US Business Summit Speech – Regional stability through trade
I would like to begin by echoing the Prime Minister’s thanks to the organisers of this Summit, Fran O’Sullivan and the Auckland Business Chamber.
I want to also acknowledge the many leading exporters, sector representatives, diplomats, and other leaders we have joining us in the room.
In particular, I would like thank Ambassador Udall for his remarks to us today.
New Zealand is and always has been a trading nation.
We have long championed the importance of global connections and maintaining international flows of goods, people, capital, and ideas.
We are at our best when we are outward-looking and backing ourselves to compete on the world stage.
Part of our government’s message to businesses, and to all New Zealanders, is that our number one focus is growing New Zealand’s economy and easing the cost of living so New Zealanders can get ahead.
Strengthening our connections with the rest of the world is one of the six drivers we’ve identified to do just that.
Trade supports one in four jobs in New Zealand, with those in exporting jobs earning 7% more on average than in other sectors.
Exporting firms have higher productivity (25% higher) and grow faster than non-exporting firms.
The simple fact is the more we sell to each other, the better off we will all be, and the more we can provide a higher quality of life.
But our global economic landscape continues to evolve.
As the Prime Minister stated this morning, geopolitical tensions are having ripple effects across trade policy internationally. We are increasingly seeing countries around the world look inwards and move towards protectionism and the appeasement of domestic stakeholders.
So one point I would make on taking up the trade portfolio for the second time is that the operating environment today is quite different to when I last encountered it.
Some things, however, have remained the same.
Trade remains an essential engine for growth. Trade continues to expand New Zealand’s economic opportunities, lift incomes, and strengthen our ability to respond to shocks.
We therefore have a strong and clear message for our partners. As the Prime Minster said, New Zealand is open for business. We will engage with you. We will be active offshore to work for New Zealand businesses and to drive investment in both directions.
Facilitating market access has long been a priority, and we have some serious unfinished business there – which we flagged in our campaign.
But government’s role today is much broader than that – it is about shaping the brand and the story behind it. Opening doors. Helping to make connections. And supporting New Zealanders to do well on the world stage.
And of course, building trade architecture that serves the needs of exporters and investors.
This is why, as part of our government’s trade strategy, we are going to:
- Focus on driving the value – not just the volume – of New Zealand’s exports upwards, with a target of doubling the value of exports over 10 years.
- We will seek to expand our access to foreign markets, including by maximising the value of our existing Free Trade Agreement architecture.
- We will focus relentlessly on resolving the barriers to trade that restrict access to overseas markets.
- We will continue to champion the importance of a level playing field and predictable rules, while working to ensure that these rules adapt and respond to the issues of the day.
So what can you expect from this government with respect to New Zealand’s trade and investment links with the US?
The United States is one of our most important trade and economic partners. Our trade relationship has transformed over time to become a high value and high innovation partnership. Despite the absence of a free trade agreement, today the US is our third largest trading partner, with two-way trade worth 27.6 billion to the year ended June 2023.
Our trade relationship with the US is broad and sophisticated, with about half in goods and half in services – from our traditional primary exports through to advanced manufacturing and technology, lifestyle goods and digital services.
In fact, our trade with the US is more diverse than our trade with the UK and China.
I am pleased that we will hear later this afternoon from John Ballingall, who will be presenting a report on the NZ-US trade and investment relationship.
The report demonstrates that the NZ-US economic relationship has not just bounced back from the challenges presented by COVID-19, but continues to go from strength to strength. New Zealand goods exports to the US have grown 57% since their pandemic-related low in 2021, and now sit at 36% above pre-pandemic levels.
In a demonstration of just how New Zealand’s export profile to the US continues to evolve, the value of the apple harvesting equipment we sell to the US is now greater than that of our apples.
Above all, the report makes it clear that economic engagement with the US is to our mutual benefit.
One of the defining strengths of the US-NZ relationship is what we have in common – a common language, common values, common can-do attitude and a shared energy for seizing opportunities.
These commonalities are at the heart of our trading relationship, which is founded in people-to-people connections. Continuing to build these connections will be vital to unlocking further growth.
We have signalled that we will undertake a record number of trade missions in this Government’s first term, more than any other Government in the history of New Zealand, including to the United States. I look forward to this delegation – which I hope will involve many of you in this room – strengthening vital connections between Kiwi and US businesses.
We will get out and hustle. A lot of the action these days, regardless of whether we have an FTA in place, is in non-tariff barriers – NTBs. I am going to seek urgent advice from officials as to how and what else we can do to supercharge this support to business. We are determined to break down the barriers that are such a drag on productivity and growth. Tackling NTBs is a complex business. It takes persistence. But we will be there for you.
I’ll put it as simply as this – New Zealand meets its trade obligations, and we take them seriously. We expect others around the world to show us the same courtesy.
The value of our relationship with the United States goes far beyond the trade statistics.
In an increasingly complex and contested world, it is essential New Zealand works with friends and partners to support our exporters, strengthen our supply chains, and position ourselves to not just endure the headwinds we are facing, but grow in spite of them.
Crucial to this effort is the pursuit of new opportunities to work together to drive growth here at home, and in our region.
From New Zealand’s perspective, in the long term, we see CPTPP as the best option for the US to embed itself in the Indo-Pacific economic architecture.
In fact, back in early 2016 one of my first responsibilities as a new Minister of Trade was hosting a 12-country ministerial meeting followed by a ceremony in Auckland for the signature of the Trans-Pacific Partnership Agreement.
We will all be aware that the US ultimately decided not to join the agreement.
It remains my hope to someday be able to welcome them.
The Indo-Pacific region fundamentally needs a framework based upon international rules that can be relied upon, and the US has an extremely important role to play in this.
In the meantime, we are focused on other ways in which the US can actively engage in the economic architecture of the Indo-Pacific. We have welcomed the Indo-Pacific Economic Framework – or IPEF – in that context.
IPEF is a bit of a tongue-twister – and I have not yet had a full briefing from officials on it yet. But in terms of initial thoughts:
On the numbers alone it is huge. 14 countries. Six G20 economies including the US and India. 50% of New Zealand’s exports. 40% of global GDP. To state the obvious, when the US is running with a regional economic initiative of this scale – one that includes rule-making – you can’t afford to not be at the table.
I know there has been negative comment about the lack of a market access track and the failure to land a deal in the trade pillar in San Francisco. I’m more inclined to say: let’s give it time. The negotiation hasn’t even been going a year.
And my strong view is that anything that might produce the building blocks for a full-feature regional free trade agreement in the years ahead is something we have to take seriously.
There’s still water to flow under the bridge here. We will go through the fine print when we get the advice from our negotiators.
But from what I’ve heard so far, it looks like something we would want to be part of and take seriously.
This leads me back to where I began.
New Zealand is at its best when we are looking outwards, engaging in the world and showcasing what we have to offer.
We benefit from and indeed, depend on, the dynamism of our economic partners, both in our region and further afield.
New Zealand’s path forward lies in maintaining this open and outward-facing stance, actively engaging with the international community.
It is imperative we continue to collaborate on a global scale to establish optimal trading conditions, with the flexibility to adapt to whatever global challenges exist at a particular point in time.
We look forward to working with our US partners to do this.
I look forward to hearing from all of the speakers today about the returns they are getting from the US market, and how to maximise the value of this most important relationship, while working together to navigate the shifting tides of trade globally.
The report is now available online on the NZUS Council website: Reports - NZUS Council