North Korea trade deal highly unlikely - expert

  • 22/04/2018

A free trade deal with North Korea is unlikely anytime soon despite the Foreign Minister's optimism, according to one expert.

Winston Peters has hinted that North Korea's softening nuclear stance makes future trade talks look promising.

"We hope in the long-term we've got a free trade deal with North Korea," Mr Peters said on Saturday, after the hermit nation announced an end to its nuclear weapons and ICBM testing.

"Right now we're talking to North Korea through the back door for the United States - this is dramatic stuff and we need to do that."

But International Business Forum executive director Stephen Jacobi says it's unrealistic.

"The fact of the matter is North Korea is not a market economy. They'll be starting so far back in the economic stakes to be able to negotiate something like this," he told Newshub.

Mr Jacobi says the more North Korea proves it wants to be civil, more trading opportunities will arise - and New Zealand could play a role in that process, having undergone dramatic changes in its economic structure in the 1980s and '90s.

"New Zealand does have a lot of experience in economic reform and structural adjustment, but North Korea's got a long way to go. It's baby steps at the beginning, and only if they were willing to become part of the civilised group of nations."

But it will take years to undo the damage caused by seven decades of isolation.

"I cannot imagine a scenario where in the next few years, we would be negotiating freer trade with North Korea. Because they don't have a market economy, it's not even clear what they could possibly offer. I just think it's entirely hypothetical at this point."

New Zealand company Pacific Aerospace was recently found guilty of breaching United Nations sanctions for indirectly exporting replacement plane parts to North Korea.

While North Korea has promised an end to its testing, it's got no plans yet to dismantle its weapons.

Mr Peters has recently been talking up the possibility of a trade deal with Russia, but is backing off considering its ally Syria appears to be using chemical weapons against rebels and civilians.