The NZ International Business Forum (NZIBF) welcomes today’s announcement of an Agreement in Principle for a future NZ UK Free Trade Agreement....
Remarks to India NZ Business Summit
The Future of Trade Agreements and How Will They Differ From Today?
Stephen Jacobi, Executive Director, NZ International Business Forum
24 June 2021, Auckland, New Zealand
Namaskar ! Kia ora !
Thanks Michael and thanks to INZBC for the invitation to join the panel today.
One of my favourite quotes, which I use far too often, is “the future ain’t what it used to be”.
That was said by the American baseball player and philosopher Yogi Berra.
The future ain’t what it used to be for trade and so trade agreements will also change.
In fact they have been changing and growing in complexity and coverage but they have not become any easier to launch and conclude.
We need to ask ourselves – why do FTAs ?
The answer seems absurdly simple – to do more trade – but it’s amazing how difficult everything can become from that point on.
FTAs are all about the environment against which business and trade are done.
They try to reduce or hopefully eliminate barriers, reduce costs and speed up the time taken to get products, both goods and services, across borders to consumers.
FTAs traditionally focused on issues at the border – tariffs and customs especially and then non-tariff barriers.
Today they encompass a much wider array of policies and regulations behind the border, particularly when it comes to services trade.
Then there are the new sectors which have burst onto the scene – like digital and the creative economy – and the particular problems of new business models, like global supply and value chains, to consider.
And key concerns of stakeholders that need to be taken into account – like the environment and climate change, labour conditions and the need to make sure that FTAs include the needs of groups like SMEs, women, indigenous people who have not been included in the past.
You can see why it’s a complicated agenda!
I foresee this agenda becoming even more complicated as time goes on.
New Zealand has traditionally favoured what we call “ambitious, high quality and comprehensive agreements”.
That’s because as a small player with an already largely open market we need to attract larger players with a bigger, more strategic agenda.
In the case of our hugely important relationship with India, where there is a desire on both sides to expand the economic relationship, it is pretty clear that this traditional approach is not going to work at least not in the short term.
But I come back to the main point of FTAs – they are only worth doing if they lead to more trade and business.
But FTAs are not the only solution.
With India, and with other partners, we need to be thinking about how to make progress at different levels.
There are a range of things that can be done which fall short of the goal of an FTA but which when brought together in a holistic way can make a huge difference to removing barriers, reducing costs and speeding up processes.
I am thinking of regulatory co-operation in certain sectors, of enhanced trade facilitation and the application of digital tools to get goods between us moving more quickly, of investment facilitation, which we heard about from Deepak Balga yesterday.
New Zealand is a member of APEC and we are chairing APEC this year: there is a wealth of economic co-operation which has gone on in APEC which could be applied to the India-New Zealand relationship – we should be using this more intentionally.
I hope these are things which we as business can work on together to demonstrate a strong value proposition to governments and my friend Bharat Joshi and I have already been speaking about this.
So, Michael, in answer to your question, trade agreements are changing all the time and while New Zealand still sees huge value in comprehensive agreements and would welcome an FTA with India, whether bilaterally or through RCEP, there are a lot of things we can be doing to boost our economic co-operation in the meantime.
The future ain’t what it used to be and, as Deepak said yesterday, tomorrow can be better than today – if we work on it!
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