New Canadian PM can take chance to resolve NZ trade dispute

Newsroom

30-04-2025

Analysis: Canada's Mark Carney arrived at the Office of the Prime Minister and Privy Council in Ottawa, the morning after his Liberal Party won the federal elections. The party was just three shy of a majority, and preparing to run the country as a minority government.
Elections Canada says it was the highest turnout in more than 30 years. It's not a rout, but it's a strong result for the former governor of Canada's central bank. Conservative leader Pierre Poilievre lost his own seat, bringing his leadership of the Opposition into immediate question.
Carney took over the Liberal leadership after Justin Trudeau resigned this year, and the economist-turned-politician quickly turned around the party's floundering fortunes. But much of that was thanks to US President Donald Trump's extraordinary interventions: launching a trade war against the USA's oldest friend, and proposing to annex it as a 51st state.
On the eve of the election, Trump had trolled Canadians on social media, suggesting that if they became 'the cherished 51st state of the USA', then they'd be able to elect him, and enjoy zero tariffs. 'No more artificially drawn line from many years ago. Look how beautiful this land mass would be.'
In the face of this existential threat, it seems Canadians have rallied around the maple leaf flag. But most of all, they've looked to Carney as a safe manager of the country's economy.
After the election result, Trump's softened his tone. He's spoken with Carney, congratulating him on his win. Carney has said he's not interested in visiting the White House unless there's something in it for Canada, but has agreed to meet Trump, somewhere, in the near future.
'The leaders agreed on the importance of Canada and the US working together – as independent, sovereign nations – for their mutual betterment,' Carney says.
'Canada now has the opportunity to resolve this long-standing CPTPP trade dispute in a way that honours their obligations to New Zealand dairy exporters and is beneficial for Canadian consumers' Todd McClay, NZ Trade Minister
It would be wrong to see the election as all about Trump: in the final days of the campaign, local media say attention turned again to domestic concerns, including housing affordability, the inflation of food prices, a crumbling health system, immigration, and crime.
Any risk the 'tough on crime' Poilievre may capitalise on this week's tragic vehicle attack at a Filipino festival in Vancouver was offset by Carney pausing campaigning and flying straight to Vancouver to support police and victims.
Walking the trade talk
As a long-standing trading partner, New Zealand will have its own questions for Carney. Because, despite his rhetoric of trade liberalisation in the face of Trump's tariffs, Canada has entrenched trade barriers of its own.
Indeed, New Zealand's biggest and ugliest trade dispute is with Canada, challenging the administration of its CPTPP trade partnership dairy quotas. The arbitration panel ruled in New Zealand's favour, but Canada has blithely ignored its orders, forcing the two countries back to the negotiating table this year.
Prior to that, New Zealand won a World Trade Organization ruling over Canada providing export subsidies for its dairy farmers. New Zealand supported Australia in a WTO dispute about Canadian protections for its domestic wine, and supported the US in a dispute over Canada dumping lumber.
New Zealand Trade Minister Todd McClay has offered his congratulations to the re-elected Government in Canada, and says he'll look to engage with them quickly once they are sworn in.
'Canada now has the opportunity to resolve this long-standing CPTPP trade dispute in a way that honours their obligations to New Zealand dairy exporters and is beneficial for Canadian consumers,' he tells Newsroom.
Carney is an economist; he surely understands the value of free trade. And if he wants to claim the moral high ground in a trade war with Trump, arguably his first task should be to clean shop.
That may be a forlorn hope.
Stephen Jacobi is a former diplomat and trade negotiator, who represented New Zealand in Ottawa. He says a lot of Ontario and Quebec electorates have dairy farmers, which is the perennial problem in trade talks with Canadian governments.
And because the US dairy industry has Canada's farmers in its sights, any concessions to New Zealand could be misinterpreted by Trump as weakness. Announcing his reciprocal tariffs, Trump singled out tariffs of 250-300 percent on US dairy exports to Canada for special mention: 'It's not a pretty picture and we don't like it.'
That said, Canada now desperately needs to diversify its trade. Jacobi suggests that may increase their interest in expanding the CPTPP, which gives New Zealand another opportunity to raise the dairy issue.
Security relationships
On security, Carney has already shown he wants to pursue closer defence ties with the European Union, South Korea and Australia – at the expense of the US. He says Canada is reconsidering its purchase of American F-35 fighters, and has announced the purchase of JORN over-the-horizon radar from Australia.
None of that will directly affect New Zealand in any significant way, except that it accelerates the acrimonious divorce between the US and its old trade and security partners. In the Canadian election yesterday, and potentially in the Australian election this weekend, conservative strongman leaders are being penalised for aligning too closely to the ever more volatile Trump.
Writing at Newsroom, Sam Sachdeva says the New Zealand Prime Minister will be watching the fortunes of those politicians with a wary eye.
Christopher Luxon has already offered Carney his congratulations. 'There's so much New Zealand and Canada share in common, with a lot more we can do together,' Luxon posted on social media. 'I look forward to working with you as you get down to business.'
Foreign Affairs Minister Winston Peters may be cosy with the Trump administration and its 'war on woke' – but there's every reason for Luxon to continue distinguishing his Government's policies from those of Trump's.
'Luxon may be able to draw contrasts with Trump in a way that his foreign minister judges to be suitably diplomatic, or at least not worthy of public repudiation,' Sachdeva says, 'but that will be a fine line to walk, and the Prime Minister will need to get better at handling such internal disagreements.'