October 31, 2024 • 9 mins
Rabobank's Singapore-based Global Strategist looks at how the outcome of the US Presidential election will potentially affect NZ and World Trade, how a Trump win would affect the wars in Ukraine and the Middle East, and whether 2025 will be a better year for the world economy than 2024?
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Todd maclay. He's in Doha, Qatar, where it's two a m.
In the morning. Todd, you're a bit of a sucker
for punishment, no rest for the wicked. Well done on
this FTA with the Golf Cooperation Council. Good afternoon, New
Zealand time.
Speaker 2 (00:17):
Well yeah, well Jamie, good afternon and thank you. I'm
particularly delighted we've got this one over the line. You
and many of our listeners will know. It's been seventeen
or eighteen years in the making, a lot of stop start,
a lot of challenges. But the reason I'm particularly pleased
about this one is it's complementary with the UA that
(00:37):
we did a month ago, the fastest deal we've ever done.
But in as far as primary exports, particularly meet and dairy,
is just such huge opportunity up here in all of
these countries, and with Saudi, this is great news for
sheep farmers. I reckon, we're going to see a lot
of lamb into this market as soon as we get
in this agreement into the interforce.
Speaker 1 (00:56):
Well, let's hope. So so the six member nations Saudi Arabia,
United Arab Emirates, Qatar. Where you are at the moment, kawait,
Oman and bah Rain. I guess Saudi Arabia is the
big one, is it?
Speaker 2 (01:10):
Yeah, it is the big one, although there's an opportunity
in all of them. I mean they are a customs union,
but they are separate countries as well. There's about three
billion dollars worth a two way trade, so we export
about two point six billion every year. There is one
point seven billion of that meets only about to red
meets only about two hundred and sixty million. So I
reckon that's really underdone. And as I've been up here,
(01:32):
this is my seventh visit to they go off to
the region this year to try and get this in
the UAE deal over the line. You do see the
lamb here, I see, but there are a quite a
bit of Australian lamb. You see something from Kenya that
they tell me is lamb doesn't look like our lamb.
But you don't see a lot of New Zealand lamb.
So we'll get that tariff rate down to zero. This
is the best deal that the uad has a UA
(01:54):
has done so far. It's its first deal with a
major agricultural exporter. And as I said, I think it's
very good news for our farmers. A lot more products
of these market. They love high quality, safe food. This
is part of the puzzle of driving up returns at
the farm gate.
Speaker 1 (02:10):
Is it a bit of a one sided deal like
the two way trades worth three billion? Two point six
billion of that comes to us at the stage you're
hoping to double that. What's in it for the Golf
Cooperation Council?
Speaker 2 (02:23):
Yeah, so what we buy from the now chemicals and
a bit of ferd lines and stuff like that. Used
to be a lot of oil, but not so much
from here this part of the world anymore. They're interested
in high quality, safe food. You know, Shane Jones you
mentioned has just been up to Singapore and he's been
talking about there. We're looking to do a sort of
a supply chain guarantee agreement so that we must sell
(02:45):
food to Singapore when they need it. We haven't done
that with these guys, but they are interested in high quality,
safe food and they recognize his island as one of
the best at the world at that and so there'll
be opportunities for them to invest. But they are int
said in what we produce, and I think that's a
big part of why we've got this deal over the line,
(03:06):
you know, And I mean it's been going for a
long time, but we really engaged probably about seven a
half months ago. The negotiating team have pulled out all
the stops and delivered well.
Speaker 1 (03:15):
Talk stored way back in two thousand and nine, but
that was around the controversy around New Zealand's move to
hold live sheep exports. That's off the table now, so
I'm taking it. It wasn't a stumbling block.
Speaker 2 (03:29):
No it wasn't. It's gone. It wasn't discussed, it wasn't raised,
it wasn't negotiated. That's behind us now. It's no longer
an issue. But what they are interested in. And I
met with the trade ministers from the six countries today
here in Qatar. We had a ceremony where we signed
an agreement to mark the conclusion of the negotiation. We
now go on to the part where we look at
(03:50):
the legal text just to scrub it and get it
ready for signature. But each of them seeing they are
very interested in buying food from New Zealand, land from
New Zealand, other products. So they've gone from I don't know,
somebody wanting to farm sheep in a desert with no
grass and just buying it from us because we're the
best at growing in the world.
Speaker 1 (04:07):
You mentioned getting lots of our lamb and there our
red meat in there. But of the two point six
billion dollar current trade with this group of nations, one
point eight billion of it is dairy. What happens to
the tariffs then? Do they come off on day one?
How does that work?
Speaker 2 (04:25):
A mixture? So so ninety nine percent of our trade
will be tariff free over nine years, so that's phase
through when you add the UAE deal to it, because
of course our members also it's just fifty one percent
of our trade on day one, so that's very good
dearly as part of that. Some of that is towards
the end of the ten years, but those very good news, Jamie.
(04:46):
That the tariff rates are not high in this part
of the world, but it's a very competitive market. So
even at a five percent tariff rate sometimes you know,
we're not competitive enough. So having the certainty to get
those tariff rates to zero and binding them at zero
was means they will never go up again gives us
a huge advantage. And one number two the UK Europe
Australia hasn't got a deal. They now will want one,
(05:08):
but I reckon it'd be harder for them to do one,
harder than it has been for us over the last year.
So you know, I back our farmers and our exporters
to get up into this market. We'll be doing a
lot of trade missions up here next year to take
full advantage of this deal before anybody else gets close
to US.
Speaker 1 (05:24):
Trade Minister Todd McLay worth US it's two am and Doha.
It seems that you can survive on very little sleep.
Singer go on a bit of a roll at the moment, Todd,
why don't you call and on India on the way home.
It would save a bit of travel costs and sign
one with them. Or have they kicked us to touch?
Speaker 2 (05:43):
Well, I would do, but it's probably two o'clock in
the morning there and if I wake up go out
my counterpart. They're a bit bit grumpy. No, they haven't
kicked it to touch. I saw that the media and
so on, and look, I'm still very optimistic about India,
but we have to invest in that relationship. It was
underdone by the Labor government over that six years. But
think of it this way. I've been up there three times.
(06:03):
I've got another visit for the end of the year.
I've had six or seven meetings with my counterpart. We
are finding ways to trade more with each other. We
had the Indian president visit New Zealand, first time it's
ever happened, could have gone anywhere. And then when Chris
Luxen met Prime Minister Modi and Laos there was a
personal invitation, so that relationship is growing. I think what
(06:27):
India was saying, and it wasn't directly from the government,
it will sue US newspaper up there. I think what
they're saying is they want to do trade deals with
big countries too, because they haven't got one with the US,
they haven't got one with the U, they haven't got
one with the UK, they haven't got on with China.
I think that's a little bit of a signal saying
just before the US election, we want to do some
trade deals with big countries. But you know, we're putting
(06:48):
the effort into India because it's a very important part
of the trade puzzle for US. And if we don't
put the effort in, I know what happens. We don't
get anything at all. So we're just going to keep
going and invest in that relationship to make sure we
can give everything we can for that market called Kiwi
explorers and particularly Kiwi farmers.
Speaker 1 (07:03):
As a trade minister, are you fearful of the potential
of a Trump administration he's not going to be as
friendly to trade with as the Democrats would be.
Speaker 2 (07:17):
Well, I'm not because for New Zealand it's very hard
for us to trade anywhere. I mean, think about the
EU deal that the Labor government did. You know, it's
a good deal, but we didn't get everything that we wanted.
So you know, it's hard for New Zealand wherever we are.
But I was trade as the last time when Donald
Trump pulled out of the TPP deal and then Prime
(07:37):
Minister Billing us to get on a plane and we
put it back together. Our trade today is greater with
the US without a trade deal than it was, you know,
but then it was when we signed the TPP and
it grew under the last Trump administration. So there will
be some challenges and it will be hard, but I
back New Zealanders and New Zealand exporters do well in
(07:59):
that market will be up there quite a lot, irrespective
of who the president is and making the case if
they are going to do something of a punitive they
should exempt us, because if you're going to treat your
friends like that, what's the point sort of thing, right,
So we'll be working with them. I had a meeting
in Brazil last week of the DO twenty with their
trade represents at my equivalent, except their economy is much
(08:19):
bigger and it is a strong relationship. We talked quite
a bit about this case legal case we've taken against Canada.
Of course the US had one previously, and there is
interested working together. So we'll wait and see what happens.
It's a week from now, and whatever whoever is elected
president will work very hard to make sure we have
a constructive relationship and we can keep those doors open
(08:42):
for New Zealand exports.
Speaker 1 (08:43):
Todd McClay, Minister of Trade. Here's a bit of positive
feedback coming in for you, Todd on the text line,
what a contrast it is to hear McClay speak compared
to O'Connor. He's a sharp operator and a great ambassador.
There you go, someone loves you out there. It might
be missus McLay. I don't know. But well done, Todd.
I think it's two am in the morning. Go and
get some shut on my dad that one.
Speaker 2 (09:06):
Yeah, well you do about to jump on a plane
and about to jump on a plane seventeen hours home.
Have only been here less than twenty hours to come
up to the deal, get home and got other work
to do. But Jamie, just to all of the farmers
that are listening, what's made it easier to do these
deals is to talk about the high quality of our production,
how much they care about the environment, admitting their obligations.
(09:26):
You know, we shouldn't take that for granted. In New Zealand.
We shouldn't let people talk us into thinking we're worse
than others where some of the best that It actually
makes my job as Egging and Trade minis overseas much
much easier because of the hard work that they put in.
Speaker 1 (09:38):
Safe travels there we go. That is Todd McClay, Minister
of Trade from Doha. As I said, two am in
the morning, you can't knock them for his effort.
Todd maclay. He's in Doha, Qatar, where it's two a m.
In the morning. Todd, you're a bit of a sucker
for punishment, no rest for the wicked. Well done on
this FTA with the Golf Cooperation Council. Good afternoon, New
Zealand time.
Speaker 2 (00:17):
Well yeah, well Jamie, good afternon and thank you. I'm
particularly delighted we've got this one over the line. You
and many of our listeners will know. It's been seventeen
or eighteen years in the making, a lot of stop start,
a lot of challenges. But the reason I'm particularly pleased
about this one is it's complementary with the UA that
(00:37):
we did a month ago, the fastest deal we've ever done.
But in as far as primary exports, particularly meet and dairy,
is just such huge opportunity up here in all of
these countries, and with Saudi, this is great news for
sheep farmers. I reckon, we're going to see a lot
of lamb into this market as soon as we get
in this agreement into the interforce.
Speaker 1 (00:56):
Well, let's hope. So so the six member nations Saudi Arabia,
United Arab Emirates, Qatar. Where you are at the moment, kawait,
Oman and bah Rain. I guess Saudi Arabia is the
big one, is it?
Speaker 2 (01:10):
Yeah, it is the big one, although there's an opportunity
in all of them. I mean they are a customs union,
but they are separate countries as well. There's about three
billion dollars worth a two way trade, so we export
about two point six billion every year. There is one
point seven billion of that meets only about to red
meets only about two hundred and sixty million. So I
reckon that's really underdone. And as I've been up here,
(01:32):
this is my seventh visit to they go off to
the region this year to try and get this in
the UAE deal over the line. You do see the
lamb here, I see, but there are a quite a
bit of Australian lamb. You see something from Kenya that
they tell me is lamb doesn't look like our lamb.
But you don't see a lot of New Zealand lamb.
So we'll get that tariff rate down to zero. This
is the best deal that the uad has a UA
(01:54):
has done so far. It's its first deal with a
major agricultural exporter. And as I said, I think it's
very good news for our farmers. A lot more products
of these market. They love high quality, safe food. This
is part of the puzzle of driving up returns at
the farm gate.
Speaker 1 (02:10):
Is it a bit of a one sided deal like
the two way trades worth three billion? Two point six
billion of that comes to us at the stage you're
hoping to double that. What's in it for the Golf
Cooperation Council?
Speaker 2 (02:23):
Yeah, so what we buy from the now chemicals and
a bit of ferd lines and stuff like that. Used
to be a lot of oil, but not so much
from here this part of the world anymore. They're interested
in high quality, safe food. You know, Shane Jones you
mentioned has just been up to Singapore and he's been
talking about there. We're looking to do a sort of
a supply chain guarantee agreement so that we must sell
(02:45):
food to Singapore when they need it. We haven't done
that with these guys, but they are interested in high quality,
safe food and they recognize his island as one of
the best at the world at that and so there'll
be opportunities for them to invest. But they are int
said in what we produce, and I think that's a
big part of why we've got this deal over the line,
(03:06):
you know, And I mean it's been going for a
long time, but we really engaged probably about seven a
half months ago. The negotiating team have pulled out all
the stops and delivered well.
Speaker 1 (03:15):
Talk stored way back in two thousand and nine, but
that was around the controversy around New Zealand's move to
hold live sheep exports. That's off the table now, so
I'm taking it. It wasn't a stumbling block.
Speaker 2 (03:29):
No it wasn't. It's gone. It wasn't discussed, it wasn't raised,
it wasn't negotiated. That's behind us now. It's no longer
an issue. But what they are interested in. And I
met with the trade ministers from the six countries today
here in Qatar. We had a ceremony where we signed
an agreement to mark the conclusion of the negotiation. We
now go on to the part where we look at
(03:50):
the legal text just to scrub it and get it
ready for signature. But each of them seeing they are
very interested in buying food from New Zealand, land from
New Zealand, other products. So they've gone from I don't know,
somebody wanting to farm sheep in a desert with no
grass and just buying it from us because we're the
best at growing in the world.
Speaker 1 (04:07):
You mentioned getting lots of our lamb and there our
red meat in there. But of the two point six
billion dollar current trade with this group of nations, one
point eight billion of it is dairy. What happens to
the tariffs then? Do they come off on day one?
How does that work?
Speaker 2 (04:25):
A mixture? So so ninety nine percent of our trade
will be tariff free over nine years, so that's phase
through when you add the UAE deal to it, because
of course our members also it's just fifty one percent
of our trade on day one, so that's very good
dearly as part of that. Some of that is towards
the end of the ten years, but those very good news, Jamie.
(04:46):
That the tariff rates are not high in this part
of the world, but it's a very competitive market. So
even at a five percent tariff rate sometimes you know,
we're not competitive enough. So having the certainty to get
those tariff rates to zero and binding them at zero
was means they will never go up again gives us
a huge advantage. And one number two the UK Europe
Australia hasn't got a deal. They now will want one,
(05:08):
but I reckon it'd be harder for them to do one,
harder than it has been for us over the last year.
So you know, I back our farmers and our exporters
to get up into this market. We'll be doing a
lot of trade missions up here next year to take
full advantage of this deal before anybody else gets close
to US.
Speaker 1 (05:24):
Trade Minister Todd McLay worth US it's two am and Doha.
It seems that you can survive on very little sleep.
Singer go on a bit of a roll at the moment, Todd,
why don't you call and on India on the way home.
It would save a bit of travel costs and sign
one with them. Or have they kicked us to touch?
Speaker 2 (05:43):
Well, I would do, but it's probably two o'clock in
the morning there and if I wake up go out
my counterpart. They're a bit bit grumpy. No, they haven't
kicked it to touch. I saw that the media and
so on, and look, I'm still very optimistic about India,
but we have to invest in that relationship. It was
underdone by the Labor government over that six years. But
think of it this way. I've been up there three times.
(06:03):
I've got another visit for the end of the year.
I've had six or seven meetings with my counterpart. We
are finding ways to trade more with each other. We
had the Indian president visit New Zealand, first time it's
ever happened, could have gone anywhere. And then when Chris
Luxen met Prime Minister Modi and Laos there was a
personal invitation, so that relationship is growing. I think what
(06:27):
India was saying, and it wasn't directly from the government,
it will sue US newspaper up there. I think what
they're saying is they want to do trade deals with
big countries too, because they haven't got one with the US,
they haven't got one with the U, they haven't got
one with the UK, they haven't got on with China.
I think that's a little bit of a signal saying
just before the US election, we want to do some
trade deals with big countries. But you know, we're putting
(06:48):
the effort into India because it's a very important part
of the trade puzzle for US. And if we don't
put the effort in, I know what happens. We don't
get anything at all. So we're just going to keep
going and invest in that relationship to make sure we
can give everything we can for that market called Kiwi
explorers and particularly Kiwi farmers.
Speaker 1 (07:03):
As a trade minister, are you fearful of the potential
of a Trump administration he's not going to be as
friendly to trade with as the Democrats would be.
Speaker 2 (07:17):
Well, I'm not because for New Zealand it's very hard
for us to trade anywhere. I mean, think about the
EU deal that the Labor government did. You know, it's
a good deal, but we didn't get everything that we wanted.
So you know, it's hard for New Zealand wherever we are.
But I was trade as the last time when Donald
Trump pulled out of the TPP deal and then Prime
(07:37):
Minister Billing us to get on a plane and we
put it back together. Our trade today is greater with
the US without a trade deal than it was, you know,
but then it was when we signed the TPP and
it grew under the last Trump administration. So there will
be some challenges and it will be hard, but I
back New Zealanders and New Zealand exporters do well in
(07:59):
that market will be up there quite a lot, irrespective
of who the president is and making the case if
they are going to do something of a punitive they
should exempt us, because if you're going to treat your
friends like that, what's the point sort of thing, right,
So we'll be working with them. I had a meeting
in Brazil last week of the DO twenty with their
trade represents at my equivalent, except their economy is much
(08:19):
bigger and it is a strong relationship. We talked quite
a bit about this case legal case we've taken against Canada.
Of course the US had one previously, and there is
interested working together. So we'll wait and see what happens.
It's a week from now, and whatever whoever is elected
president will work very hard to make sure we have
a constructive relationship and we can keep those doors open
(08:42):
for New Zealand exports.
Speaker 1 (08:43):
Todd McClay, Minister of Trade. Here's a bit of positive
feedback coming in for you, Todd on the text line,
what a contrast it is to hear McClay speak compared
to O'Connor. He's a sharp operator and a great ambassador.
There you go, someone loves you out there. It might
be missus McLay. I don't know. But well done, Todd.
I think it's two am in the morning. Go and
get some shut on my dad that one.
Speaker 2 (09:06):
Yeah, well you do about to jump on a plane
and about to jump on a plane seventeen hours home.
Have only been here less than twenty hours to come
up to the deal, get home and got other work
to do. But Jamie, just to all of the farmers
that are listening, what's made it easier to do these
deals is to talk about the high quality of our production,
how much they care about the environment, admitting their obligations.
(09:26):
You know, we shouldn't take that for granted. In New Zealand.
We shouldn't let people talk us into thinking we're worse
than others where some of the best that It actually
makes my job as Egging and Trade minis overseas much
much easier because of the hard work that they put in.
Speaker 1 (09:38):
Safe travels there we go. That is Todd McClay, Minister
of Trade from Doha. As I said, two am in
the morning, you can't knock them for his effort.
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