The announcement in October 2003, at the Asia Pacific Economic Cooperation (APEC) Leaders Meeting in Bangkok, that New Zealand and Thailand agreed to undertake a joint study on a bilateral CEP and to enter negotiations was a surprise. On top of the very short timetable for negotiations – the aim is to conclude negotiations by November 2004 when APEC leaders meet again in Chile – any consultation or study of the consequences will be very limited. An Information Paper was released by the Ministry for Foreign Affairs and Trade (MFAT) in December 2003, which contained little but statistics and the usual optimistic generalities about trade agreements. A study is being conducted which was expected to be completed by the end of March 2004.

MFAT’s Information Paper states that

"A key objective of a CEP will be to negotiate the reciprocal elimination of all tariffs and non-tariff barriers such as quotas. Thailand imposes significant tariffs and other restrictions on goods of interest to New Zealand exporters. In some areas, these restrict and even prohibit the ability of New Zealand product to compete in the Thai market. 80% of New Zealand’s current imports from Thailand enter duty free. Thailand already receives some tariff concessions as a developing country".

The most sensitive area for New Zealand will be, as with the now stalled Hong Kong agreement, textiles, clothing and footwear (TCF). The Government’s recent tariff review announced a reduction in tariff protection for the sector, but a significant level of tariffs will remain. There has been no announcement as to whether the Government will try to retain those tariffs with Thailand, which exported $10.6 million worth of these products to New Zealand in the year to June 2003. If the tariffs go, not only will these imports threaten New Zealand TCF jobs, but Thailand (minimum wage $6-7 per day) will become a useful base from which TCF traders from other parts of South East Asia will have an incentive to channel their exports to New Zealand and Australia.

Labour conditions in Thailand have been forcefully criticised by the main international trade union organisation, the International Confederation of Free Trade Unions (ICFTU). "Child labour, forced labour, trade union rights violations and gender discrimination are all still prevalent in Thailand," it reported in 2003. The country’s labour code "severely restricts the right to collective bargaining and the right to strike" and women "suffer extensive discrimination in employment and pay". Although forced labour was prohibited by law, it existed in trafficking of women and girls for prostitution and domestic work and in the existence of debt bondage where sometimes whole families were held in servitude.

In addition an agreement is likely to cover the usual areas including services (particularly education) and investment. MFAT states:

Thailand has been one of the more gung-ho advocates of trade liberalisation in South East Asia – it gave its former Deputy Prime Minister, Supachai Panitchpakdi, to the World Trade Organisation (WTO) to succeed Mike Moore as Director General. It has recently completed negotiations for an agreement with Australia (which the New Zealand government saw as pressure to sign one too), and talks are planned with the US and Japan later in 2004. It has limited bilateral trade agreements with China and India. Like Singapore, it is trying to become a hub for bilaterals in the region.

Unlike Singapore however, it has strong social movements opposed to free trade and the neo-liberal agenda, and a large part of the population is still heavily reliant on agriculture for a livelihood, even though it is a decreasing portion of the country’s Gross Domestic Product (GDP). Dairy – New Zealand’s largest export to Thailand and the main target for increased exports – is one area where Thai farmers will feel threatened. Its 60,000 dairy farmers meet 44% of the local demand for milk and milk products.

There is mounting opposition to the Thai government’s privatisation programme with large union-led demonstrations and occupations gaining increasing public support to prevent the sale of the country’s water and energy services. The Thai government has announced that it will spend 10 million baht in 2004 on advertisements "to inform the public about the benefits of free trade area agreements, in particular the one proposed between Thailand and the United States".

Yet in recent times it has learned some lessons from the financial crisis of the late 1990’s, which began in Thailand, and the current Government has taken a much more pragmatic approach to both domestic economic and international trade policies. It is deliberately trying to expand the domestic economy, making widespread use of price controls, increased government spending, expanded availability of credit, large government-funded infrastructural projects and an investment fund (partly to combat foreign speculation). Internationally it is advocating international commodity agreements to stabilise the prices of its agricultural exports. The economy is less welcoming to foreign investors – for example, it has used town planning laws to slow the rapid expansion of foreign-owned superstores, which are forcing smaller Thai-owned shops out of business. As a result the economy is growing rapidly (6.3% in 2003). The danger is that debt is growing too fast for the economy to handle it. New Zealand can therefore expect some hard bargaining.

Trade talks with China were announced when Chinese President Hu Jintao visited New Zealand in October 2003. China’s Vice-Commerce Minister Ma Xiuhong visited Wellington in January 2004 for "talks about trade". China, with a quarter of the world’s population and consistently one of the fastest growing economies in the world, is the dream market for any trade liberaliser. However it is also exceptionally complex. Not only is the whole world queuing up – or rather, queue-jumping – to get in, but many of the obstacles are not easily addressed by conventional trade agreements. There is still heavy government intervention in all aspects of the economy, and language and business practices (including much being done without written agreements, high values put on trust and longstanding relationships, cronyism and reputedly corruption) make for major difficulties. It is questionable what a formal free trade agreement would achieve.

China is being particularly solicitous towards New Zealand. This may be a reflection of its recognition of New Zealand’s relative independence in world affairs (such as over Iraq and nuclear issues), and has long had friendly relationships with China, dating back to Rewi Alley*. It may be that this leads to more rapid movement on any framework and subsequent developments than Australia and others in the queue. According to media reports, negotiations on the framework were expected to be finalised by the end of June 2004, but a decision to launch a feasibility study on a free trade deal had yet to be taken. * Rewi Alley was the legendary New Zealander who lived in China from 1927 until his death in 1987. He would be turning in his grave if he knew that his name was being invoked by the very capitalists, in both countries, whose practices led to him becoming a Communist in the first place. Ed.

In a speech in March, the Minister for Trade Negotiations, Jim Sutton, announced that the two governments had "agreed that we should start negotiations on a Trade and Economic Co-operation Framework" (TECF). He said that the document

"would set out the areas where New Zealand and China could both benefit through increased cooperation. This was to cover areas of government administration, ways to facilitate the easier flow of goods across our borders through better cooperation between our regulatory authorities. We were to look for areas of possible joint research; areas such as environmental protection where the specialist knowledge of one country might be used to contribute to the development of the other".

However he also announced that "we had agreed, in the first round of our TECF negotiations, to negotiate an FTA, and that in doing so New Zealand would become the first Western developed country in China’s queue… we do want to explore the costs and the benefits of a trade agreement with China… Negotiating trade agreements is not – generally – a swift process. It will take time. Discussions with China are progressing well, and that’s about as much as I can say at this time". He took pains to stress it was still "if" negotiations for a free trade agreement commenced.

China is now the dominant exporter of TCF products in the world, with most other developing countries’ industries withering in the heat of its competition. An FTA with China, which from their point of view would be pointless if it did not include TCF, would certainly be the end of all but the small top end of New Zealand’s TCF industry and its remaining 8,000 jobs. Other manufacturing will only develop if it does not compete with China. Given that tariffs on other goods are at or near zero, this will not affect existing industry – but it prevents New Zealand fostering such industry in the future.

One area which is likely to develop, given current world trends, is outsourcing of services: call centres and computer services (particularly programming) are moving to India from Europe, the US and Australia, but China is rapidly developing its computer services capabilities in competition with India. Education is again likely to be a major target, given that China is currently the single largest source of overseas students coming to New Zealand. China’s labour record is notorious, with many examples of excessive working hours, unsafe working conditions (including multiple deaths in factory fires), exploitative treatment of migrant workers, and suppression of independent trade unions.