“Out with the old, and in with the new”. The old saying seems to have particular relevance for 2020, a veritable annus horribilis for the global economy. 2021 can’t come fast enough, but while the vaccine portends better times to come, many parts of the world remain in crisis as the year closes.
Trade plows through rough water
The Covid 19 virus caught the world unprepared and has had incalculable effects on people’s health and livelihoods: too many precious lives have been lost and economies have been devastated. Trade has been heavily disrupted as supply chains continue to come under pressure. Protectionism was quick to rear its ugly head at an early stage as even supplies of much-needed medical equipment were blocked, but eventually wiser heads prevailed and markets remained largely open and trade continued to flow. The WTO reports that global trade volumes bounced back in the third quarter from a deep slump in the second quarter – up 11.6 percent, as compared to – 12.7%, but still 5.6 % lower than the same time the previous year.
Trade has been heavily disrupted as supply chains continue to come under pressure. Protectionism was quick to rear its ugly head at an early stage
New Zealand’s trade has held up remarkably well this year, with some variations between products. The trade surplus is the highest it has been for twenty years or more: imports are down sharply while exports are around 4.4% lower than this time last year (which was a bumper year for trade). There is little doubt that trade saved New Zealand’s economic bacon in 2020, but constraints at ports and a growing lack of shipping are beginning to have a major effect.
Trade policy did not stand still
It’s hard to keep a good trade policy down, and New Zealand negotiators pivoted very successfully during the initial impact of the crisis to negotiate a series of supply chain resilience agreements. International organisations played their part too with the WTO, G20 and APEC all making supportive statements. Some significant agreements were concluded this year including the Digital Economy Partnership Agreement (DEPA) signed virtually – of course – in June and the Regional Comprehensive Economic Partnership (RCEP) signed in November.
Other negotiations are ongoing. The NZ/EU FTA is the biggest of these with eight rounds of negotiations having been held, but the NZ/UK FTA is gathering speed, albeit in the uncertain environment created by Brexit which, as ever, is going down the wire. Much attention was focused early in the year on an apparent truce in the trade war between the US and China,
but this conflict has by no means gone away and may not be entirely resolved by an incoming Biden Administration. New Zealand’s own relationship with China has been in the spotlight this year: the NZ/China FTA upgrade has been completed but awaits signature. As the year closes the World Trade Organisation – that great lifeboat for international trade – remains without a Director-General and without an Appellate Body, rendering the task of settling trade disputes that much more problematic.
Enter APEC !
In this highly contested and uncertain environment, New Zealand takes the chair of APEC in 2021 and will do so virtually. This is no mean feat for our Prime Minister, Ministers and senior officials but it gives us a chance to help lead the emergence from Covid and prepare the ground for the economic recovery. Business is gearing up too as New Zealand also chairs the APEC Business Advisory Council (ABAC). This will be major preoccupation for us in 2021 as ABAC provides an important opportunity to socialise important ideas and concepts and build alignment with other business leaders and groups around the region. Global co-operation and collaboration have been critical during the pandemic and will be no less so during the recovery.
Keeping on keeping on
Throughout this year it has been important to continue our work in support of trade and investment and to point out to New Zealanders (and anyone else listening) the importance of openness and integration. We published 18 blogs on current issues, posted a raft of information to the Trade Works site and to our social media channels and updated the look and feel of the website as well as the content, with a view to the work we have to do with ABAC next year. The New Zealand election gave us the opportunity to publish background on the trade positions of the major parties. We look forward to engaging with the new Government in the period ahead.
As the curtain falls on the most difficult year many of us have ever experienced, all the team at Trade Works extend our best wishes to all our readers for a restful holiday period and for a happier, healthier and more secure trading year in 2021.
This post was prepared by Stephen Jacobi, Executive Director of the NZ international Business Forum. Meri Kirihimete me ngā mihi nui ki a koutou kātoa !