Here’s my summary of the key events from over the weekend that affect New Zealand, with news of an historic breakthrough for our agricultural exporters.
World Trade Organisation members have agreed to eliminate subsidies on agri exports, at their 10th Ministerial Conference in Nairobi. Fonterra’s chairman says the agreement comes after decades of negotiations and is key to levelling the playing field within the dairy industry.
Trade Minister Todd McClay says it’s been illegal to subsidise the export of industrial goods for more than 50 years, so it’s a major achievement to extend this principle to agriculture.
In a second win for our exporters, McClay has announced the New Zealand-Korea Free Trade Agreement will see tariffs on nearly half of our exports to Korea eliminated. He says current duty-free access to the Korean market will now be ‘bound in’, and existing tariffs will be done away with on $793 million of exports.
The 30% tariff our wine exporters pay will be removed, while the 45% duty our kiwifruit exporters pay will be eliminated and their tariffs reduced by 7.5%. McClay says some forestry products, some aluminium and many other industrial goods will enjoy duty-free access to Korea. He says the service sector will also benefit from the agreement.
Emerging economies like China, India, Brazil and Russia are a step closer to gaining more influence within the International Monetary Fund. The US Senate on Friday ratified reforms to boost the representation of these economies, putting them among the IMF’s top 10 shareholders. The legislation will now go to President Barack Obama.
In New York, the UST 10yr yield benchmark has slipped back 7bps since Friday to 2.20%.
The US benchmark oil price is just below US$35/barrel, while the Brent benchmark is just under US$37/barrel.
The gold price has risen since Friday to US$1,065/oz.
The US dollar has given back some of its Federal Open Market Committee gains, following a run of weaker data. It’s eased back against the New Zealand dollar to 67.4 US¢, as the preliminary estimate for the Markit services Purchasing Managers’ Index was lower than expected. The NZD is at 93.8 AU¢ and 62.1 euro cents. The TWI-5 is at 72.9.
If you want to catch up with all the local changes on Friday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».