12 Aug 2016

Day after day a new story from McClay

10:23 am on 12 August 2016

Another day, another revelation about when the government became aware of a possible trade dispute with China, and what was done about it.

09082016. Photo Rebekah Parsons-King. Caucas run.Todd McClay.

Minister of Trade Todd McClay now says the government was aware of the China's trade concerns in May. Photo: RNZ / Rebekah Parsons-King

At the centre of the story are warnings given to the kiwifruit exporter Zespri from industry players in China about possible trade retaliation if New Zealand authorities investigate steel dumping complaints against China.

And this story has moved a long way since it broke while Prime Minister John Key and Trade Minister Todd McClay were in Indonesia.

At the time they dismissed media reports as "extremely hypothetical" - now Mr McClay has said there were discussions between the Chinese and New Zealand governments, back in May.

When it was first put to Mr Key and Mr McClay that at least one New Zealand exporter had been warned about possible retaliation, that was rejected as unsubstantiated allegations.

Then Mr McClay said he had been told about it the week before when he was in China.

Upon his return to New Zealand, in a statement he said the Ministry of Foreign Affairs and Trade had been working to "assess the veracity" of reports for a few months.

Now Mr McClay has said there were specific discussions some months back.

"In late May I was made aware of Chinese concerns, there was engagement and limited correspondence at that time.

"I can't go into detail about what that is because legislation prohibits me from talking about any competition issue."

Amid all of this has come a temporary halt to Zespri exports to China, after Chinese authorities found fungus in two containers of kiwifruit.

The government insisted this was only because of what it called "technical issues", and had nothing to do with complaints about steel.

Labour Party leader Andrew Little has questioned the timing.

"I think we need to know more.

09082016. Photo Rebekah Parsons-King. Caucas run. Andrew Little.

Labour Party leader Andrew Little. Photo: RNZ / Rebekah Parsons-King

"People says it's a coincidence - it is at the very least a coincidence that within a couple of weeks of talk of threats of retaliatory action and use of non-trade barriers we see the use of a non-trade barrier, namely this concern about this kiwifruit fungus.

He said he understood from people in the industry that kiwifruit with that fungus had been crossing the border for years.

"That this issue is nothing new to the Chinese authorities so I think we do need to know more about what is motivating the Chinese."

New Zealand First leader and former Foreign Minister Winston Peters said this went further than diplomatic exchanges about trade concerns.

Winston Peters on the bridge at Parliament.

New Zealand First leader Winston Peters. Photo: RNZ / Alexander Robertson

"The reality is that you've had a cacophony of cheerleading for the New Zealand/Chinese relationship.

"But the fact is we are being heavied now, we're being pushed around on matters that we should have sorted out at the time of the 2008 free trade agreement."

Furthermore, he said, the government has been too slow and too timid in its response.

"The New Zealand government should have quickly circled the wagons to find what they were up against because our trading future is dependent on getting a fair go in markets like China, and elsewhere."

Mr Little said the government had not been straight with New Zealanders.

"The idea that the Ministry of Foreign Affairs would be dealing, since May, with allegations of retaliatory action and the Minister either not across that, or not prepared to talk about it, or apparently not briefing his own Prime Minister, I think that is indefensible for a minister and we need to know more."

The government said it has continued to seek and receive assurances from China there would be no trade consequences if a complaint about steel dumping has been laid, and if New Zealand authorities decided to investigate.

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