Trade update – July
July Trade Update
As all exporters and importers will know the supply chain remains hugely disrupted. Only the bravest amongst us are thinking that there will be any real change in the next few months. It is increasingly likely that problems will be stretching into 2023. And it seems that we are the beginning of a new global wave of COVID and, thanks to the Delta variant, it is hitting hard. In our region Victoria and NSW, Indonesia, Vietnam and Southern Chinese ports are all facing new disruptions. We are not immune from this disruption here as evidenced by the two fishing boats and a container ship currently quarantining at our ports.
Until the container ship (currently at Bluff), there had been zero COVID arrivals in New Zealand by sea. There had been ship crew infections but these had been the result of crew transfers/arrivals by air. The latest development has made the Government even more cautious about the risk posed by the maritime border and emphasises the importance of the testing and vaccination regimes operating at ports. By late in the year it will be mandatory for front line port workers to be vaccinated. They are already subject to weekly or fortnightly testing regimes – depending on their roles.
The new vaccination rule is expected to have two impacts – it will encourage some who have yet to get vaccinated to get vaccinated. But it may also mean that some stevedores will leave the industry. This skill set is in short supply and these skills are hard to replace from within New Zealand in the short term. We may need to increase pressure on Government to include stevedores on the list of essential skills and to ensure that sufficient space is available in MIQ for these workers.
Congestion in the container trade has seen importers and exporters look to the possibility of bulk ship charters as a means of easing congestion. This is already a big part the trade for some companies and some industries, but it may be an activity that many others have not undertaken for many years. There is much happening on this topic at present with meetings occurring nearly every day. Export New Zealand is heavily involved. We might write more on this in our August update.
The disruptions of the past year and a half have highlighted the importance of New Zealand’s expanding FTA network. When some markets have slowed or shut down it has been possible to shift relatively quickly to other markets. It is therefore good that we have progress being made in FTA negotiations with two new potential partners – the UK and EU.
With the two governments trying to reach agreement in principle by the end of August there is intense activity underway in pretty much all areas of the negotiation. To secure something similar to the good deal on agriculture that Australia looks likely to receive, New Zealand is going to have to give the UK some good outcomes in other areas of the negotiation – government procurement, spirits, intellectual property, services and investment. The problem is that negotiations in these areas were relatively underdeveloped until recently as New Zealand was insisting on seeing the colour of the UK money on agriculture before digging deep in other areas. The pressure is going to be very much on.
The eleventh round of negotiations with the EU ended in early July.
The impression we have is that good progress was made and that a momentum for an end of year end of this negotiation is building. To achieve this improved market access offers were necessary and we understand that these were exchanged. And it seems that there was improvement. It is unclear whether anything was achieved – or even discussed – on the sensitive areas of meat and dairy. The EU understands that New Zealand expects good forward movement on these sensitive products before a final outcome can be contemplated. There is a full report on the last round of negotiations has been published by the EU https://trade.ec.europa.eu/doclib/docs/2021/july/tradoc_159741.pdf