ExportNZ Trade & Policy Update October 2022
It has been another busy month for the New Zealand trade policy team.
The month has seen a CPTPP Council meeting and a negotiating session on the UK CPTPP Accession. New Zealand is preparing to take on the CPTPP Chair role and MFAT Deputy Secretary Vangelis Vitalis is visiting capitals to take sounding on member expectations for the year ahead. Nervous eyes are being directed at the political situation in the UK and Europe. Meanwhile, the US-led Indo-Pacific Economic Framework takes shape. India was also in focus.
India-New Zealand Trade Relations
It was good to see Minister O’Connor lead a trade delegation to India and the Indian Foreign Minister spend a week in New Zealand. There was apparently little or no discussion on the FTA possibility (negotiations remain suspended) but the fact that these visits occurred is significant. There has been much lower high-level engagement in recent years between India and New Zealand than the frequent contact that has occurred between Australia and India. We understand that more high-level contacts are in the wind and that the Minister of Customs has also visited India. ExportNZ encourages this contact and supports a closer economic relationship between New Zealand and India.
While a comprehensive FTA appears off the agenda for the foreseeable future, there is talk of possible sectoral approaches to achieving some improved market access and cooperation.
European Union-New Zealand Free Trade Agreement
A delegation of EU parliamentarians visited New Zealand recently. The FTA was very much the focus. Messaging on achieving ratification of the agreement was encouraging but this may take some years.
United Kingdom-New Zealand Free Trade Agreement
The continuing leadership struggles of the UK Government have New Zealand trade policy observers nervous. Prime Minister Truss is a very strong supporter of the FTAs with Australia and New Zealand, and should she continue in office she would be expected to continue to push for early ratification of the FTAs. But if she were to be replaced what would this mean for the two agreements and the ratification timeline?
Comprehensive & Progressive Trans-Pacific Partnership
United Kingdom Accession
The word from Sydney where CPTPP members and signatories were negotiating with UK officials on the UK’s CPTPP accession is a bit disappointing. This is turning out to be a much tougher process than many expected. In part, this is because the UK is the first jurisdiction to seek accession to CPTPP. The fact that Chile and Brunei have not yet ratified the agreement is also a challenge.
It seems most unlikely that the UK accession can be completed in 2022. This means that the first part of 2023, is likely to remain dominated by this process.
As the UK accession is being seen as a test case, no progress can occur in the applications that have been received from China, Taiwan, Ecuador and Costa Rica. The slow pace of the accession process may be deterring others from applying.
New Zealand Prepares to Chair CPTPP
Singapore chaired the CPTPP process in 2022. In 2023 it will be New Zealand’s turn. With the UK accession proving more difficult than expected and with decisions pending on how to handle further applications, it could prove a challenging year. To prepare for the role, MFAT Deputy Secretary Vangelis Vitalis is travelling around CPTPP capitals to seek member and signatory views on their expectations for the year. We hope to have a readout on these discussions in early November.
Indo-Pacific Economic Framework
New Zealand remains actively involved in the Indo-Pacific Economic Framework, the initiative announced by the United States, which now involves a range of important economic partners in the Americas, Asia and the Pacific. Four pillars of work have been agreed on trade, supply chains, clean economy and fair economy. Unfortunately, the trade pillar still excludes negotiations on market access for goods and services. MFAT officials have expressed the hope that commercial opportunity might emerge from negotiations on trade facilitation, digital trade and regulatory cooperation processes.
Participants will no doubt be watching the outcome of the US mid-term elections to see whether there are any changes in US attitudes to market access negotiations once the new make-up of the House and Senate is known.
Get Set For Go Global 2022 – 9th November – Auckland, New Zealand
After a two-year hiatus, we are finally able to go ahead with Go Global once again!
Make sure to book the 9th November in your diaries and join us at the Cordis Hotel in Auckland for a great lineup of speakers discussing all aspects of exporting from New Zealand.
Keep an eye out through our website – https://www.goglobal.nz/ – for when registration opens and the programme is announced.
Supply Chains and Logistics
Domestic
Following the reopening of the international border, air freight connectivity continues to improve, cargo demand continues to be strong on a number of routes, and prices remain at high levels.
Shipping prices are stable and are expected to fall in response to falling global shipping prices.
Ports of Auckland are not reporting any major disruptions and are planning towards a restoration of terminal berth windows from March 2023 onwards which will hopefully increase certainty around berths.
International
Global supply chain pressures again decreased in September, making this the fifth consecutive month of easing. The Global Supply Chain Pressure Index has fallen from a high of 4.31 in December to 1.47 in August and now 1.05 in September – (the pre-Covid value of the index was 0.0). The softening in prices can be attributed to a slowing down in global economic growth.
Global schedule reliability continues to improve, reaching 46.2 per cent reliability in August. However, this is still well below pre-Covid normality (around 75-80 per cent).
The average delay for late vessels fell again and now sits below six days, another year-on-year improvement on 2021.
Credit: Sea Intelligence, August 2022
The Ministry of Foreign Affairs & Trade published its Quarterly Monitoring Global Supply Chains Report earlier this month, click here for that report.
BusinessNZ Planning Forecast September 2022 Quarter
Despite some recent improvements in economic activity, the outlook for September 2024 is still for subdued growth due to a range of factors outlined below. Some economic indicators are bouncing around, fluctuating significantly even every month. For this reason, a degree of caution is required in making any long-term assumptions about future activity based on current data.
There is also international pressure, ranging from the ongoing war in Ukraine, where Russian retaliatory measures are severely affecting energy supplies from that country to other European nations, to China’s economy stumbling on the back of ongoing lockdowns aimed at eliminating Covid. Geopolitical tensions, combined with supply-side issues and the consequence of the ongoing Covid pandemic, have encouraged a more insular approach to international trade. Countries are tending to become much more nationalistic in their attitude to the provision of both goods and services.
To see the whole BusinessNZ Planning Forecast for the September 2022 Quarter, click here.
MfE: Pricing Agricultural Emissions [Submission Open]
The Ministry for the Environment is consulting on their proposal to price agricultural emissions in New Zealand. This will include how the levy is set, governance arrangements of the system, how farmers will report and pay for their emissions, and recognizing sequestration.
There has been significant criticism from the agricultural sector on the proposal who believe the proposals are a step too far and will only serve to push emissions overseas. ExportNZ is set to submit on the proposal and will focus on the impacts to New Zealand’s export sector and value of our agricultural exports. ExportNZ are be happy to receive comments from members. Please email [email protected].
You can find more information on the proposal here on the MfE website. You can also read the Prime Minister’s announcement here. The submission period closes on the 18th November.
MFAT: Trade and Labour Framework Review [Submission Open]
The Ministry of Foreign Affairs & Trade (MFAT) and the Ministry of Business, Innovation, and Employment (MBIE) are reviewing the 2001 Trade and Labour Framework as part of the ‘Trade For All” recommended process.
The Discussion Document can be found here. Submission on this piece of work close at 12 midday on the 31st October 2022.
ExportNZ will be submitting on this consultation and would be happy to receive comments from members. Please email [email protected].
MPI: Modern Export Legislation for Food & Fibre Products [Submission Completed]
The Ministry for Primary Industries (MPI) is reviewing the way it regulates the exporting of food and other primary sector products. This is due to shifting market access requirements by our international trading partners. MPI is hoping to introduce legislation that can allow them to respond to foreign market access rules.
ExportNZ wrote in support of Legislative Option One: Create new enabling export legislation for regulating the export of all food and other primary sector exports.” And also wrote about several concerns that were raised with ExportNZ regarding the proposal.
You can read our submission here.
