PM Key at APEC calls on other nations to conclude WTO trade talks to eradicate agriculture subsidies; Notes deleveraging has to happen in developed world; Says TPP has strong momentum

PM Key at APEC calls on other nations to conclude WTO trade talks to eradicate agriculture subsidies; Notes deleveraging has to happen in developed world; Says TPP has strong momentum

By Alex Tarrant in Vladivostok

Prime Minister John Key has called on other nations to end agriculture subsidies, using New Zealand's experience through the 1980s as an example of how the sector can recover from being cut off from state help and become more productive.

Speaking to trade representatives at the Asia Pacific Economic Co-operation (APEC) forum in Vladivostok, Russia, Key said the levels of subsidisation from some governments was "no longer affordable nor sustainable."

Key gave the opening speech at the APEC CEO summit on Friday morning (NZ time) during a panel discussion, Economic integration: Benefits and unintended consequences. He began by noting the problems facing the global economy, particularly the eurozone.

"Deleveraging has to happen, particularly in developed countries," Key said.

"But growth has to happen as well," he said.

Key said Trans Pacific Partnership negotiations had strong momentum. The eight existing TPP members are currently in negotiations with the United States for the world's largest economy to join the free-trade agreement. It is also hoped Canada, Mexico, Japan and Korea might sign up to the agreement over the next 5-10 years.

Key said it was critical TPP achieved the high goals its member nations had set for it, as a low quality agreement would be a "road to nowhere."

“All governments involved will have to take some tough decisions if we are to get there," Key said.

"But we also need to be honest about what TPP can achieve and what it can not," he said.

TPP would not be a substitute for World Trade Organisation trade talks, he said. The reality was less-developed countries often weren't included in trade negotiations like TPP, he said.

And while agreements like TPP dealt with barriers to trade and investment, they did not get to the heart of subsidies.

Key said World Trade Organisation negotiations were the key to tackling high domestic subsidies in many economies' agricultural sectors. He noted the New Zealand experience through the 1980s and 90s following the removal of subsidies there.

"While there is some responded very quickly to the signals – cut costs, increased productivity," Key said.

“This level of subsidisation is no longer affordable nor sustainable," he said.

"Now is the time for leaders around the world to be bold," Key said, calling on them to eradicate subsidies, and start down the road of deficit reduction.

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what's wrong with that statement? It is possible to have growth and pay down debt at the same time - tricky, but as long as your GDP and labour force isn't based too much on retail then growth can continue while people pay personal debt down to a safer level.
When it comes to government debt deleveraging Greek style is not the solution - it just creates a recession spiral that you can't get out of so you need to maintain growth ideally without borrowing.

If you ask me the world needs a bit more Icelandic-style delveraging .... trash the banks, wipe out everyones mortgage, and start again. Wonderful. Yeah a few bankers take a hit along with a bunch of investors who get a much-needed lesson in pricing in risk, but it's nothing they don't deserve for the mess they have created. 

"But we also need to be honest about what TPP can achieve and what it can not," he said.
It would be in the realms of democratic tradition if Mr Key stood by his word and was honest with New Zealand voting citizens and divulged the TPP decisions his coalition government is undertaking on our behalf  - if he cannot, he should be dumped for a leader who can.

Please God, find me a politician (and a PM) to vote for, who is fiercely patriotic financially and if necessary just a bit xenophobic as well would help. 

Basel Brush III - love the fiercely patriotic financially bit. Could we replace the "if necessary a bit xenophobic as well"  too only NZ citizens and residents perhaps.
There could be a little bit of light at the end as John Key was looking at the Companies Act and has been discussing that Companies might be required to have a resident Company Director in NZ.

Steven H - absolutely the TPP should be open debate with NZ'ers.  While I recognise that it is in a draft form - it should be made available to the public and be open to a consultation process.

The TPP is a regional rehash of the global MAI in the 90's. That failed because its contents became public and there were huge global protests including NZ. This time by keeping it secret they hope to slide the whole thing through with as little publicity and protest as possible. At the moment there is no need for the Govt (Cabinet) to consult, debate or inform either Parliament or a Select Committee about treaties or agreements like the TPP or WTO. Even within Cabinet it will only be a few senior members working with senior bureaucrats.
Not only are all the negotiations and drafts secret, the final agreement will not be completely public for 4 years after it is signed. How's that for democracy.

Yeah Right.  Europe completely removing subsidies - will never happen.  The biggest difference to NZ in the 1980's is
that majority of NZ farmers were not receiving up to 50% or more of their income from subsidies
NZ farmers were not also working off farm for their main income.
Perhaps the biggest difference is that Europe, especially, views farming as part of it historical culture - not so in NZ.
Then to get started on countries like Canada, USA etc
It just won't happen on the scale Key wants.

Yep - you are totally correct - he's trying to divert our attention from the true nature of the proceedings - it's the same claptrap as trickle-down economics. NZ will be burnt by protected US industry patents and monopolies with nothing offered in return. More foreign land sales anyone?  

Stephen H - if we don't want more foreign land sales then perhaps we have to push for legislative change. I'm waiting on the Crafar Farm sale -Supreme Court case to see what the outcome will be.

Deleveraging has to happen, particularly in developed countries," Key said.


"But growth has to happen as well," he said.

pdk,ctnz is already onto it above.

"While there is some responded very quickly to the signals – cut costs, increased productivity," Key said.
Now there's a line that requires, examination, clarification, and speculation ... as to who is setting the benchmark , who is facilitating  the environment  to make those changes, where does it leave the individuals who could ill afford to  retool / regear...?
You would think that any person involved in a business Farming or otherwise examine their costs and productivity  at regular intervals....John say's they don't , but they respond if you send them a signal.....a smoke and mirror signal..? saying shape up or ship out....?or Prepare to be Corporatised.
I wonder if the European Farming Communities, having heard that little snippet ,would allow him to leave alive......
The man has a one track Corporate philosophy on every damn subject he tackles.....I'm begining to think he's not that bright either.

Christov - In reply to your statement "You would think that any person involved in a business farming or otherwise examine their costs and productivity at regular intervals...John says they don't". There are some very loose operators out there who don't match up costs, productivity and PROFIT LEVELS!  They often look at these things when they find themselves struggling financially. 
NZ has a very high number of small to medium sized business entities and many of these are highly profitable but there are many who are only making enough to pay themselves a small wage.  Private enterprise is usually forced to take action or they will have business failure. They either do this by going over their business finding the leakages and inefficiencies, increasing their revenues or obtaining outside help to assist and guide them or often all of these things together. Increased revenues frequently doesn't equate to increased efficiencies or blocking the leakages.
The last Government also failed miserably in examining costs and productivity in the public sector. In fact they inflated the size of the public sector to an enormous capacity because they assumed they had a never ending funding stream via private enterprise. 
I believe Govt's should be bound by very strict controls on any spending that they undertake as the public service model is the least efficient in service delivery. Both Local and central Govt should also not be allowed to enter into the PPP agreements.
Very few people took notice of the last labour Govt and what and where it was spending as the feel good factor was having an effect. It wasn't until the GFC actually hit that people started to take notice.  The feel good factor is the irrational beast in any market or business. 
Farmers in NZ did respond in the 1980's it was a sink or swim situation. The 1980's were damn tough years and the worst part is it was debt that caused NZ's problems then and we have all allowed the same thing to happen again.  Innovation pulled us through the 1980's and I think innovation will pull us through the next phase.

I'm all for it Notaneco, (innovation and rejig) that is....I am also well aware that Public sector mismanagement and waste is at the worst end of scale.
I think you rather extrapolated my point into something else altogether,  Key has a one track Corporate mind, Monopoly and Control is what he understands and subscribes to a NZinc.
To demonstrate further there is a gulf of difference between helping a business see where it is going wrong or not maximising potential to manipulating it into a structure that guides it's every move eventually consuming it.
 I appreciate your comment on the matter but don't think we were on the same page this time.

Christov - Key already knows that family farmers are more efficient operators than the Corporates so I don't think that Corporatising Farming would be his preferred goal.
I think the Govt has found itself between a rock and hard place on the Crafar issue and offshore owners.  It is quite easy for an MP to lose their position when they are seen as directly interferring. Think of Nick Smith and the ACC fiasco.   I think the Corporate mind, monopoly and control has been coming from within the public service. 
If there is a deleveraging of debt then maybe Bill English is right when he stated that NZ'ers would be buying these farms back in the future couple that with another public sector corporate running the show and it might happen a little bit sooner.

Time will tell Notaneco...... Anyhoo , being Friday n all I'll go find a thread for Friday Yay...! ay..? 

Notecono, what are the signals the PM is giving to indicate he knows owner operator farms are more efficient than corporate. In a recent Rabobank report economist Hayley Monyhan predicts increasing corporatisation in farming and decreasing family farm (owner operator) ownership. Based on economies of scale???
I remember the eighties reforms. I was at boarding school and more than once had a friend returning from leave with a tragic tale of a farmer who struggled to adapt to the signals, one involved a pump shed, need I say more. It was tough alright, I felt guilty for growing out of shoes, and facing up to the prospect that we could lose the farm wasn't pleasent. I don't remember alot of debt being an issue, but I think 20% interest rates and low product values were. Some recent ballet farmers around our way had their interest written off (by govt), and promptly built tennis courts etc, one is a Fonterra TAF proponent, so appears handouts are addictive. Not so fortunate for those that drew ballets a couple of years earlier though, I think they resorted to the pump shed. Our farm was valued around $500k at the time, and it wasn't until the ninties that values started escalating, thanks in part to some 'economic genius' from Douglas and Richardson and Land Reform Act....Despite the tough times I think my father genuenly thought Douglas et al was making necessary reforms, but I think on reflecting on progress to date and ridiculous land values, he's changed his opinion.

Omnology - You might like to read the first two articles. The first article refers to Landcorps return on capital and the second one Bill English discusses the "owner-operator model as the one that is likely to continue to succeed here".  
Economies of scale have always affected farmers.  Corporate structures in farming when they get too large lose any significant advantage of economies of scale.  
Small sized farms are affected as they produce less but have the same compliance costs etc of a larger scale unit.
I think NZ farmers see what has happened in the USA where Corporate farming has taken over and perhaps we fear that the same thing could happen here. However US coporate farming is heavily reliant on subsidies and I don't think that model would exist if those subsidies were to be removed.
John Key has made it pretty clear in his recent speech at APEC that he wants the subsidies removed from agriculture.  I think the timing of events could well be  perfect, Governments with enormous debt, calls for austerity measures etc and then our PM strong speech telling other Govt's how they can save money.
Key has also stated that NZ farmers are the most efficient in the world, this is sending a very strong message that farming can survive without subsidies.
The pump-shed incident you mentioned. These people are the worst tragedies that rural NZ faced. I don't think there will be any rural communities in NZ that weren't affected.  I certainly do not want to see another period of the 1980's farming in NZ and that is one of the reasons I'm so adamant that Govt should keep its expenses down and keep bureaucracy out of NZ.

Thanks notecon, appreciate your feedback and insight.

Cutting agri subsidies. Is he talking about Canterbury irrigation? Or the cr4ppy streams that spill across the beaches and into our inshore waters? Or farms in marginal areas that would not survive long term without tax relief every major storm or drought? Don't get me wrong, I see agriculture as the absolute cornerstone of NZ economy, but having a pop at european agriculture is like waving the NZ clean green flag blindly about.

Not to forget the subsidies from not including agriculture in the emissions trading scheme. 

For those that missed it; there are moves afoot to eliminate the parallel import rules we have now. It's widely believed that this is part of the TPP and driven by the usual suspects - multinational corporations.

"The Warehouse had made representations on the issue to Government and asked to be kept informed if there was any suggestion of a change in policy.

However, the negotiations for a new trade treaty, dubbed the Trans Pacific Partnership Agreement (TPPA), are being held under tight secrecy.

The Ministry of Economic Development commissioned Australian economist Henry Ergas to carry out a study on the parallel importation regime last year, spurring further fears that a change is being considered as one possible trade-off in the negotiations.

Sunday Star-Times was denied access to the document, completed in August 2011 and described in parliamentary papers simply as "an assessment of the likely impact of changing NZ parallel importation laws", under the Official Information Act.

Powell said The Warehouse imported genuine products directly from multinational manufacturers.

"I'd be very concerned if the TPP restricted that".

Kiwidave - thanks for that link, interesting stuff going on. Here's another side to the parallel importing issue.  Looks like there could be winners and loser all right.
Interesting read I had yesterday out of the China Daily. They had had one Adidas factory closure in China and the Chinese had stated that other countries were able to do the production work more cheaply. It also stated that China was now moving into an innovation and design economy and would be desiging, branding and producing its own goods.  Sounds like they're going to go head to head with prominent multi-nationals.

Check this out!!!...can't quite remember where I first spotted this little nugget ( think it was Homepaddocks blog)....but anyhoo, do ya think the TPP will wean the US of A farmboyz of the tax mans teat anytime soon?....
read it n weep!!

Why weep ? ....... that's bugger all ....... a mere $US 277 billion in accrued subsidies over 17 years ......
....... and the population of the US rose from 263 million in 1995 , to 312 million currently ...
So , for the sake of argument , a crude averaging reveals just $US 57 of subsidies as a cost to each American citizen , each year ........ fifty seven dollars ........ big freaking deal !!!!
And 80 % of all primary producers received just $US 594 in subsidies per annum !
" read it n weep!! " ........ a ha ha de haaaaaaaaaaaaa .......

Well I would have thought the good ole US of A would've better things to spend $57US/every man woman and child on other than propping up a few inefficient, read lazy, farmboyz (stuff people from other countries do better)....I'm sure that same subsidy could create more jobs if spent elsewhere, say Detroit.... might dig Mr O out of the hole he's in!!!

Across all industries in the US , subsidies or tax breaks add up to nearly $US 1 trillion per annum ...... thanks largely to the successful lobbying of congressmen over the years , by vested interest groups ......
...... had Barack cracked onto that , the budget would be balanced in no time , and crony-capitalism would be dealt a KO punch ......
But he didn't's  too politically hard  to do the right thing ....

The USA has one advantage over any other country on this one-horse-planet's got more (by a long margin) internationally active/profitable entities than anyone else....repatriated subsidizing?...she's a vicious circle we can't compete with!

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