2023 – Steps forward and back

Trade liberalisation moved forward and backward in 2023.  Some notable gains have been achieved for New Zealand, but war, geo-political rivalry and global inflation continue to depress global markets. While the pandemic continued to lurk in the shadows, 2023 was the year when a sluggish global economy finally caught up with us. This year for the first time the value of exports declined as global inflation began to bite and China, our largest market, struggled to throw off the after-effects of the pandemic lockdown.  The better news is that major NZ players in China remain  bullish about the outlook for growth as the Chinese middle class expands and the economy improves. 

ABAC comes amidst a storm

This time last year we were preparing to host the Members of the APEC Business Advisory Council (ABAC) for their first meeting for 2023 held in Auckland.  This was an opportunity not only to launch the United States’ year as Chair, but to demonstrate the manaakitanga which we could not offer in our own virtual host year in 2021.   As it turned out our 150 guests were not the only visitor as Cyclone Gabrielle touched down in Auckland and more devastatingly in Hawke’s Bay and Tairawhiti.  Protected by sand bags around the Cordis hotel, it seemed as if there was a metaphor in play about the state of the global economy, but the meeting continued to a good outcome with much appreciation expressed by delegates for our “can-do” attitude in a crisis.  Unfortunately those in other parts of the country did not fare so well and we recognise the cyclone’s continuing severe impact on livelihoods and industries.

The United States ran a good APEC year but the results from APEC Leaders’ Week in San Francisco were mixed, with a significant disappointment that the (already modest) Trade Pillar of the Indo Pacific Economic Framework (IPEF) could not be completed. The Supply Chain Pillar was however concluded in May and signed in San Francisco – while we have some doubts about its efficacy, if it can make progress on enhancing supply chain resilience, then so much the better.   Where IPEF falls down is in the “hard stuff” of high quality, ambitious and comprehensive trade agreements like CPTPP – prohibiting export and import bans, eliminating unnecessary and expensive tariffs and especially non-tariff barriers, as well as other binding commitments to keep supply chains open – precisely the sort of thing which a trade-sceptical US Administrations seems reluctant (if not incapable) of delivering.

Trade rules ok !

Against the background of the celebration of 40 years of CER with Australia, , 2023 saw a number of advances on the FTA front.  The NZ/UK FTA entered into force and agreement was reached at a July Ministerial meeting held in Auckland on UK membership of CPTPP.   That sets the scene for a significant expansion of CPTPP coverage which would be assisted by further accessions, including by China, Chinese Taipei and four other aspirant economies.  China’s possible accession was the subject of discussion at Fudan University’s Shanghai Forum in October. The views of APEC business on CPTPP modernisation and expansion were also aired at an event, organised by ABAC NZ, in San Francisco.

The NZ/EU FTA, for which negotiations concluded in July 2022, also took a step forward in 2023 as the EU Parliament, by a surprisingly large margin, voted to support ratification.  While we continue to have reservations about this agreement, given its uneven coverage of our major export interests, we hope the NZ Parliament moves to support ratification as soon as possible in the new year.

New Government, new priorities

This year saw the election of a new Government and the return of a familiar face to the Trade portfolio in Hon Todd McClay, to whom NZIBF has been pleased to provide its advice.   At time of writing the Minister is making his first overseas visit to Delhi and Singapore.  Both destinations are well chosen – India has been the focus of our attention for the last 18 months, culminating with the successful business delegation to India, led by five organisations, including NZIBF in August.   The incoming Government have made expanding the relationship with India a strategic priority and we welcome this ambition.

Singapore is also worthy of the Minister’s early attention.  Sitting right at the heart of the Asia Pacific region, and a highly trusted trade partner for New Zealand,  Singapore and New Zealand share similar outlooks, not the least of which how to maintain independence of thought and action amidst geo-political turmoil.

As the curtain closes on this up and down year, NZIBF Board Member Raewyn Bleakley reminds us that our prosperity depends on trade.  NZIBF Chair Philip Gregan in his annual report expresses his thanks to outgoing Minister Damien O’Connor, to hard-working trade officials and to NZIBF Members for making it possible to do the work we do.   We extend our best wishes for the holiday season to all our readers and our hopes for a more stable trade year in 2024 !

This post was prepared by Stephen Jacobi, Executive Director of the NZ International Business Forum.