New Zealand is a member of the founding group alongside Singapore, Switzerland and the United Arab Emirates. Other members are Brunei, Chile, Costa Rica, Iceland, Liechtenstein, Malaysia, Morocco, Norway, Panama, Paraguay, Rwanda and Uruguay. More countries will be announced on Friday. Fiji and Samoa will attend as guests.
Among those slated to attend are: Singapore: Deputy Prime Minister Gan Kim Yong; Switzerland: State Secretary Helene Budliger Artied and UAE State Minister for Foreign Trade, Dr Thani bin Ahmed Al Zeyoudi.
In effect, this small economies club is endeavouring to build something the WTO is not delivering: a practical mechanism for countries that still believe trade rules matter.
New Zealand’s formal priorities for this meeting include advancing work in four key areas:
Confronting non-tariff barriers (NTBs) – Unjustified red tape, processes and regulations that make it harder and more costly for our exporters to access international markets. It’s estimated NTBs impact an estimated $9 billion of New Zealand trade, hitting the primary sector hardest.Promoting paperless and digital trade – this helps business reduce costs, increase productivity and create new opportunities, particularly for small to medium-sized enterprises.Tackling subsidies – Certain forms of subsidies can distort trade and investment flows, suppress global prices, and disadvantage competitive exporters. Addressing them is essential to restoring fair competition. This new workstream will bring together the efforts of FIT Partnership members to understand and address global subsidisation, in ways that complement efforts in the WTO and other forums.Reinforcing the global trade rules and systems that deliver a level playing field, market access, and give exporters certainty and transparency.
The WTO’s consensus model has become increasingly synonymous with paralysis. Every member holds a veto. Negotiations stretch over years before collapsing under competing national interests. Meanwhile, the world has changed dramatically.
Covid exposed just how fragile global supply chains really were. Russia’s invasion of Ukraine rewrote energy markets. Conflict in the Middle East has once again reminded exporters how vulnerable international shipping remains.
With the FIT Partnership, “you don’t need everybody to say ‘yes’,” says McClay.
“If a majority say, ‘work on this’, we build it up – and others can join later if they want.
“We’re not going to get bogged down in consensus.”
The trade landscape has dramatically shifted. Governments have embraced industrial policy on a scale not seen for decades. Economics has become an instrument of national security.
Washington increasingly uses tariffs as leverage. But trade is no longer simply about tariffs. It is about critical minerals, semiconductors, batteries, artificial intelligence, data, shipping lanes and strategic resilience.
New Zealand’s chief trade negotiator Vangelis Vitalis – along with officials from the three other founding members – has been quietly building out this initiative over many months.
It lacks the drama and sheer torture of negotiating the Indian free trade agreement, which rightly is to the fore in today’s visit by Prime Minister Narendra Modi to Auckland, or hosting the 2021 Apec summit virtually, but it matters.
As an aside, this small economies club formed their own ‘coalition of the willing’ well ahead of Canada’s Mark Carney urging middle powers to do so.
One of the more contentious workstreams recognises something some have been slow to acknowledge. People have become part of the supply chain.
Modern exports depend as much on engineers, software developers, researchers and specialist professionals moving across borders as they do on containers carrying milk powder, kiwifruit or manufactured products.
Reducing unnecessary barriers to skilled mobility may ultimately prove every bit as valuable as reducing tariffs.
The most politically sensitive issue of all is subsidies. For decades, New Zealand argued against agricultural subsidies while competing against governments prepared to spend billions protecting their own farmers.
Today the subsidy race has gone industrial. Governments are pouring extraordinary sums into semiconductors, batteries, hydrogen, electric vehicles, clean technology and advanced manufacturing. Industrial subsidies have become the economic weapon of choice.
“We’re looking at supply chain resilience, people and trade, and the harm subsidies are doing – industrial and agricultural,” McClay says.
“From my point of view agriculture has to be on the table, but you’ve got to put the other stuff in there as well.
“This is the start of that conversation.”
Countries like New Zealand cannot hope to outspend Washington, Brussels or Beijing. But together they can begin building the evidence, forming alliances and eventually the disciplines needed to prevent global markets becoming permanently distorted.
That conversation alone makes this coming week’s meeting significant.
McClay will also hold a series of bilateral meetings with countries New Zealand either wants to deepen relationships with or sees as future trade partners.
The first ministerial trade committee meeting under New Zealand’s new agreement with the United Arab Emirates is particularly significant.
Business has long complained that governments celebrate trade deals on signing day before losing interest in the hard work of execution. This meeting appears designed to avoid precisely that trap.
The broader significance reaches well beyond tariffs or customs procedures. It is about whether middle-sized and smaller economies still believe a rules-based trading order is worth defending.
Christopher Luxon’s Government has rightly made rebuilding New Zealand’s trade relationships one of its defining economic priorities. The India free trade agreement, the Gulf agreements, renewed engagement across Southeast Asia all point in the same strategic direction.
The great powers increasingly appear comfortable using economic coercion to pursue strategic objectives.
Thus the FIT partnership reflects a growing recognition that smaller economies can no longer afford to wait for Washington, Beijing or Brussels to determine the future of global commerce.
The real test will be whether successive governments maintain that outward-looking focus. Trade is easy to take for granted. Until markets close.
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