“Supporting a Trade-Led Economic Recovery”
Trade Policy Road Show Speech
Kia ora koutou – nau mai, haere mai ki Manukau, ki Tāmaki.
Good morning everyone, and thank you for this opportunity to discuss with you current global challenges, opportunities and the Government’s strategy in support of a trade-led recovery from the economic impacts of the COVID-19 pandemic.
Wearing both my Trade and Agricultural ministerial hats, I’d like to thank the manufacturers and farmers who have worked so hard for New Zealand through such challenging times.
I would like to acknowledge the presence today of so many members of the local business community, industry associations, international business councils and Chambers of Commerce. It’s a real pleasure to see you here demonstrating the value you place in New Zealand’s trade. It’s also great to see members of the Diplomatic and Consular Corps, and of academia, civil society and others participating in this event. Nau mai, haere mai. Welcome. And lastly, given the role South Auckland plays in hosting many of our Pasifika communities, and in connecting New Zealand and the Pacific, I am delighted to be joined today by my colleague Hon Phil Twyford, who is responsible for our PACER Plus free trade agreement, which encompasses many Pacific nations.
South Auckland is a fitting venue to play host to this Trade-Led Recovery roadshow. Highbrook and Auckland Airport’s business parks are two of the country’s largest manufacturing and distribution hubs. There is an important ecosystem for international trade around this area, from nearby MIT which teaches import and export shipment processes, to the Pacific Business Hub, which offers a platform for start-ups to collaborate and share resources before they expand overseas.
A challenging global context and trading environment
It goes without saying that we find ourselves in an increasingly difficult trading environment. Globally, we are in a time of unparalleled international turmoil and geopolitical uncertainty. We need to be clear about the challenges we face to inform our strategy in support of a trade-led recovery.
The pandemic has triggered a massive economic shock, resulting in the largest global downturn since the Great Depression. The OECD estimates that global GDP fell by 3.4% last year, and the World Trade Organisation calculates that global goods trade contracted by over 9%.
While New Zealand’s trade over the past year has performed better than many initially feared, New Zealand’s two-way trade fell 13%, which represents the largest annual fall since data began to be collected in the early 1970s. It is not all bad news, however, and our goods exports were a relative bright spot, with the strong performance of fruit, dairy and some manufacturing such as health technologies. Overall, our exports continued to provide much needed support to the New Zealand economy during the worst of COVID-19’s disruption.
I am, however, aware that many businesses and exporters have been hit hard. At the same time many, including many of you, have shown remarkable resilience and agility in the face of the unprecedented challenges thrown up by COVID-19. Thank you all for those efforts. I will return later to the Government’s commitment to providing ongoing support to our exporters.
Unfortunately, even before the onset of the pandemic, it was not getting any easier to be a small and distant trade-dependent country.
Geostrategic competition between large countries has intensified and protectionism is on the rise with a significant increase in subsidies and new trade barriers globally. The international rules-based system, that for decades has underpinned global stability and prosperity, is under pressure at a time when we most need coordinated action on issues as diverse as international trade, vaccine roll outs, and climate change.
Now, more than ever, New Zealand’s commitment to strengthening rules and international institutions, as well as broadening and deepening our international relationships will be essential. And as you will be aware, New Zealand’s trade policy has long been focused on mitigating risks for our exporters through pursuing access to a diversified range of international markets. We have seen over the past year that every one of our key export markets is vulnerable to global shocks. I urge you all to consider you own commercial diversification strategies in the light of this.
New Zealand’s strategic response in support of a trade-led recovery
In the current climate, we need to be clear-eyed about the strategies that we are deploying to meet current challenges. Central to our strategic approach to supporting a trade-led recovery is a commitment to multilateralism, international rules and institutions, and broadening and deepening our relationships to diversify export markets and build resilience.
I wish to spend some time now outlining our key strategic priorities in these uncertain times.
Firstly, we are actively supporting international trade rules and organisations. We are working to reform and strengthen the World Trade Organisation, to ensure it remains effective and can contribute to solving contemporary global challenges. The appointment of new WTO Director General, Dr Okonjo-Iweala, and signs from major economies of renewed commitment to the multilateral system, are positive developments, but much work remains to be done by New Zealand in support of the multilateral trading system.
Secondly, we’re refreshing key trade relationships, and increasing our presence in regional trade architecture, including through Free Trade Agreements, to ensure our businesses have many overseas market options.
It is no coincidence that today’s roadshow began with senior MFAT officials updating you on our key trade negotiations. Diversification has long been a key principle of New Zealand’s trade policy, and the Government will continue to encourage all businesses to consider their market concentration and exposure risks. As my colleague, Minister of Foreign Affairs Hon Nanaia Mahuta, recently stated, New Zealand must avoid overreliance on any one trading partner. It is vital to our long term economic resilience and well-being that we remain agile in the face of changes internationally.
To that end, as you heard this morning, we are continuing negotiations on important new Free Trade Agreements with the European Union and the United Kingdom, New Zealand’s third and sixth largest export markets respectively. CPTPP remains our largest FTA in force and there is potential interest from the United Kingdom and other economies in joining that agreement. We are also refreshing our agreements with ASEAN trading partners and pursuing our FTA with the Pacific Alliance, a Latin American grouping. We’re also keeping an eye on options with other regions.
In November, I signed the Regional Comprehensive Economic Partnership Agreement – estimated to increase New Zealand’s GDP by around $2 billion once fully implemented. RCEP membership accounts for nearly a third of the world’s population, and over half of New Zealand’s exports. I have also recently signed an upgrade to New Zealand’s FTA with China, which supports our continued trade with our largest trading partner.
A third strategic priority to support a trade-led recovery is our commitment to ‘open plurilateral agreements’. These include the Digital Economy Partnership Agreement (DEPA) signed by Singapore, Chile and New Zealand last year – a first of its kind that establishes new approaches to digital trade. Another is the Agreement on Climate Change, Trade and Sustainability (ACCTS) which we are negotiating with Costa Rica, Fiji, Iceland, Norway, and Switzerland. This will utilise trade rules and practices to achieve mutually-supportive outcomes for the environment and trade.
All these agreements will build relationships and broaden opportunities for our exporters to rebound more strongly from the challenges they have faced over the past year.
Fourthly, and beyond our trade deals, New Zealand continues to support global public good institutions that build trade, such as APEC. New Zealand’s hosting of APEC this year is directly relevant to our trade-led recovery, and our efforts to make sure trade is delivering for all. This year, we are working with the 20 other APEC economies to lead a collaborative economic response to COVID-19. I will chair the meeting of APEC Ministers’ Responsible for Trade on 5 June and we hope that all 21 APEC Trade Ministers will set a clear direction for enhanced regional trade in these times of uncertainty. A focus for the meeting will be for Ministers to commit to tackling COVID-19 issues together, including to ensure that critical vaccine supply chains remain open.
As you know, COVID-19 has exposed vulnerabilities in global supply chains and differences in how governments and businesses are choosing to respond. Some governments have encouraged the re-shoring or shortening of supply chains and manufacturing to reduce reliance on imported products, while others have encouraged businesses to diversify their supply chains. We need to position New Zealand favourably within this evolving context to protect our resilience and growth.
Exporter support is at the centre of a trade-led recovery
The fifth strategic priority in support of a trade-led recovery is improved exporter services.
Supporting exporters requires all government agencies to work in a coordinated way. This morning, an inter-agency Exporter Support panel described improved exporter support, tools, and market intelligence. These are designed to allow businesses that are thriving through the pandemic to build on this success, while giving those that have endured harsh market shocks the information and tools to rebuild and find new opportunities. I encourage you to work with those agencies so that they can better support you in these challenging times, especially if you are affected by travel restrictions. Some examples of additional support that the government is providing include:
- NZTE has doubled the number of high focus export companies, launched a myNZTE portal, and expanded its services to significantly more export companies. NZTE has also put more people in overseas posts and doubled the International Growth Fund.
- MFAT Posts have published 167 market intelligence reports to help exporters unable to travel. MFAT, along with MPI and Customs, are also resolving more non-tariff trade barriers including several covering over $155 million of trade in recent months.
- The Ministry of Transport is working with industry to mitigate sea freight supply chain delays while MFAT is publishing updates on global supply chain disruptions. The government also recently established a Maintaining International Air Connectivity (MIAC) scheme, which will run until the end of October, with the possibility of extension to a final date of 31 March 2022.
- NZ Customs continues to promote the benefits of joining the Secure Exports Scheme, and is working with SMEs and Māori exporters to ensure Customs’ services meet their needs.
I also want to acknowledge the difficulties that many businesses continue to face as a consequence of our current border settings that impact on international travel.
On 19 April, we saw our Quarantine Free Travel with Australia commence and the roll-out of system improvements to the Managed Isolation Allocation System. Our expectation is that this development will free up some capacity in MIQ. The Government is also committed to a 10% target for critical workers coming into the country.
The vaccine will be made available to the broader public from July this year and officials are looking at the development of verifiable vaccine certification that could be used to facilitate travel, recognising that safe international connectivity remains fundamental to the economic and social wellbeing of New Zealanders. We have made a concerted effort to ensure front line workers have been vaccinated, this includes those workers keeping our critical supply chains operating.
Finally, and importantly, our Trade for All Agenda underpins this entire effort, to ensure that trade delivers for all New Zealanders, including Māori as treaty partners. This focus is essential, if trade is to be successful and sustainable in the longer term.
All New Zealanders need to not just understand the benefits of trade, but also be able to share in those benefits.
I want to conclude by reiterating that while New Zealand exporters and importers are facing challenging and turbulent times, there are opportunities for us all to contribute to New Zealand’s recovery from COVID-19.
Our successful response to COVID-19 domestically provides New Zealand with a unique opportunity to position ourselves globally as a safe and secure place to trade with, to invest and manufacture in, and eventually to visit again.
The Government is committed to working closely with exporters like all of you here today, to do just that.