Momentum gathering on trade
The year was 1882 and New Zealand sent its first export of refrigerated meat to London. The introduction of refrigeration helped transform the NZ economy as we began our journey into being an export nation. Of course many years have passed since this first voyage and NZ has grown as a country that relies on its export market across many industries and commodities.
When looking at history, a trend that appears in New Zealand is that our quality of life plummets when we are shut off to the global market. In 1966 the World Bank advised that we needed to revise our entire trade policy stance, as our small export market was not paying for our increasing imports. We don’t get rich by selling to ourselves! Our small domestic market is too small for our exceptional kiwi businesses, and by opening up to the global economy it raises our standard of living across New Zealand. We profit from the economies of scale that the world market offers. Trade is vital for creating more jobs and higher incomes for New Zealanders.
This year the Government has made significant progress on several trade deals which will unlock a wide range of opportunities for our country.
Just a few weeks after finalising the Trans Pacific Partnership (TPP), we have already moved on to the next big trade deal. The Prime Minister and European Union (EU) leaders have announced that negotiations will begin on an EU-NZ free trade agreement as soon as possible, and this can only be good news for all New Zealanders.
The EU covers a staggering NZ$20 trillion worth of GDP and is home to many consumers with sophisticated tastes. Europeans like New Zealand’s quality exports and if we can get better access to those markets, then we can sell more. This is just the first step and it could take some time, but it is significant progress towards a stronger trading relationship. This will build on the Korea FTA and the recently concluded TPP negotiations.
TPP is expected to be worth at least $2.7 billion a year to New Zealand by 2030. The agreement with Korea will save New Zealand exporters $65 million in the first year alone and largely eliminate the $229 million our exporters pay a year in duties. Tariff savings are just the start of the benefits trade agreements offer. Removing barriers to access is even more important to exporters.
That means New Zealand businesses have more money to invest in growth, including jobs.
Trade deals also allow New Zealand companies to stay afloat in markets overseas, and for their products to compete with others who already have free access. We just can’t afford to miss the boat on this.
Creating new opportunities for our exports is crucial to growing jobs and incomes in New Zealand.
The TOM Column - December 2015
Momentum gathering on trade