PM censures Trade Minister for 'head of a pin' answers on China trade threat

John Key told reporters he had not requested or been offered Todd McClay's resignation. With special feature audio.

Prime Minister John Key has censured his newbie Trade Minister, Todd McClay, for "dancing on the head of a pin" in answers he gave to both Key and news media when first asked about alleged trade threats from China over steel imports.

Speaking after launching a new government initiative aiming to make New Zealand 'predator-free' by 2050, Key told reporters he had not requested or been offered McClay's resignation, although McClay had apologised to him for his handling of the issue, which blew up while Key and McClay were travelling in Indonesia.

McClay initially claimed, in comments that Key also relied on for his own statements, that contact between a Chinese non-government agency and kiwifruit exporter Zespri International was the full extent of activity relating to the alleged potential for retaliation by China against key New Zealand agricultural exports if Chinese steel was ruled to have been dumped in the New Zealand market.

In fact, dairy exporter Fonterra Cooperative Group had heard the rumours and the Ministry of Foreign Affairs and Trade had undertaken its own investigation into the rumours, receiving official assurances from Chinese authorities that no such retaliation would occur.

"Certainly when the issue was raised and I was in Jakarta, the briefing I had was that the only discussions had been a non-government agency and Zespri and that's not correct and he (McClay) should have made both the media and myself aware of that," said Key of an issue that has now been running for more than a week. "I think he took a very literal interpretation of the question that was asked of him.

"While he may have been technically correct, that's giving a very specific and I think 'dancing on the head of a pin' type of answer to what was really a broader question."

He had left "the wrong impression" that the only contacts had been between Zespri and an unofficial source.

Key had met McClay this morning to tell him he had been "under the very clear illusion when I answered questions that there had been discussions between the commercial sector and the industry body and the company. What he's now telling me is 'yes, there have been discussions with a number of parties, some very limited correspondence', and that doesn't quite fit with what I understood at the press stand-up in Jakarta," Key said.

"So it's not really a controversial matter for the Minister in so much of his engagement, it's simply a matter of whether that's a genuine threat or not and he needs to be able to answer that and I'm not sure that we did that in quite as fulsome a way as we still would be able to do while still preserving WTO rules."

Labour leader Andrew Little issued a statement calling for McClay's resignation, saying he was "clearly out of his depth."

Earlier this afternoon, McClay released a statement apologising formally to Key for the fact that there had been discussions on the steel issue for some months.

"I want to make it clear today that there have been discussions and limited correspondence over the past few months as the Ministry of Foreign Affairs and Trade has endeavoured to assess the veracity of these reports," he said. "I should have requested a more thorough briefing before I responded to questions on this issue.

"I have apologised to the Prime Minister for not being able to provide more details at the time."

The issue of whether Chinese steel is being sold below the cost of production on global markets is a highly sensitive one at present for Beijing, which is fighting American, European and other major steel producers on the issue.


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