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 pain...farmers 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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