Cuddly Russians want more than just trade

Russia today squeezes New Zealand closer to being a pivotal pawn in Moscow’s foreign policy strategy for the Asia-Pacific region.

Today’s “consultations plan” signed with Russian foreign minister Sergey Lavrov formalises bilateral cooperation for another two years, a positive step towards improved relations and trade development between both countries.

Most recent ministry of foreign affairs figures to December 2010 showed exports to Russia sat at $275.7 million – mainly butter, sheepmeat, fish and cheese - while imports to New Zealand totalled $424.7 million worth of fishing boats and chemicals.

So there’s plenty of room for growth.

But hyped-up hurrahs for yet more trade need to be seen in the context of Moscow’s determination to carve for itself a strategic position in the region – alongside the United States and China.

Russia has always had its eyes on a strong foothold in the Pacific as a means to counter American, and now, Chinese, influence in the region.

An FTA with New Zealand is more a trophy for Russia, but New Zealand could benefit if it played it cards well, National Business Review foreign affairs correspondent Stuart McMillan earlier wrote.

Barely 19 months ago, Mr McMillan discussed the view of trade minister Tim Groser, that “nobody, with the exception perhaps of Australia, has ever done a deal with New Zealand for overtly commercial reasons.”

The prize for Russia in starting FTA negotiations with New Zealand, according to Mr Groser, was buying a “low cost entry ticket” with a small APEC economy deeply involved in and designing the development of Asia-Pacific trade and investment strategy.

Mr Groser told a seminar at the New Economic School, a Moscow university, Russia needed to participate in FTA strategy if it wished to shape the future of the world’s most dynamic economy.

According to Mr Groser, New Zealand had been realistic in its discussions leading up to FTA negotiations, fully recognizing that it was a strategic, not a commercial play, for Russia.

It was the same for all the big economies New Zealand had either negotiated, or was negotiating, with.

He described an FTA with Russia as an example of “future-proofing” New Zealand’s economy and which offered hope for Russian investment, particularly in agricultural joint ventures.

Meanwhile, New Zealand hopes to have an FTA tied up by the time APEC meets in Vladivostok later this year, NBR reported this month.

If the trade deal comes off, it will be the first Russia makes with a country which is a member of the OECD, Mr McMillan reported.

Mr McMillan said that should offer some advantages to New Zealand – just as it did by being the first to sign a free-trade deal with China.

New Zealand also hopes for trade deals with Taiwan, South Korea and India.