Trading ahead: New Zealands trade strategy

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Trading ahead New Zealands trade strategy

• Stephen Jacobi
• Presentation to Agrivision seminar
• Wellington, 15 March 2006

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Agenda

• About the TLN the NZ US Council
• About NZs trade situation
• About the World Trade Organisation
• About free trade agreements
• About the United States

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• Building public understanding and support for
  trade
• www.tln.co.nz

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• Fostering and developing a strong and mutually
  beneficial relationship between New Zealand and
  the United States
• www.nzuscouncil.com

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Trade New Zealands life blood !

• Trade is our lifeblood. We will do whatever we
  can to secure more access for our goods and
  services
• (Helen Clark)
• Internationalising more New Zealand business is
  the key to raising our standing on the OECD
  ladder Exporting is the way of the future
• (Trevor Mallard)

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NEW ZEALAND EXPORTS LESS THAN MOST DEVELOPED
COUNTRIES
Exports as a of GDP, 1990 and 2004
Note OECD average for 1990 and 2003. Source
OECD National government statistics for Chile,
China, and Singapore.
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NEW ZEALANDS EXPORTS HAVE GONE SIDEWAYS AS A
SHARE OF THE ECONOMY OVER THE PAST 20 YEARS
Exports as a of GDP, 1971-2005
Source World Development Indicators (1971-1987)
Statistics New Zealand (1988-2005).
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NEW ZEALAND IS DISTINCTIVE IN HAVING A LOW AND
REDUCING OUTWARD FDI STOCK
Outward FDI as a of GDP
1980
1990
2005
Source UNCTAD.
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NEW ZEALAND IS DISTANT FROM MAJOR MARKETS
Circle represents distance reached within 3.5hr
flight
Source Groningen Growth and Development Centre
and the Conference Board, Total Economy Database,
May 2006, http//www.ggdc.net
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World Trade Organisation

• 150 members and growing
• A set of rules for international trade
• A process for negotiating
• the reduction of trade
• barriers
• A means of settling trade
• disputes

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Doha Development Agenda

• An opportunity unparalleled but unrealised
• Agriculture, goods, services, rules, developing
  countries
• Market access, domestic support, export subsidies
• Timing, timing

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WTO Dispute settlement

• A referee not a policeman
• Backed up not by sanctions but by withdrawal of
  concessions
• NZ success
• US lamb
• US steel
• EU spreadable butter
• Canada milk classes

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Some questions

• Free trade or fair trade ?
• Trade or the environment ?
• Trade or labour ?
• Trade or development ?
• Globalisation or sovereignty ?

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GROWTH OF TRADE AGREEMENTS
Doha Round
Uruguay Round
Note Trade agreements shown on year entered into
force. Source WTO Secretariat.
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Free trade agreements

• Not free - progressive implementation, some
  ongoing barriers
• Not just trade - investment, rules
• No agreement - disputes, eg apples to
  Australia
• Raise questions of compatability with WTO

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NZs FTAs

• Australia (CER) completed 1993
• Singapore completed 2001
• Thailand completed 2005
• Trans Pacific (Singapore,Brunei and Chile) -
  completed 2005
• China underway since 2004
• Malaysia underway since 2005
• CER/ ASEAN underway since 2005
• Gulf Co-operation Council initiated 2006
• Hong Kong suspended since 2003

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APEC

• Asia Pacific Economic Co-operation
• Since 1989
• A concept whose time has come OR consistent
  failure to live up to promise ?
• Towards a Free Trade Area of Asia Pacific
• (FTAAP)

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Some questions

• Do we have the main markets covered ?
• What are our competitors doing ?
• How attractive is NZ as an FTA partner ?
• What has been the success rate of FTAs negotiated
  to date ?

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New Zealand and the United States

• Shared values and interests
• Second largest export market
• Second largest source of imports
• Provides 12 of foreign investment
• Significant source of tourists who spend more
  than anyone else !
• Source of technology, innovation, business ideas
• A long standing partner in defence and security,
  international peacekeeping and the war on
  terrorism

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ECONOMIC RELATIONSHIPS WITH THE USA, 2005
CAGR 1993-2005

Services Exports
NZb
Goods Exports
Direct Investment Stock
10 11 7 16 4
Share of GDP
Note CAGR is compound annual growth rate. Data
to most recent year available, generally
2005. Source OECD UNCTAD ABS Statistics New
Zealand WDI.
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Our FTA case

• An FTA would
• Help expand trade and investment
• Contribute to the spread of freer markets
  internationally
• Recognise the close business and trade policy
  connections that already exist
• Disjuncture with Australia we are already a
  trans Tasman market
• Support in US business and Congress

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Whats the problem ?

• A full agenda in the US
• Trade Promotion Authority
• Potential opposition
• The relationship from ally to very, very very
  good friend

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Conclusions

• NZs economic prosperity is linked to increasing
  integration in the global economy
• Trade agreements expand the size of our domestic
  space and provide a framework of rules
• WTO provides the best opportunity but FTAs with
  key markets, like the US, are also critical

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Trading ahead New Zealands trade strategy

• Stephen Jacobi
• Presentation to Agrivision seminar
• Wellington, 15 March 2006