Exports to the USA show success of New Zealand’s emerging high-tech sector

Trade and Export Growth

A new economic report shows the important role the United States plays as an export market for high-value and high-technology New Zealand products as the country builds its COVID-19 recovery, Trade and Export Growth Minister Damien O’Connor said.

A new report released by the NZUS Council titled The NZ-US trade relationship: stability and diversity in a time of change, shows that while the primary sector remains the top NZ exporter, digital services have become a major contributor.

“New Zealand is a trading nation and supporting our country’s hard-working exporters remains a priority for this Government. It’s crucial we show the diversification of high quality exports that New Zealand has to offer – and in doing so accelerate our economic recovery from COVID-19,” Damien O’Connor said.  

“The United States is New Zealand’s third largest trading partner overall and it is now our largest destination for services – receiving over 22 percent of our total service exports.

“Digital services are a major contributor, with NZ$682 million worth of exports to the US spread across computer services and software license exports. US trade and investment has also played a key role in the development of the New Zealand space industry.”

The report found New Zealand’s primary sector remains the backbone of exports to the United States, but showed a significant shift in the balance of products.

“It’s clear that we’re shifting up the value chain and away from a volume focus. American consumers are developing a taste for distinctive New Zealand primary products like wine and honey, which respectively earned $625 million and $75 million in 2020,” Damien O’Connor said.

“When it comes to our more traditional beef and sheep meat products, consumers are demanding a wider range of cuts. They’re also becoming significantly more conscious of the health benefits of our food and environmental upside of our production systems as evidenced by the successful Taste Pure Nature campaign.

“Changes in our dairy exports complement the high-tech trend, where we’re now seeing New Zealand dairy exports to the US diversified across a range of high value specialised dairy products. These products range from high quality whey protein to nutritional ingredients used in the sports, medical, and paediatric sectors.

“This report demonstrates that the USA is a vibrant market that sees value in the widest range of services and goods that New Zealand proudly exports.

“Trade is vital to our economic recovery from COVID-19 and we will continue to support New Zealand companies doing business with the United States when the Prime Minister travels there, amongst other countries, on her trade mission later this year to further accelerate that recovery.

“Our Trade for All agenda has very good momentum. We have just signed our historic FTA with the United Kingdom, our negotiations for one with the EU are progressing and we remain committed to opening up opportunity for New Zealand businesses abroad,” Damien O’Connor said.

The report was commissioned by the NZUS Council and the Ministry of Foreign Affairs and Trade, and was prepared by Sense Partners.

Link to the full report: https://www.nzuscouncil.org/wp-content/uploads/2022/03/REPORT-NZUS-trade-relationship-Stability-and-diversity-in-a-time-of-change.pdf

Key findings of the report

  • The bilateral trade relationship has grown steadily over the past 15 years, averaging over 5% annual growth. Pre-COVID, bilateral trade was over NZ$21 billion. Bilateral trade is now NZ$17.6 billion as of the year ended September 2021.
  • The US remains a vital trade partner for New Zealand, ranking 3rd for goods exports and imports, and – since COVID’s arrival in early 2020 – is New Zealand’s largest services market.
  • Bilateral services trade grew by an average of 7.9% from 2007 to 2019. This compares to 3.6% average growth for New Zealand’s agricultural goods exports and 2.8% for non-agricultural goods exports.
  • New Zealand’s exports of computer-related services have doubled over the past four years and now account for around 25% of services exports to the US.
  • In 2006 the volume of New Zealand dairy exports to the US peaked at around 193,000 tonnes, valued at US$663m. In 2020, the value of New Zealand dairy exports to the US was US$544m, but with a volume of only 95,000 tonnes. This shows a clear volume to value shift.
  • Wine – primarily Marlborough Sauvignon Blanc – is now New Zealand’s second largest primary goods export to the US (NZ$625 million in 2020, with average growth of over 10% per year since 2010).
  • At NZ$260 million in 2020, sleep apnoea machines now account for a larger share of New Zealand’s exports to the US than timber or casein.