A YEAR FOR RECONNECTING

As I write this end of year dispatch, NZIBF is preparing to host the first meeting for 2023 of the APEC Business Advisory Council (ABAC).  We are looking forward to welcoming the 200 or so business leaders and senior officials from APEC member economies across the Asia Pacific (sic!) region, a sure sign that Aotearoa New Zealand is open and ready to reconnect with the rest of the world.

Open or closed?

We wish this sense of openness was universal.  Some economies are still struggling under the pandemic.  Others are taking hitherto unprecedented steps to retreat inwards.  And some, who were once the leaders of international trade, seem intent on weakening the international trade system by a series of small cuts to the legal framework which underpins the way business is done around the world.  Refusing to recognise panel decisions is bad enough, but blocking the appointment of new Appellate Body judges renders effective dispute settlement unworkable. Finding innovative ways to subsidise and protect local industries when the rules clearly prohibit this, are in no-one’s broader interest but it can feel good, at least for a time. 

Light in the tunnel

Even so, we are pleased to report, trade does not stand still.  Despite the challenges, a rare victory was snatched from the jaws of defeat at the WTO Ministerial in June and the APEC Summit was able to held again in person for the first time since 2018 – APEC even managed to release a consensus statement ! Our favourite FTA, CPTPP, continues to attract new interest from economies around the world. RCEP, the world’s largest FTA, is now also in effect for thirteen out of fifteen signatories.

In New Zealand’s case trade has underpinned the domestic economy throughout these Covid times and is likely to continue to do so.  Amidst a background of a devastating and useless war in Europe, global inflation has replaced supply chain disruption as the greatest risk to economic certainty and prosperity.  Those doing business need to be nimble, to manage risk especially arising from geo-political uncertainty and to shore up key customer relationships. 

Some progress this year has been made with NZ’s key trade relationships.  Fifty years of NZ/China partnership was celebrated this year but new partners of this size and scale are hard to come by. The conclusion of the NZ/UK FTA was a landmark outcome for both sides.  We were pleased to support ratification in New Zealand and look forward to entry into force next year.  The NZ/EU FTA was also concluded – while not the ‘gold standard’ FTA claimed by some, the agreement has some useful provisions which will be good for horticulture and  other sectors.  Because it offers only limited new access for dairy and meat, our major export sectors, it will not however be transformational for the NZ economy nor provide for significant “diversification” – after such long and arduous efforts, this is something of a missed opportunity.   The relationship with India also suffers from differing views on trade and a lack of political and business focus – there are signs however that more attention will be paid to India in years to come.  My own first-ever visit to India was certainly an eye-opener.

Starting over

As we round out the end of the year, the US has held a first round of negotiations for an Indo Pacific Economic Framework (IPEF).  The Indo Pacific terminology is problematic for us  and we remain sceptical about what can be achieved without market access on the table, but if there is some good in IPEF, say in trade facilitation, we are sure negotiators will find it.  The US is hosting APEC in 2023 for which they have our full support, particularly as we host ABAC in Auckland 12-14 February.

NZIBF has had a busy and less disruptive year as our Chair’s report shows. We hope you have enjoyed our occasional insights into the world of trade.  Trade works, after all, as we have always said.  We extend our best wishes for the holiday season and for a fully reconnected and trade-filled year in 2023!

This post was prepared by Stephen Jacobi, Executive Director of NZIBF.