Founded by Max Farndale 1947 - 2018
The easing of United Nations sanctions against Iran in 2016 has created export opportunities for New Zealand. There is significant scope for increased trade, but care is needed.
The Government puts its shoulder to the wheel
Since United Nations sanctions were eased in 2016, there has been an uptick in government-to-government contact between New Zealand and Iran. The latest visit was by Minister for Primary Industries Nathan Guy early this month.
While in Iran, Minister Guy witnessed the conclusion of a Meat Agreement between the Iranian Veterinary Organisation and the New Zealand Ministry of Primary Industries and the signing of a Statement of Intent between Zespri and Iran's Ministry of Agriculture.
These developments are commercially significant. Iran, with a population of over 80 million people, is the second largest economy in the Middle East-North Africa region. It was among New Zealand's top five export markets for lamb in the 1980s and remains a critical market for New Zealand butter.
Other recent political contacts include:
During Dr Zarif's visit in 2016, the New Zealand Export Credit Office (NZECO) signed an arrangement with the Export Guarantee Fund of Iran (EGFI) designed to help facilitate economic cooperation between the two countries.
Dealing with financial institutions in Iran
The lifting last year by the US Government of secondary sanctions which constrained the engagement of non-US banks in financial transactions with Iranian individuals and entities has removed an obvious impediment to trade – although problems remain.
On the plus side, there is now far greater scope for non-US banks to legally process Iranian payments. They may transact with Iranian financial institutions not on the US Treasury's List of Specially Designated Nationals and Blocked Persons (SDN List). According to the US Treasury, the institutions removed include most Iranian financial institutions.
However:
It is also important for companies to be aware that in the event of significant non-performance by Iran of its commitments under the Joint Comprehensive Plan of Action (JCPOA) pursuant to which United Nations sanctions were lifted, those sanctions will “snapback" and be re-imposed. The US has committed not to retroactively impose sanctions for legitimate activity undertaken before the date of re-imposition of sanctions, and OFAC has indicated that if a snapback occurred, it would work with non-US companies to minimise any impact on that legitimate activity.
In addition, there are autonomous (i.e. non-United Nations) US sanctions related to terrorism and human rights violations, as well as questions about how aspects of the OFAC guidance relating to the lifting of the United Nations sanctions is to be interpreted.
In recent weeks, the Trump Administration has imposed new sanctions on persons or organisations which procure technology or materials to support Iran's ballistic missile programme or have links to Iran's Islamic Revolutionary Guard. While this is unlikely to have any real impact on New Zealand companies looking to export to Iran, it may have a cooling effect on banks already reluctant to update their risk profiles to reflect the new regulatory environment outlined above.
Chapman Tripp comment
Pursuing opportunities with Iran will not be straightforward – Minister McCully noted only last week that while the Government is seeking to deepen economic ties with Iran, remaining banking restrictions make this “a bit difficult".1
It has been reported that Western banks have been hesitant to deal with Iran, due in part to concerns about whether doing so might cause them to run into problems with the US Treasury. But OFAC released guidance in 2016 that should give banks some comfort that they can structure transactions so as not to fall foul of the sanctions that remain in place.
Those remaining sanctions must be carefully managed. But they should not stop businesses from working with their financial institutions to investigate ways of accessing the Iranian market or increase their exports to Iran.
Undertaking thorough due diligence both on the part of exporters and financial institutions will be critical. But the potential prize may be well worth the effort. If you need guidance understanding the risks, and how to mitigate them, please contact a member of our expert team.
1“Government hopeful of free-trade deal with Gulf states this year – McCully", www.stuff.co.nz, 7 March, 2017.
| A ChapmanTripp release | March 16, 2017 ||
Viña del Mar, Chile - High Level Representatives from Australia, Brunei Darussalam, Canada, Chile, Japan, Mexico, New Zealand, Malaysia, Peru, and Singapore and Vietnam met here today to discuss the Trans-Pacific Partnership (TPP) on the margins of the High Level Dialogue on Integration Initiatives for the Asia Pacific.
The participating partners reiterated their firm commitment to collaborate in keeping markets open and to the free flow of goods, services and investment advancing regional economic integration and strengthening the rules-based international trading system noting our concern with protectionism in many parts of the world.
They recalled the balanced outcome and the strategic and economic significance of the TPP highlighting its principles and high standards as a key driver for regional economic integration and promoter of economic growth, competition, innovation and productivity, with the potential of generating jobs and lowering costs for consumers.
The high level representatives exchanged views on their respective domestic processes regarding TPP and canvassed views on a way forward that would advance economic integration in the Asia-Pacific.
Senior Trade Officials will meet and consult in preparation for the Ministers to meet again in the margins of the APEC meeting of Ministers Responsible for Trade on 20-21 May 2017.
| A Beehive release | March 15, 2017 ||
The amount of water exported in bottles is so small that it is irrelevant to the important discussion on better managing New Zealand’s freshwater resources, Environment Minister Dr Nick Smith says.
“We use a million times more water for irrigation, town water supply and industry than that for bottled export. Bottled water exports are such a small fraction that it is a distraction to the important debate about how New Zealand better manages its freshwater resources.”
New Zealand’s annual freshwater resource is 500 trillion litres of which 2 per cent, or 10 trillion litres, is extracted. Statistics New Zealand reports that last year 8.7 million litres of bottled water was exported, down from 9.8 million litres in 2015. This means bottled export is 0.000002 per cent of the total water resource or 0.0001 per cent of the total water extracted.
“There is a real fairness problem with charging bottled water for export and not other water users. It would be odd from a health perspective to be charging a company bottling water, but not charging for the company that makes fizzy drink or beer. Nor would it make economic sense to charge the company bottling water for export, but not the company using the water to produce wine or milk. There may be a better return for New Zealand with less environmental problems in exporting the water rather than spraying it on land, adding fertiliser and producing milk noting that each litre of milk takes an average 400 litres of water to produce. The argument that the water bottling company may be foreign does not hold water when many larger water users in other industries like dairying and wine also have overseas investment.
“Freshwater management in New Zealand does need to improve. We have introduced a requirement for Councils to set minimum flow requirements in our waterways and compulsory metering. This has resulted in a significant number of red zones where further water extraction is prohibited.
“A technical advisory group is working on how New Zealand can better allocate freshwater and will be reporting back to Government by year’s end. The key to reform will be ensuring it is based on sound science and good data.”
| A Beehive release | March 14, 2017 ||
Trade Minister Todd McClay travels from London to Chile today for the first combined meeting of Trans-Pacific Partnership (TPP) countries following the United States’ withdrawal from the agreement.
“I welcome the opportunity to sit down with other TPP ministers, to take stock of current developments and to look at how we might move this important agreement forward together,” Mr McClay says.
Mr McClay says he believed the TPP Agreement continued to offer value as a common set of rules across the Asia-Pacific region.
"I have recently visited Australia, Japan, Singapore and Mexico, met with ministers from Brunei and Malaysia and talked directly with trade ministers from all other TPP countries. It is clear our partners remain committed to the benefits high quality trade agreements provide," Mr McClay says.
The meeting comes following strong public encouragement from New Zealand’s largest exporters for the Government to pursue a deal with the other 10 countries.
While in Viña del Mar at the High Level Dialogue on Integration Initiatives for the Asia-Pacific, Mr McClay will also meet with members of the Pacific Alliance and a number of other Asia-Pacific countries discuss regional trade issues.
“High quality regional trade deals are key drivers of economic development and job growth. The Government will continue to fight for a fairer deal for kiwi exporters and to push for better access for our goods and services around the world,” Mr McClay says.
| A Beehive release | March 12, 2017 ||
Trade Minister Todd McClay met International Trade Secretary Dr Liam Fox and Minister for Trade Policy Lord Price today to reaffirm their joint commitment to global trade liberalisation, and lay the foundations for the future trade relationship between the UK and New Zealand.
International Trade Secretary Liam Fox asserted the importance the UK places on its trading relationship with New Zealand, with total trade in goods and services between the two countries increasing by 13 per cent between 2014-15.
The ministers welcomed progress made during the inaugural Trade Policy Dialogue meeting earlier this month.
“Our dialogue will enable us to build on our existing trading framework, towards an agreement in the future,” Mr McClay says.
“Through the dialogue we will continue to push for greater global trade liberalisation and reform, share expertise, and identify ways to strengthen our trading relationship.”
Minister McClay also welcomed the UK’s ongoing commitment to be a champion of global free trade. Secretary Fox confirmed his intention to visit New Zealand in the coming months.
“During that visit we will hold a joint public event to highlight the importance and benefits of open markets to our citizens at a time when the global economy is facing a period of uncertainty”, Mr McClay says.
The Secretary of State confirmed that the UK would remain fully supportive of the New Zealand-EU FTA as long as it remained a member of the European Union, and that he was very pleased that the scoping phase had been finalised.
| A Beehive release | March 10, 2017 ||
Quai D’Orsay and Lambton Quay share a nightmare
The New Zealand Ministry of Foreign Affairs and Trade must now begin the difficult and counter-ideological process of accepting that Marine Le Pen’s National Front Party might win the pending Presidential Election in France.
The reason is that Miss Le Pen has pledged to extricate France from both the EU and also the eurocurrency.
Miss Le Pen (pictured) and her party according to the polls is now the front runner to take over the Presidency and thus the government of France.
The former Prime Minister Francois Fillon has dropped in the polls following revelations that the leader of the Republican (i.e. Conservative) Party had while serving President Sarkozy put most of his family on the parliamentary payroll for performing duties that still remain unclear.
The second-line Republican Party candidate Alain Juppe has ruled himself out from succeeding the beleaguered Mr Fillon, partly because Mr Juppe, also a former premier, had also been mixed up in what the French describe as “fictitious employees.”
This leaves Miss Le Pen, followed by Emmanuel Macron the youthful former economics minister under President Francois Hollande.
Mr Macron in exiting the government of President Hollande did not wait to become adopted by an existing party. He simply formed his own France En Marche—France on the Move.
The Socialist Party led by Mr Hollande is simply not in the running, and does not feature in any of the polls as a realistic winner.
All this is bad news of course on Quay D’ Orsay and equally on Lambton Quay. On the quays the fervent hope was that while Miss Le Pen’s National Front might win the first round in the election, the once solid-seeming Mr Fillon would wash her away in the second round.
If the current polls hold water also washed away will be two years worth of negotiations in formal support of the EU-New Zealand trade liberalisation agreement.
Also swept aside will be the European Commission’s mandate to put the trade deal into action.
The reason is that France’s departure from the EU, and it is likely to be abrupt if Miss Le Pen takes charge, will invalidate the central axis of the union which is the German-French one.
France is the link between the Nordic/ Teutonic zone and the Mediterranean member countries.
It is uncertain if New Zealand’s Ministry of Foreign Affairs and Trade has charted a contingency plan in the now likely chance that Miss Le Pen and her party will emerge victorious from the imminent general election in France.
But given last year’s upsets in the US and the UK a suitable such contingency scheme would be to have ready a shrink-wrapped substitute deal with the EU’s northern nations.
The victory of President Donald Trump in the United States indicated that the New Zealand apparatus did not lay any groundwork, notably alternatives, for an event that it most ardently hoped would not in fact happen.
To an only slightly less extent the Brexit development is a similar indicator in an antipodean belief in the status quo.
| From the MSCMewsWire reporters' desk | Thursday 9 March 2017 ||
Trade Minister Todd McClay and European Union Trade Commissioner Cecelia Malmström have agreed the completion of joint scoping discussions towards an EU-NZ Free Trade Agreement (FTA) following a meeting in Brussels today.
After almost 2 years of discussion, reaching this significant milestone means the FTA process now enters a new phase, where the Commission and New Zealand will seek respective mandates to commence negotiations.
"Today’s meeting was an important demonstration of our commitment to launch negotiations as soon as possible in 2017," Mr McClay says.
“New Zealand and the EU both recognise there are substantial benefits to be gained from free trade, and we are now one step closer to a high-quality, comprehensive FTA that can deliver great outcomes for our citizens.”
Mr McClay and Commissioner Malmström also agreed that officials should look at ways to engage the public on trade issues. Mr McClay said the EU undertakes a number of trade events during negotiations which might suit New Zealand.
"With this in mind, I have invited Commissioner Malmström to visit New Zealand later this year. The Commissioner has accepted this invitation," Mr McClay says.
| A Beehive release | March 08, 2017 ||
Trade Minister Todd McClay will travel to Brussels for Free Trade Agreement (FTA) talks with the European Union (EU) this weekend and will then go on to London for a meeting of Commonwealth Trade Ministers.
'The simple aim of my visit to Brussels is to meaningfully advance efforts to commence our FTA negotiations with the EU,' Mr McClay says.
'The EU is our third largest trading partner with annual two-trade closing in on $21 billion. It is immensely important that we continue to fight on behalf of our exporters for improved access and reduced tariffs.'
In London, Mr McClay will look to progress discussion on ways the Commonwealth can expand trade between members. He will also chair a roundtable discussion with his ministerial counterparts before meeting bilaterally with British Secretary of State for International Trade Liam Fox.
'This is an excellent chance to discuss the direct trade opportunities that arise for New Zealand in a post-Brexit environment,' Mr McClay says.
'New Zealand is a trading nation, trade liberalisation and fair access to markets are essential for the continued growth and stability of our economy.'
| A Public release | March 05, 2017 ||
New Zealand’s sheep and beef farmers have a profound story to tell about where and how our meat is produced, says Mike Lee.
New Zealand’s sheep and beef farmers are sitting on a grass-fed gold mine.
This is according to Mike Lee, the CEO and founder of New York-based food design and innovation agency Studio Industries, who says this country’s farmers have a great story to tell consumers hungry to know where and how their meat is produced.
Visiting this country, Lee says it is about creating the profound out of the mundane – and for NZ sheep and beef farmers – their mundane is profound.
“New Zealand farmers are grass farmers and it’s about building that image of turning grass into the protein on your plate.
“To me, it’s a romantic image.”
Stories, he says, are what connects people and any story about food is actually a human story – the story about the growers and farmers and where and how they produce food.
“Your story connects the food system with the human experience.”
While historically, stories were exchanged around the campfire, today’s digital “campfire” allows global connections and as Lee says, there are now so many ways consumers can hear and learn about food and the people who produce it.
He urges this country’s red meat industry to identify people who can tell stories on its behalf.
“Empower people as ambassadors to tell your amazing story for you – it’s just a matter of finding the right people.”
Lee says food today is no longer just about sustenance, it is intrinsically linked with social bonds and values. The food consumers eat says something about how they want the world to be, so in essence people are eating their values – and these include the way animals are farmed – although food also needs to deliver on taste.
To consumers, the process is the product and in the case of meat, this is about how animals are grown.
The adage “you are what you eat” has been expanded to “you are what you eat eats”- and this is where NZ’s grass-fed story is so valuable.
In New York, grass-fed meat fetches a premium and is a selling point on restaurant menus and in bone-broth cafes.
Thanks in part to the vilification of sugar, meat is now trendy, and butchers the new rock stars. In the US, there has been a resurgence of craft butcheries such as the “The Meat Hook” in New York city, where customers can watch carcases being boned out and gather information about how to make use of every part of the animal - not just the primal cuts. Even the meat sections in supermarkets are being transformed into old-fashioned butcher shops, where the carcases are cut in full view of the public, rather than being hidden away.
Lee says the “eat local” movement is acknowledging that local is not always better and how a product is produced can offset disadvantages of distance – which again favours NZ red meat producers.
| An article published on Beef+Lamb | March 01, 2017 ||
The strategic view that Britain needs to be in the EU remains universal among New Zealand strategists. However the Leaves did not vote geopolitically but on domestic considerations including, apparently, resentment of immigration and of the unequal gains from trade. New Zealand has little alternative but to accept the direction the Brits are taking, albeit with regret.
Withdrawing from the EU is proving more difficult than anyone anticipated. Almost every week there is a revelation of an additional complication. Two years to negotiate the deal is just absurd, indicative of how little David Cameron, the previous British prime minister, had thought things through.
I do not think any informed person – anywhere in the world – takes seriously Theresa May’s view that Brexit represents no retreat, but rather that it will be the making of a ‘truly global Britain’ and that as a result the country will be ‘more outward-looking than ever before.’ The hard fact is that, as every New Zealander working in the international sector knows, being a small country isolated from the big trading blocs is a huge challenge. Sure, Britain is bigger than New Zealand but small compared to China, the EU and the US.
New Zealand’s interests will be challenged by Brexit. A couple of examples. We are currently in early negotiations with the EU over a free trade agreement. Almost certainly they will be delayed because the EU will be focusing on the Brexit negotiations; in any case they were going to be tortuous because they involve every member of the EU agreeing to the deal which, if it is of any significance to us, is going to affect their key farm interests.
Second, because of Brentry and subsequent multilateral negotiations, such as the Tokyo and Uruguay rounds, we already have various trade deals with the EU. However they are not with its individual members. What happens to them when one leaves?
For instance, there is a New Zealand sheep meats quota for the whole 28 countries; about two fifths of our lamb goes to Britain. That quota is ‘bound’, in effect it has a standing in international law and cannot be unilaterally abrogated. What happens to it if Britain leaves? We could insist that we will continue to have access for the whole quota to the remaining 27 countries and then negotiate a separate one with Britain outside the EU in exchange for trade concessions here. I imagine the EU will want us to agree that the quota be divided between the EU27 and Britain. The permutations are enormous; it will be a miracle if they are settled within two years, given there are many other examples like this involving other commodities and other countries.
So tiny New Zealand will be directly involved in some aspects of the Brexit negotiations even if we find it hard to get the EU 27 to focus on an FTA. Meanwhile, according to EU rules, Britain cannot begin negotiating trade agreements on its own behalf until after it leaves the EU.
During the Brentry negotiations, half a century ago, New Zealand’s negotiating strength included some ‘moral’ weight. At that time more people living in New Zealand said they were British-born than said they were Maori, underlining emotional attachments between the two countries. But those attachments have become attenuated with the external and internal diversification.
I won’t say we had a veto on Brentry in 1973, but undoubtedly the British government of the day wanted our support because it feared the anti-Brentry forces would use New Zealand to intensify their campaign.
That won’t happen this time. Instead of moral considerations we are going to have to depend upon the WTO rules. In principle that should mean that we will be no worse off – except where we have better deals than the legal bindings. And undoubtedly, we will suffer if the British economy suffers, as it is expected to. (However, except for some products, ties of sentiment mean New Zealanders tend to overestimate the importance of the British economy to us today.)
Moreover with a few exceptions, such as the RCEP (the Regional Comprehensive Economic Partnership of 14 Asian nations and Australia and New Zealand), other international trade deals are going to go be put on hold. That particularly affects our campaign to reduce world food protectionism in the interest of consumers and efficient farmers.
Of course, Brexit may not go ahead. A possible scenario is that when the deal is agreed, Britain will have a second referendum offering a real choice between the specific Brexit terms and Remain. May’s ‘hard-Brexit’ is designed to meet the demands of the extreme Brexiters, especially over migration, but it sacrifices a lot to do that. The softer Brexiters may reject the hard-Brexit terms. Already there is a growing group of doubters – Bregretters.
Although there are hard liners among the other 27 EU, who will not offer Britain an easy deal, one hopes commonsense will mean the 27 will leave open the option of Britain abandoning Brexit when the terms are settled and it becomes evident (to just about everyone) how painful the exit option is.
What may be crucial may be this year’s elections in France and the Netherlands, where immigration issues are expected to play an important role. Supposing that the electoral outcomes do not totally disrupt EU unity, it seems likely, nonetheless, that the EU will soften its commitment to free movement of labour. That would make it easier for Bregretters to change their minds.
Whatever, New Zealand’s global trading ambitions – especially over better access for its farmer products to protected markets – are going to have to be put on hold. But we will still pursue quality trade deals whenever the opportunities arise even if there are less of them.
| By Brian Easton published on pundit | March 6, 2017 ||
This is a follow up ‘Brentry: How New Zealand Coped’, setting out some of the challenges which face New Zealand today.
Palace of the Alhambra, Spain
By: Charles Nathaniel Worsley (1862-1923)
From the collection of Sir Heaton Rhodes
Oil on canvas - 118cm x 162cm
Valued $12,000 - $18,000
Offers invited over $9,000
Contact: Henry Newrick – (+64 ) 27 471 2242
Mount Egmont with Lake
By: John Philemon Backhouse (1845-1908)
Oil on Sea Shell - 13cm x 14cm
Valued $2,000-$3,000
Offers invited over $1,500
Contact: Henry Newrick – (+64 ) 27 471 2242
|
|