Prime Minister Christopher Luxon describes the "food for fuel" deal he has just concluded with Singapore as "world leading". While that language may sound unnecessarily Trumpist, the arrangement is certainly a positive one to be celebrated.

It reflects the ongoing strength of the relationship between Singapore and New Zealand and is a pragmatic and hopefully long-term response to the difficult international situation at present. Both countries are committing to trading commodities that each need, to their mutual benefit.

Singapore’s pragmatism since the time of Lee Quan Yew in the pursuit of growth and prosperity and advancing the interests of the city-state is legendary. So it was no real surprise that it should have shown such an interest in reaching a deal like this. Especially as since the end of World War II Singapore has consistently cited New Zealand and Australia as its two most significant regional partners.

But the pragmatism that underpins Luxon’s deal has also been a consistent strand in New Zealand’s trade policy over recent decades. Again, there is a similarity with Singapore. Both countries have had to deal with changes to British foreign policy that have adversely affected them. In Singapore’s case, it was Britain’s winding down and eventual abandonment of its East of Suez policy in the 1960s. For New Zealand, it was Britain’s decision to join the European Economic Community in 1973.

Faced with the double whammy of both losing long-term automatic access for sheep and dairy products to the British market and the first oil shock after the Yom Kippur war in 1973, New Zealand, as a small trading nation, faced rapid economic adjustment. The end of the guaranteed British market meant New Zealand had to develop and break into established markets elsewhere to sell its primary products and other manufactured goods. And that meant having to consider new mutual trading relationships.

Ironically, in the light of the current international situation, one of its earliest efforts involved Iran. In 1974, the Rowling government hosted the Shah of Iran on a state visit to New Zealand during which agreement was reached on New Zealand exporting lamb, cheese and wool to Iran in return for Iranian oil being exported to New Zealand.

It proved to be a highly successful arrangement. By the mid-1970s, Iran was purchasing around 60% of New Zealand’s lamb exports, and New Zealand had stability of oil supplies from Iran. However, it fell apart over the years after the 1979 Iranian Revolution, because the impact of international sanctions on the new Islamic regime caused severe foreign exchange shortages for Iran, making it a less reliable trading partner.

In a similar vein, but much less successfully, New Zealand reached an agreement with the Soviet Union in the early 1980s to trade dairy products for Lada cars. However, the collapse of the Soviet Union at the end of 1991, not to mention the inferior quality of Lada cars, put paid to this arrangement.

By contrast, Luxon’s deal with Singapore looks more soundly based. For a start, there is a measure of political stability in both countries which means it is likely to endure, whoever is in government in either Singapore or Wellington. Moreover, there is a historical dimension to New Zealand’s relationship with Singapore that runs deeper than its relationship with both Iran and the Soviet Union at the time those deals were concluded. And because of that, the ongoing relationship is much more multi-faceted.

Over the years, many New Zealand politicians have spoken enviously of Singapore’s economic development and sought to apply its lessons to New Zealand’s somewhat less stellar economic development and resilience. Since 2000, Singapore and New Zealand have had a free trade agreement, the Closer Economic Partnership, and the "food for fuel" arrangement will be incorporated into this agreement. Again, this should provide greater certainty for its future viability than the earlier agreements.

It seems likely that the United States’ demolition of the rules-based approach that has underpinned international relations since 1945 will lead to more direct country-to-country and regional economic and political arrangements. In that regard, New Zealand’s experience in reaching this deal with Singapore should serve it well in reaching similar deals with other regional partners.

This arrangement is not just a “nice to have”. Rather, the "food for fuel" deal is a vital part of the jigsaw of our future approach to trade and international relations.

Taken together, the “food for fuel” deal and the free trade agreement signed with India earlier on Luxon’s current overseas trip, make last week one of the most significant for a New Zealand government in recent years.