New Zealand plans new policy to boost trade

The New Zealand Ministry of foreign affairs and trade issued its trade agenda 2030, presenting the country’s trade policy strategy, to further enhance the sector and to enable exporters to continue to seize opportunities presented by new markets and sectors. The report delivers on this commitment, setting out four key shifts in its trade policy that are necessary to this objective.

Hon Todd McClay, Minister of Trade, noted that, as a clear indication of its export ambition, the country sets the ambitious target for 90 percent of New Zealand’s merchandise goods exports to be covered by FTAs by 2030, so the next 3-5 years will be a period of particularly intense effort to achieve that goal. That said, this new strategy is intended to set a broad policy direction over a 10-15 year timeframe. The challenges that exist do not change the fundamental basis for the strategy: that trade is vital to the New Zealand economy and the livelihoods of New Zealanders. The strategy is intended to provide a long-term directional guide to assist New Zealand achieve these objectives.

Some strategic orientations for New Zealand’s trade policy in the period ahead are set out. These ‘shifts’ will necessarily be put into effect over time and remain flexible in their implementation:

More than half of New Zealand’s exports of goods are now covered by Free Trade Agreements. Given recent developments, we should urgently extend that coverage with key trade partners wherever it is possible to secure high-quality trade agreements, while also doing more to ensure that business can take full advantage of our existing agreements. As the country reaches the point in future where a more substantial proportion of its goods exports are to markets covered by FTAs, it is likely to spend less effort on negotiating new agreements and more on maximizing benefit from that architecture through an increased focus on implementation, enforcement and enhancement of existing agreements. Trade Agenda 2030 sets a target of covering around 90 percent of New Zealand’s merchandise goods exports through FTAs by 2030. Aiming for that target will not lead to any compromise in our usual FTA standards. High-quality comprehensive agreements deliver the maximum benefits for New Zealand. Negotiation of new agreements will not then be precluded, but will have to be justified against rigorous criteria;
As tariffs reduce, there is greater attention on non-tariff barriers. Tariffs are still important for some sectors (notably dairy) and higher tariffs on more processed products often still confront New Zealand exporters. Government will still look for ways to address these, but progress on
tariffs allows increased focus on non-tariff measures such as subsidies, customs delays and technical barriers, which are holding businesses back;
The rise of trade in services, investment and digital trade. An increased focus on measures affecting services, investment and the digital economy. Services are a growing part of the country’s exports. Overseas Direct Investment (ODI) is key for businesses to better position themselves in value chains, get closer to customers and add value to volume. Digital trade is important to help reduce the enduring challenges of distance and small scale; and Competitive ‘market success’. An increased focus on helping exporters translate market access opportunities into competitive success against businesses from other countries, i.e. ‘market success’. As part of this, there is the need to deepen and expand New Zealand’s exporting base. It is estimated that only 267 businesses export over $25 million per year.
The global economic landscape has evolved considerably over the past 20 years and will continue to do so. With ongoing change comes uncertainty and, as a small country, it is important that it is able to manage any uncertainties effectively. Throughout this, the WTO will remain
critically important for New Zealand. This trade policy strategy refresh is an evolution. It builds on, and retains, the four tracks of the current strategy, which has proved successful. At the same time, it explicitly provides for changes, over time, in the weightings across and within those tracks.

In addition, the government notes that the composition of New Zealand’s trade – both in terms of what it sells and the markets it sells to – has changed considerably over the past 20 years. As transport links and information super highways have evolved, regional supply chains have lengthened and more developing countries have opened their doors to international commerce. There have seen significant increases in both the value and volume of global trade. Fast-growing Asian countries have become major importers of foreign goods and an increasingly significant source of tourists and students. Other services, like software development, consultancy and engineering are more tradeable than ever and making a significant contribution to the export earnings of many countries. Recently, the Government has pioneered sale of Government expertise to other Governments, for example in the Gulf. This ‘G2G’ export channel has proved successful to date.