7 Mar 2017

McCully believes Gulf trade deal can be finalised this year

9:58 am on 7 March 2017

Foreign Minister Murray McCully is optimistic the stalled free trade deal with the Gulf states will be completed this year, he says.

Foreign Minister Murray McCully attends a meeting with his Chinese counterpart Wang Yi in Auckland on February 10, 2017.

Murray McCully is meeting Gulf Cooperation Council political leaders this week (file photo). Photo: AFP

Trade talks with the six-member Gulf Cooperation Council (GCC) wrapped up in 2009 but the deal was never ratified by the parties involved. It is not clear why it has taken this long since the negotiations concluded.

Mr McCully is in the Gulf this week meeting GCC political leaders to promote trade and bolster support to push through the deal. The GCC comprises Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain and Oman.

"We see the conclusion of a free trade agreement with the Gulf states as one of our highest trade policy priorities,", Mr McCully told Reuters in Abu Dhabi.

He said he was very optimistic the deal would be finalised this year.

New Zealand believes a GCC trade agreement would lift exports beyond the region, with Mr McCully calling the Gulf "the gateway for the whole of the Middle East and Africa".

Annual two-way trade between New Zealand and the GCC is worth more than $3.2 billion, according to the Ministry of Foreign Affairs and Trade. Main exports to the region include dairy and sheep meat.

New Zealand is perceived by Arabs to have gained political capital in the region after it jointly put forward in December a UN Security Council resolution demanding an end to Israeli settlement activity on land the Palestinians want for a state, Reuters reports.

All Arab countries support an independent Palestinian state and Qatar's foreign minister, Sheikh Mohammed bin Abdulrahman, al-Thani, thanked Mr McCully in their meeting on Sunday for New Zealand's role in passing the resolution, the state-run Qatar News agency said.

Israel recalled its ambassador to Wellington after the resolution passed and New Zealand is "still not clear on how that's going to play out", Mr McCully said.

"I've made it clear from the beginning that we greatly value the friendship we have with Israel and hope that we will be able to get back into the sort of friendly relationship that we've enjoyed in the past," he said.

New Zealand's term on the security council, which ended in 2016, also included holding the rotating presidency when sanctions on Iran were eased after an accord was reached in 2015 on Tehran's nuclear programme.

New Zealand has since sought to deepen economic ties with Tehran, however remaining banking restrictions on Iran make it "a bit difficult", Mr McCully said.

Iran would need to make "some movement", including resetting its relationships in the region, "to see optimal trade patterns to resume", he said.

Gulf states, including Sunni majority Saudi Arabia, accuse Tehran of interfering in their internal affairs. Shi'ite majority Iran denies the accusations.

Mr McCully also met UAE counterpart Sheikh Abdullah bin Zayed al-Nahyan in Abu Dhabi. His regional visit will also include Saudi Arabia, Kuwait and Bahrain.

- Reuters

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