirement has been to refocus political and negotiating attention beyond the Kyoto Protocol to a more comprehensive agreement that is capable of dealing with the real environmental problem – the vast bulk of emissions that would never have been covered by Kyoto.

“That figure is 86% and will reach 90% of total global emissions in a few years. It is a matter of simple arithmetic that the only agreement that makes environmental sense long term is an agreement that deals with the bulk of emissions, not an increasingly small part of global emissions,” Mr Groser says.

The Ministers added that they were pleased agreement had been reached on amendments to the Kyoto Protocol that will allow European countries and Australia to continue to use its provisions for the next 8 years, starting from 2013. The Ministers confirmed that New Zealand was on track to fulfilling its own Kyoto commitment for the period 2008-2012 but that the next commitment would be made outside Kyoto.

“This is a long-term problem and we have a long-term strategic approach to deal with it. Internationally, all the focus should now be beyond Kyoto, which up to now has dominated negotiating and political attention, in spite of its decreasing coverage of global emissions. Domestically, we have a world-class emissions trading scheme which we have maintained at current settings in the recent review. At current, deeply depressed international carbon prices its economic impact is low but the Government has no intention of forcing NZ businesses and households to pay higher than world prices in the current difficult international economic climate,” Mr Groser says.

The Ministers noted that it would take some time for international carbon markets to absorb the implications of what had been agreed at Doha and they expected New Zealand carbon markets would be no exception. What was clear, however, was that New Zealand would continue to have access to existing Kyoto carbon markets at least until 2015. What happened after that would be deeply influenced by progress made in negotiating the more comprehensive international Climate Change Agreement as well as progress made in on-going discussions to build regional linkages amongst carbon markets.

“Meeting the real challenge of global climate change has been aptly described as the most complex international negotiating problem the global community has yet tackled. We have every expectation that further progress will be made, but it will be slow, incremental and controversial. New Zealanders should be deeply sceptical of quick fixes and piece-meal solutions. But we are confident that New Zealand has the right strategic long-term approach.”

“This is a long-term problem and we have a long-term strategic approach to deal with it. Internationally, all the focus should now be beyond Kyoto, which up to now has dominated negotiating and political attention, in spite of its decreasing coverage of global emissions. Domestically, we have a world-class emissions trading scheme which we have maintained at current settings in the recent review. At current, deeply depressed international carbon prices its economic impact is low but the Government has no intention of forcing NZ businesses and households to pay higher than world prices in the current difficult international economic climate,” Mr Groser says.

The Kyoto agreement has lots of flaws, not least that it deals with only about 15% of global emissions.

New Zealand is doing more than its share in dealing with the problem and the decision to continue outside Kyoto doesn’t change that.

Protest or progress

Quite how people who think they care about the poor can protest against free trade escapes me, but there they were outside the venue for the Trans-Pacific Partnership talks.

. . . protesters say these negotiations are too secretive and are being driven by large US corporations.

As the talks at Sky City began this morning, protesters made themselves heard outside. . .

However, there is another view:

. . . the Government says a deal could be a billion-dollar boost for our economy.

“It’s going to be big,” says Trade Negotiations Minister Tim Groser. “It’s going to be significant and it’s going to help New Zealanders find well-paid jobs.”

That view is shared by the people who will provide some of those jobs:

More than 50 business leaders from some of New Zealand’s largest and most successful companies and business organisations have expressed their support for the Trans Pacific Partnership (TPP) negotiations currently underway between eleven APEC economies.

In an open letter to Prime Minister John Key, the business leaders underlined the importance of international trade and investment for New Zealand. “The signatories to the open letter represent a cross section across all major export sectors in New Zealand, including agriculture, forestry, fishing, horticulture, wine, manufacturing, technology and Maori business. Together they either directly employ, or their members employ, an enormous number of Kiwis,” said Chairman of the New Zealand International Business Forum, Sir Graeme Harrison.

“These business leaders welcome the TPP round taking place in Auckland this week and commend negotiators from the TPP economies for their efforts to conclude a future agreement which should bring benefits for all member economies”.

 “The group is aware the negotiation poses challenges for New Zealand policy settings in a number of areas and that the negotiation is complex. We have confidence that Trade Minister Tim Groser and his officials will seek solutions that meet New Zealand’s national interests.”

“We see great advantages for New Zealand arising from a future agreement that is high quality, comprehensive and ambitious, one that eliminates trade barriers, lowers the cost of doing business and makes improvements to the way regional supply chains can link producers and consumers in the region.” The open letter coincides with the launch of a new business-led initiative, Trade Works, a website (www.tradeworks.org.nz) to help Kiwis better understand the benefits of trade and investment for New Zealand, and understand the potential benefits of TPP. Funding for the website has been provided by the NZ US Council and the website has been built with the support of thirteen business organisations representing the main export sectors.

“The Council and its partners see value from an effort to create a TPP which meets business and wider needs and reflects the way business is being done today and will be done in the future. This will assist economic growth and job creation in New Zealand. Our new website signals that we are also ready to participate with other members of civil society in a dialogue about how TPP can contribute to what it is best for New Zealand,” said Chairman of the NZ US Council, Rt Hon James Bolger.

The protesters want to take us back to the bad old days when inefficient producers were protected and everyone else paid more because of that.

The business people want progress and fair trade and the only way to get that is to have free trade.

Minimum rationality

Quote of the day:

“I have advised my Cabinet, literally I’ve said to them, `assume minimum rationally will prevail,’” Groser said.

The Climate Change Minister was referring to the Doha talks on climate change.

Given the inconsistencies and stupidities that came out of Kyoto his view may well be an optimistic one.

Comprehensive deal better than Kyoto

The Kyoto Protocol had several faults, not least of which was it wasn’t supported by some of the countries with the biggest emissions.

Climate Change Issues Minister is correct when he says it is far better to seek a comprehensive deal than to continue with Kyoto.

. . . Some nations want the Kyoto Protocol, which expires this year, to be renewed until 2020.

Mr Groser says the signatories to that pact make up only a small part of total greenhouse gas emissions, and New Zealand, Canada, the United States, Japan and others are seeking to replace the protocol with a new, comprehensive scheme.

“Kyoto Protocol will cover 15% of global emissions, you can’t make a serious argument that you’re dealing with climate change unless you have a comprehensive deal that captures the 85% of emissions left out.”

Mr Groser says the aim is to have countries such as China, India, Indonesia, Mexico and Brazil to lower the growth rate of emissions, and have a cap on emissions in some years time.

Excluding countries like these from any new climate change agreement would leave 85% of total emissions uncovered, he says. . .

The opposition will say this is a cop-out.

But New Zealand is already doing more through the Pastoral Greenhouse Gas Consortium which is attracting international support for  research than signing up to an extension of Kyoto would achieve,

Kyoto is the past

Quote of the day from Climate Change Minister Tim Groser:

“Kyoto is the past”, he said. “The future rests on getting countries outside Kyoto to start doing something serious about climate change.”

He said it would be wrong to tie the hands of a future New Zealand government for eight years while a single new treaty is negotiated.

The Kyoto Protocol was the triumph of politics and bureaucracy over science and reason.

It was a lot more about being seen to do something than actually making a difference.

It was riddled with inconsistencies and its one-rule-fits-all approach

The best thing done to address climate change is not anything achieved through the ETS imposed under Kyoto but the  New Zealand-initiated Global Research Alliance on agriculture greenhouse gases.

Instead of the tax-it approach taken by Kyoto and its supporters this initiative brings countries together to find ways to increase food production while minimising emissions.

Kyoto and its supporters take a negative approach, the Global Alliance takes a positive one.

Two NZers too many for WTO?

Trade Minister Tim Groser has confirmed he’s keen on taking the top job at the World Trade Organisation.

With his background in negotiations and more recently politics he would be well qualified for the position, but qualifications aren’t the only consideration.

Geography counts too and there’s a feeling two from New Zealand could be one too many:

. . . So far, only two have said they want the job.

One is New Zealand’s Trade Minister Tim Groser, who starts with a double disadvantage: most diplomats say it is the “developing countries’ turn”, and New Zealand has already held the job once in the WTO’s 17 year history.

One trade negotiator said it would be “very peculiar” for two of the WTO’s first six chiefs to come from the same small, rich country.

Another said he regularly met Groser and said he was “very down to earth. But another New Zealander? I don’t think so.” . . .

Former Prime Minister Mike Moore headed the WTO from 1999 – 2002 and was generally regarded as doing it well. But his relatively recent tenure could handicap Groser’s bid.

We need brainy and brawny jobs

Fran O’Sullivan has identified a new strain of “New Zealand envy” from the other side of the Tasman Sea:

. . . Like Bill English, Groser had been buoyed after hearing a bunch of Australian business leaders talk openly about their clear case of “New Zealand envy” in Sydney the previous week.

The frank admiration for New Zealand’s economic policies – which was on show at the annual Australia New Zealand Leadership Forum meeting – had not really been displayed by Australian power-brokers since this country was in the grip of Rogernomics and Bill Birch’s labour market reforms.

 The Cabinet has since made a strategic decision to capitalise on the improved Australian business sentiment towards New Zealand by “going hard” for more investment. Companies like Heinz Wattie have already scrapped hundreds of Australian jobs in favour of opening new plants in New Zealand to take advantage of lower wages and restrictive labour laws.

This is good news. But typically, Labour still sees it through a “glass half empty” prism as positioning New Zealand like Mexico; a low wage neighbour where Australians can outsource manufacturing jobs in the way United States corporates have outsourced similar jobs to Mexicans.

I wish Labour would also focus on the fact that it is going to take considerable time and investment to build more high-tech growth companies which will spawn high-paid brainy jobs as well as the brawny ones.

Three or four decades ago made in Japan meant low price and probably low quality. Now  Japanese products, especially electronics and cars, are generally high quality.

That took time and it will take time for our economy to turn round and support more high paid, high tech jobs.  While we’re waiting we should welcome companies keen to do business here, even if one of the attractions is lower costs, including that of labour.

It’s stupid to sneer at lower paid jobs and those that require more brawn than brain. They too can contribute to much-needed economic growth.

Ag entry to ETS postponed to 2015

Changes to the ETS announced by the government are designed to maintain incentives for emission reductions, without loading large extra costs onto households, employers and exporters.

“Today’s decisions are a reflection of the balanced and responsible approach this Government has taken to reducing greenhouse gas emissions.  They offer Kiwi exporters, employers and households certainty in a challenging and changing world economy,” Climate Change Issues Minister Tim Groser says. . .

“We have considered in-depth the recommendations of the ETS Review Panel, listened to what those affected by the ETS are saying, and reviewed what our trading partners are doing.  We also considered feedback through community consultation, including written submissions, a series of regional meetings, and hui.

“The National-led Government remains committed to doing its part to reduce greenhouse gas emissions, but it is worth noting that we are the only country outside Europe with a comprehensive ETS.  In these times of uncertainty, the Government has opted not to pile further costs on to households and the productive sector.

“The Government remains an active and engaged participant in the on-going discussions focused on global agreements, and the changes announced today offer us useful flexibility to adapt in the future, while still demonstrating our commitment to doing our fair share,” says Mr Groser.

Not surprisingly the left reckon this is disastrous.

However, Business NZ says the government has taken a reasonably balanced approach to carbon pricing in its amendments.

The protections – companies having to surrender carbon units for only half the carbon they emit, and a cap of $25 per tonne in the price of emissions –recognise the fact that New Zealand is ahead of most of the world in accepting a price on carbon.

BusinessNZ Chief Executive Phil O’Reilly says the changes will maintain incentives for emissions reduction while shoring up New Zealand companies’ ability to compete against companies in other countries.

“The move recognises the financial constraints not only on businesses but also on consumers.  It guards against increases in the price of electricity and fuel that would otherwise occur because of an unequal international playing field.

“This is not a softening of the ETS.  The changes announced today will not reduce the costs currently faced by New Zealand business and consumers.

“We should remember that the current cost of carbon, although relatively low, is still more than is being faced by our trade competitors, and will doubtless increase as the global economy recovers.

“While these amendments do not make the environment harder for business, neither do they make it easier.  Moreover the frequent reviewing of the scheme’s design also loads uncertainty costs onto New Zealand business.

 Federated Farmers says the changes, which include delaying the entry of agriculture into the scheme, are one step towards reality:

The New Zealand Emissions Trading scheme (ETS) has taken a big step towards forward, yet remains the harshest treatment of any agricultural production system on earth.

“The Government realises even tougher measures would hurt not just agriculture but the wider economy,” says Dr William Rolleston, Federated Farmers Vice-President and climate change spokesperson.

“Both our Chief Executive, Conor English, at the Rio+20 Earth Summit  and our President, Bruce Wills, at the World Farmers Organisation, got the same message; targeting primary food production in ETS-type policies is anathema to sustainable primary food production.

“In a world preoccupied with the survival of their economies and with food security, there is no point in trying to lead where others will not follow.

“Yes biological emissions account for some 47 percent of New Zealand’s emissions profile.  They also represent 68.1 percent of our merchandise exports and indeed, 100 percent of the food we eat. 

“New Zealand is able to not only feed itself, but produces enough food to feed populations equivalent of Sri Lanka. 

“This is why it is positive the Government has listened to Federated Farmers and will keep agricultural biological emissions out of the ETS until at least 2015. 

“We have retained the one-for-two surrender obligation we asked for, along with the $25 fixed price option. Federated Farmers also wanted offsetting for pre-1990 forests and opposed the reduction of pre-1990 forest allocations. The Government has listened to that too, but those who do offset will be penalised. 

“We are pleased the Government has chosen not to further complicate matters by imposing additional restrictions on the importation of overseas emissions units.

“Despite what some Opposition parties are likely to say following these changes, our ETS remains the harshest on any agricultural production system, anywhere in the world. 

“Unlike other countries where agriculture is given special treatment, farmers here, just like every other business and family, pay the ETS on the fuel and energy we use.  This not only impacts a farm’s bottom line, but the cost of turning what we produce into finished goods for export.   

“Australia’s new Carbon Tax is really aimed at Australia’s 300 largest companies.  Meanwhile, Australian farmers are being financially rewarded for boosting soil carbon levels on-farm. 

“Since 1 January, all agricultural processors in New Zealand have been filing emission returns accounting for agricultural biological emissions.  We are still counting emissions no other government is contemplating, including our cousins across the Tasman.

“While agriculture emissions here grew 9.4 percent between 1990 and 2010, the dollar value these generated for NZ Inc exploded almost five-fold.  Our sector’s emission growth needs to be put into context alongside a 59 percent increase in electricity emissions and 60 percent for transport.

“What’s more former Labour Cabinet Minister, the Hon David Caygill, found emissions in every single unit of agricultural product have fallen some 1.3 percent each year, for the past 20 years. 

“We do not need an ETS to improve our productivity.  Global competition has done that for us. 

“That New Zealand’s farmers are among the world’s most carbon efficient, is an inconvenient truth New Zealanders are not hearing from Opposition politicians. 

“We can do more but that will be through productivity gains and research leadership exemplified by the Global Research Alliance on Agricultural Greenhouse Gases.

“In a world of increasing food deficit, our hope is for Opposition parties to realise being a carbon efficient food exporter is global leadership,” Dr Rolleston concluded.

The Kyoto Protocol was the triumph of politics and bureaucracy over science and negotiations have yet to reach agreement on its successor.

There is nothing to be gained for the environment and a lot to be lost from the economy if agriculture is forced into the scheme when none of our competitors faces similar costs.

All that’s “green” isn’t good

“Green” might be the new black but all that is “green” isn’t necessarily good as this exchange from Question Time last week shows:

4. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister for Economic Development: Does he stand by all his recent statements as Minister for Economic Development in relation to the Pure Advantage report New Zealand’s Position in the Green Race; if so, why?

Hon STEVEN JOYCE (Minister for Economic Development): Yes, especially my statements that it is important that New Zealand take advantage of all its opportunities for economic growth within sensible environmental and safety protections.

Hon David Cunliffe: Why, then, did he say that he fundamentally disagrees with New Zealand getting a slice of the $6 trillion world market export opportunity in the move to a clean economy, and why does he believe this would be “far too value-destroying” for the New Zealand economy?

Hon STEVEN JOYCE: Because the Pure Advantage** people promote shifting a whole lot of resources, particularly Government resources, into subsidising those industries as a way of actually achieving that level of growth, and although* we of course support and encourage our high-tech* and cleantech* industries—and some of them are doing a fantastic job—there is a limit to how much you can support them without being value-destroying for other parts of the economy. Also, saying that certain industries should not be invested in when they represent between them roughly 80 percent of our exports would be value-destroying.

Hon David Cunliffe: Why will he not heed the actual call by Pure Advantage, as clarified by chairman **Rob Morrison, to level the playing field so big pollution has to play by the same rules as innovative Kiwi cleantech* start-ups?

Hon STEVEN JOYCE: I am not quite sure what the member is alluding to, but I presume he means that industry should pay higher costs around, for example, emissions than they currently do. Of course, that would mean that they would be paying costs that their competitors in other countries do not face, which would be value-destroying. The challenge for New Zealand as a country trying to grow its exports is to make sure that it does not hobble its exporters with tests and costs that other countries’ exporters do not have to face.

Hon David Cunliffe: Why did he describe the Pure Advantage group of business leaders as self-interested and accuse them of bias in asking for “very big subsidies into industries and firms that would … not be economic …”, when its recent report does not call for specific subsidies; and if he cannot substantiate those claims, will he now withdraw and apologise to Pure Advantage chairman Mr Rob Morrison and trustees such as Mr *Phillip Mills, Mr *Jeremy Moon, Mr *Mark Solomon, and Sir Stephen Tindall*?

Hon STEVEN JOYCE: I am sure that Rob will be quite capable of the robust debate, as I am sure he has been in the past, and I have had good discussions with him about it as well. The point I was making is that in the report it talks a lot and in very positive terms of countries that make very, very big subsidies to industry, such as Spain and the Nordic countries—and also, for example, America with the Tesla Motors** company—and suggested that would be a model for New Zealand to follow. Obviously I disagree. . . .

“Green” jobs are supposed to be good but they come at a considerable cost:

Hon Tim Groser: Is the Minister aware that the Pure Advantage report suggested that a very good model to follow would be the Birmingham City Council** green growth strategy, which produced 270 jobs at a cost of nearly $2 million a job, and does he think that is a sensible model to follow for New Zealand?

Hon STEVEN JOYCE: Yes, I am aware of that and a number of other models cited in the report. I think that illustrates the problem with the approach. The debate has actually moved on and in the New Zealand economy we are focused very much on greening our successful export industries and developing new industries, and not just trying to pick winners, as Mr Cunliffe seems to be advocating.

We have only one world and it behoves us to take care of it for those who follow us but sustainability is supposed to balance economic, environmental and social factors.

All that’s “green” isn’t good when it’s based on emotion rather than science and if it doesn’t stack up economically and socially.

Pure brand damaged from within

Trade Minister Tim Groser says New Zealand’s 100% pure brand is being damaged from within:

“Our enemies who are internal, will find one cow in one stream and feed it back to environmental activists in the developed world to be used to try to exclude New Zealand’s products and services in the ludicrous belief this will somehow help New Zealand.”

The 100% pure brand was used to market the New Zealand tourism experience and it has been deliberately manipulated in this space,” Mr Groser says.

There’s nothing like being overseas to help you realise just how relatively clean and green New Zealand is.

That is easier for us when we are relatively under-populated and it doesn’t mean there isn’t room for improvement.

But internal saboteurs who use isolated examples of what are usually insignificant problems to paint a dirty picture do the country a disservice.

They do nothing to improve the environment and pose a very real danger to the economy on which we depend if we are to afford the even cleaner, greener environment to which most of us aspire.

US dairy offer not up to scratch – Groser

Trade Minister Tim Groser says the USA is yet to produce an acceptable offer on dairy access in Trans Pacific Partnership (TPP) trade talks.

Despite two years of formal negotiations, he says, the US is yet to produce anything of substance on the dairy market, the biggest prize for New Zealand in the TPP.

“We are not going to sign up to a deal that doesn’t improve the export position of our principal exports,” he says. “We will wait and play our cards in the endgame.”

The USA dairy lobby must have strength far in excess of its numbers to keep negotiations stalling on the issue of access for our produce.

Any benefit to the relatively small number of them from protection comes at the cost of higher prices and less choice for many millions of consumers.

Dare we hope?

Dare we hope that Rob Hosking is right:

. . . Underlying this appears to be a further calculation: that the Kyoto Protocol and its various policy offshoots is not going to be around, at least in its current form, by the time anyone has to make a decision on this. . . .

The Kyoto Protocol is the triumph of politics and bureaucracy over science and sense.

Initiatives like the Global Research Alliance which Climate Change Minister Tim Groser launched in Copenhagen are far more likely to do some good for the environment than the protocol which in some instances will do more harm than good.

Whether or not the suggestion that the protocol won’t survive is right, it does appear the government is sticking to its word that it won’t force agriculture into the ETS until the industry has the technology to counter emissions and our competitors face similar measures and the costs which go with them.

Bridges promoted to Minister

Prime Minister John Key has promoted Simon Bridges to the position of Minister outside Cabinet:

Napier MP Chris Tremain, who is currently a Minister outside Cabinet, will  move up to become a Minister in Cabinet at number 20 on the Ministerial  list.

Mr Key also announced a minor reshuffle of portfolios with the departure of Dr Nick Smith.

David Carter will assume the role of Local Government Minister in addition to his current portfolio of Primary Industries.

“The local government reforms announced recently remain an important part of the Government’s agenda. Mr Carter is an experienced Minister and I’m  confident he will drive these reforms along,” Mr Key says.

Amy Adams will take over as Environment Minister and hand the Internal Affairs portfolio to Mr Tremain.

Tim Groser will also become the new Minister for Climate Change Issues.

“Mr Bridges will be the new Consumer Affairs Minister and Associate  Minister of Transport, taking over from Mr Tremain. Mr Bridges will also be Associate Minister for Climate Change Issues,” Mr Key says.

The National caucus had strong intakes in 2005 and 2008 which means there are several candidates for any vacancy.

Simon had a promising career in law before he entered parliament and is a popular MP.

Tim was already Minister for Climate Change negotiations and a logical choice for the Climate Change Issues portfolio.

The NBR says:

 Mr Groser is believed to be less supportive of the emissions trading scheme (ETS) than his predecessor Nick Smith. As Climate Change Negotiations Minister, he is more aware than most that the while Kyoto system, on which the ETS is based, is likely to collapse at the end of this year. His record is of favouring more direct initiatives on the matter, such as the Global Research Alliance on agriculture that he set up, which has been the only real outcome from recent UN climate change summits and now boasts more than 30 countries as members.

Working on an initiative which could make a difference is far better than wasting time on an agreement which is the result of bureaucracy and politics triumphing over common sense.

Trade is the key – first steps to FTA with Chinese Taipei

Quote of the day:

Trade is about specialization. Specialization is the heart and soul of productivity growth, which in turn is the key to the elimination of absolute poverty –  Trade Minister, Tim Groser in his addres for the annual Ralph Hanan Memorial Lecture.

This contradicts the widely held view many on the left harbour about the advantages of protection and trade barriers.

The address incldues other gems:

More and more people and communities on the planet have discovered that the competition for resources does not need to involve war, but is better organized through mutually profitable exchange, buttressed by the rule of law, both domestic and international.

What has changed is not human nature, but technology. Because of technology, the opportunities for trade are now extraordinary. It is rapidly falling transport and communication costs that have created the phenomenon of the global supply chain . . .

When transport was expensive, trade had to be in highly priced goods to justify the expense of getting them to market. Now transport costs are relatively low it is cost effective to send low price goods within and between countries.

The industrial model of vertically integrated production – you try to make everything – is almost certainly the wrong model. “100% made in New Zealand”, while a crowd pleaser as a slogan, is absolutely the wrong slogan for higher real wages and a prosperous future.

There will be honourable exceptions – goods that are from top to bottom nearly 100% NZ value added and yet remain internationally competitive in the process. Further, given our extraordinary primary resource strengths, there may be rather more such successful examples in New Zealand’s future than would be the case in most developed countries. But by and large, we need to move beyond this idea of “100% made in New Zealand” to embrace the extraordinary opportunities of the global supply chain.

Local production and independence have their place but they are not always the right model.

This is where New Zealand needs to position itself – as a small, diverse and sophisticated producer of ‘bits’ in the global supply chain. Trade in intermediate goods is now some 60% of world trade; trade in intermediate services is even higher, according to OECD definitions.

The examples he gives is aircraft. We can’t make and export them but we can, and do, manufacture some of the parts which are needed to make them in other places.

The address also highlighted the inefficiency, high costs and general stupidity of the way our economy used to operate:

Through rigid import licensing and massive tariff barriers, we force-fed vertically integrated production in New Zealand for the domestic market. I remember that when we started to scope out the CER negotiation, our exports of manufactured goods were some pitifully small percentage of total NZ exports.

If we could not make it 100% in New Zealand, we had a simple solution: we sent officials and business people to Tokyo or Detroit and said: “pull your TV, Sony-san, to bits and export the bits to New Zealand where we will re-assemble them. And while you are at it, Mitsubishi-san and Mr Ford, send us bits of your cars so we can re-assemble them here in NZ”.

It was a money-go-round and subsidy racket made possible only by having a highly successful mono-cultural agricultural export economy with unlimited access to the middle class of what had been the most powerful country in the world – Great Britain. The moment the UK joined the then EEC, the skids were under us. It was the start of a massive challenge to NZ to build new political, business and trade policy platforms.

It’s hard to believe that some political parties would take us back to days.

If you sit down and ask yourself why have we not made a faster adjustment to this new trading world, and why all those OECD comparative charts have us flat-lining from the mid 1970s you may be underestimating the gulf between the reality of NZ trade strategy yesterday and today.

But ladies and gentlemen, don’t throw in the towel yet on this small but fascinating country of ours. We have engineered a revolution, if you are allowed to use that term to describe something that has required a quarter of a century. And this lies at the heart of my deep belief, that New Zealand is now poised to enter a new period of highly successful wealth creation over the next quarter of a century.

As with our earlier success, if we make it happen, it will be based around superior export performance, and again to the middle class of the world’s most important economies as it was in the early 20th Century. It is just that the power has shifted and we have needed to shift with it.

He then gives the case for rational optimism:

All the ingredients are there and we just need to put them together, piece by piece. I have concentrated tonight on our future as a niche manufacturing and services exporter, not agriculture. Nothing alters my view that agriculture is going to play as large a part in our future as it has in our past and our relationship with the emerging economies lies at the heart of that judgment. I think Sir Graeme Harrison, Chairman and founder of ANZCO, is absolutely right with his metaphor: agriculture is New Zealand’s Silicon Valley. The choice was never agriculture or non-agriculture. We need superior exporting performance from all sides of our economy to build our future.

Quite – agriculture is one of our strengths and given our natural advantages in converting grass to protein for a hungry world, it will continue to be so. But we shouldn’t have all our eggs in the agricultural basket.

Of course we need to see our way through this current deeply difficult international situation in the developed world, and we will. And of course we will need consistently sophisticated leadership from our political, business, farming and technology leaders to build successfully on this new trading platform. These leaders need to be looking through the front windscreen to where we are going as a country, not the rear-vision mirror at where we have been.

Central to this new trading platform are our trading relationships with the emerging economies. The bedrock here is our relationship with Australia, the CER and the wider economic relationship around the CER.

The next most important trading partner is China.

We are uniquely well placed to build that economic relationship, because we are the only developed country in the world to have a comprehensive FTA with the world’s second largest economy.

But we also, intriguingly, are the only country in the world to have a matching comprehensive FTA with the second element in the wider Chinese economic area – our FTA with Hong Kong, which we signed in 2009. And tonight I am delighted by the news that we have initiated the first step that may lead us in a year or so being the first economy in the world, other than China itself of course, to join the three points in the Chinese economic triangle together.

Tonight I have issued a brief press statement welcoming a sparsely worded press release from the New Zealand Commerce and Industry Office in Taipei (NZCIO) and the Taipei Economic and Cultural Office in Wellington announcing that they had agreed to explore the feasibility of an economic cooperation agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei).

To use its WTO nomenclature, Chinese Taipei is an important trading partner for New Zealand and even after its WTO accession maintains a number of high barriers to our exports.

New Zealand signed a FTA with China in 2008 and a Closer Economic Partnership with Hong Kong in 2009. The FTA with China has been spectacularly successful.

I am hopeful that any eventual economic cooperation agreement with Chinese Taipei will see substantial growth in exports to this important economy. It is not just important for our goods exporters. It is an important source of tourists, students and investment as well.

This is both a trade and diplomatic coup. Relations between Beijing and Taipei are at best delicate and talking to one has in the past required ignoring the other.

That our FTA with China has been so successful and that we are now taking the first, albeit tentative, steps towards economic co-operation with Chinese Taipei is internationally significant.