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In this edition:
Indonesia has now formally ratified the Agreement establishing an ASEAN-Australia-NewZealand Free Trade Area (AANZFTA). A significant development, this will come into effect from January 10, 2012.
New Zealand businesses will be able to capitalise on expanded opportunities for trade with Indonesia – already one of our most important trading partners.
By 2015, New Zealand exporters will receive tariff-free treatment in Indonesia on more than 90 percent of tariff items, compared with only 11 percent now. By 2021, 99 percent of trade (by volume) will be tariff-free. You can find more information on specific tariff concessions at www.asean.fta.govt.nz/tariff-finder.
The FTA will also give greater certainty to New Zealand investors and services suppliers in Indonesia.
Equally as important, Indonesian ratification means that the AANZFTA family is complete with all 12 countries now on board. This firmly establishes AANZFTA as one of the key building blocks toward regional economic integration.
Greater potential for regulatory harmonisation, reduced business costs and improved access to regional/global supply chains will be among the benefits.
With economic growth averaging well over six percent, supported particularly by a natural resources base and a huge domestic market, Indonesia has been relatively insulated from the rest of the world’s recent economic woes.
Indonesia is the largest economy in South East Asia, accounting for over one third of ASEAN’s GDP, and is expected to be one of the world’s top five economies by 2030.
This issue of BusinessLink sports a new look inspired by reader feedback.
Thank you to everyone who completed the online survey sent with our October/November issue. It revealed that only 10 percent of readers were printing out the PDF version, and that most people preferred to scan for the articles of most interest. More than half of readers wanted to receive a summary email with links to detailed items on the website, which is the format we have now adopted.
Feedback is very welcome and can be emailed to enquiries@mfat.govt.nz with “BusinessLink” in the subject line
Increasing consumer demand for sustainably produced consumer goods has been described as a “global megatrend”. The trend is led by mature markets such as the UK and Europe - but is not exclusive to these markets. The food and beverage industry is often at the vanguard of this movement. However, the trend is unpredictable, and manifests in different markets in different ways and is likely to remain unpredictable in the future.
Once a quarter, the Ministry of Foreign Affairs and Trade and NZTE publish a country-by-country report of sustainability market signals in food and beverage export markets. The report is based on information collected by Ministry of Foreign Affairs and Trade and NZTE overseas posts, and provides New Zealand food and beverage exporters with an up-to-date perspective on the trends around sustainable production of food and beverage products. Information includes developments in government policy, private sector standards (such as retailer-led certification/labelling programmes), and consumer preferences and consumption patterns.
These reports are posted by country on NZTE’s website. The November 2011 quarterly report includes individual country reports from the USA, the United Kingdom, South Korea, Sweden, Germany, the Netherlands, France, Italy, Taiwan and Canada.
The government has agreed to changes which will widen the scope and accessibility of the New Zealand Export Credit Office's trade guarantees. The New Zealand Export Credit Office [external link] provides financial guarantee products for New Zealand exporters and banks. These products help exporters manage risk and capitalise on trade opportunities around the globe.
Two amendments to NZECO’s mandate agreed at the end of October will enable the office to support more trade with China by adding the renminbi to the ‘approved currency list’, and will give the office more flexibility to support transactions with benefits to New Zealand by adjusting the requirements for local value-added content.
Trade Minister Tim Groser has said that “This is about the internationalisation of local companies, which generally operate outside the traditional primary export sector, have a strong local design component and bring profits and other benefits back to New Zealand.”
Click here for the media release [beehive website] from the Minister of Finance, Hon Bill English and Minister of Trade Hon Tim Groser.
To learn more about NZECO and its products go to their website [external link].
The Ministry of Foreign Affairs and Trade is inviting submissions on the expressions of interest from Japan, Mexico and Canada in joining the Trans-Pacific Partnership negotiations.
On the margins of the APEC Leaders Meeting in Honolulu in November 2011, Japanese Prime Minister Yoshihiko Noda, Canadian Prime Minister Stephen Harper and Mexican Economy Secretary Bruno Ferrari each announced their respective country’s intention to begin consultations with the current nine TPP participating countries towards joining the TPP negotiations.
Before taking a decision on bringing an additional country into the TPP negotiation, there will be a preparatory process that involves discussions with each of the current members. The aim of this process is to establish whether a prospective member is able to negotiate rules and market access commitments consistent with the quality of the agreement currently being negotiated.
As New Zealand prepares to enter these discussions it is important that negotiators know and understand the views and interests of New Zealanders. Investors, exporters and importers of goods and services, non-government organisations and individuals are invited to make submissions.
In your submission, you may wish to highlight:
The closing date for submissions is 3 February 2012. Submissions should be sent:
As we did for submissions provided when the United States signalled their intention to join the negotiations in 2008, we plan to publish these submissions on this website once they have all been received. With that in mind, please indicate clearly if you would prefer to have some or all of your submission kept private.
Negotiators will follow up submissions with direct contact if necessary. The public consultation process is an on-going one that will provide opportunities for input and comment on the negotiation.
Political leaders have announced the broad outlines of a Trans-Pacific Partnership (TPP) free trade agreement.
Nine countries - Australia, Brunei, Chile, Malaysia, Peru, Singapore, the United States, Viet Nam, and New Zealand - have been negotiating toward a high quality, comprehensive Asia-Pacific regional trade deal since March 2010.
This group includes four of New Zealand’s 10 most important trading partners (1st – Australia, 3rd – US, 7th – Singapore and 9th – Malaysia). Overall, 38 per cent of all New Zealand’s trade is with TPP economies.
In November, in the margins of the APEC Leaders’ Meeting, leaders from the nine TPP economies endorsed a report from their Trade Ministers defining the TPP agreement’s scope.
While there are still sensitivities to be worked through, the broad outlines reveal member’s shared commitment to full tariff elimination on goods, a single tariff schedule for each country, and no sectoral carve-outs (or product exceptions).
The broad outlines also focus on 21st century issues, such as behind-the-border barriers. Over time, this will allow a move towards better and more consistent regulatory practice that will benefit traders and investors. This would have real value to New Zealand’s small to medium sized enterprises, which face significant compliance costs when they begin to export, as well as to SMEs and larger businesses operating or participating in global supply chains.
Deputy Prime Minister Bill English and Trade Minister Tim Groser, who represented New Zealand at the meeting, welcomed the TPP Leaders’ endorsement of the broad outlines as an important milestone towards gaining improved access to Asia-Pacific markets for New Zealand exporters.
US President Barack Obama said that TPP leaders had directed negotiators to finalise the agreement in the coming year. TPP Trade Ministers expect to meet in the margins of an APEC ministerial meeting in mid-2012 for a political stocktake on progress.
Japan, Canada, and Mexico all expressed an interest at the APEC Leaders’ Meeting in joining the TPP negotiations.
These announcements were welcomed by a number of existing TPP participants, including New Zealand. The New Zealand Government views TPP as an inclusive, living initiative with flexibility to accommodate new members and address new issues in the years ahead. Our eventual goal is to have TPP function as a high quality platform that can develop into a future Free Trade Agreement of the Asia-Pacific.
Before taking a decision on bringing an additional country into the TPP negotiation, there will be a preparatory process that involves discussions with each of the current members. This discussion will establish that the prospective member is able to negotiate rules and market access commitments of the quality that others are seeking. The P4 countries went through this process with the United States for a year before launching the expanded negotiation in 2008.
New Zealand business groups such as the NZUS Council, Beef+Lamb NZ, the Meat Industry Association, Federated Farmers, Export NZ, and the New Zealand Chambers of Commerce responded positively to the broad outlines and membership announcements.
Many highlighted the potential for TPP to deliver significant benefits for the New Zealand economy. They also noted that world leaders’ commitment to TPP sent a message about the need for trade liberalisation to lift the global economy out of its current malaise.
The full set of TPP documents released at APEC, statements issued by New Zealand Ministers welcoming the announcements, and reaction from business are available on the Ministry of Foreign Affairs and Trade’s TPP Talk website.
The Ministry of Foreign Affairs and Trade has established a new Business Liaison Unit within the existing Economic Division. The new unit will be led by Nick Markwell.
The Business Liaison Unit will be specifically tasked to engage more actively with exporters, including key sector groups and regional representatives, in order to facilitate their international connections. The Ministry has a very close relationship with NZTE, and we will continue to work with them as we engage with business, together with other important business-facing agencies (the Ministry of Economic Development, Immigration New Zealand, the New Zealand Customs Service, Education New Zealand, the Ministry of Transport and Tourism New Zealand.)
The Ministry of Foreign Affairs and Trade plays an important role for New Zealand business by:
In November Taiwan’s Ministry of Finance announced an extension to the cut in tariffs on butter and anhydrous milk fat (AMF). Until 31 May 2012 tariffs for butter (HS Code 04051000) and AMF (HS Code 04059010) are to remain 25% lower at 3.75% and 6% respectively. New Zealand is the number one source of butter and AMF to the Taiwan market with over 64% market share.
Taiwan reinstated a temporary 50% reduction in tariffs for infant milk powder (HS code 19011000 - lowered to 2.5% from 5%), prepared milk powder (HS code 19019021 - lowered to 6% from 12%), and other milk powder (HS code 19019022 - lowered to 6% from 12%). These tariff reductions, applying till 24 May 2012, will be welcome news. In the twelve months to October 2011 New Zealand exports of infant, prepared and bulk formula to Taiwan were worth $47.2 million.
Round Four of free trade negotiations between New Zealand and the Russia-Belarus-Kazakhstan Customs Union will be held on 19-20 December 2011 in Geneva. Negotiators will cover the range of chapters under discussion with a view to making good progress towards the shared objective of concluding the agreement in 2012. This Round occurs at a significant time for Russia, following its expected accession to the World Trade Organisation at the WTO Ministerial meeting 15-17 December. Russia is also Chair of APEC for 2012 with the first informal senior officials’ meeting being held this month in St Petersburg.
New Zealand Trade Minister, Tim Groser and Rob Davies, South African Minister for Trade and Industry, launched the joint New Zealand-South Africa Trade Trends Study on 21 October 2011.
The study, completed in May, found few serious access obstacles in the merchandise trade between the two countries. It also revealed that where New Zealand companies compete, they tend to command significant market share.
The study identifies sectors already performing strongly, and highlights others with growth potential. It also identifies measures which might be undertaken by both countries to help grow the trade relationship, and assesses their relative priority.
The trade study identified areas for growth in sub-sectors of the two countries’ already strong trade relationship. For South Africa, undeveloped potential exists in a range of machinery and stainless steel products, while there are opportunities for New Zealand in wood products, beef and unwrought aluminium. Both countries could grow their trade in services.
The full study is available here [external link].
For further information contact Georgina Roberts, Deputy High Commissioner, New Zealand High Commission, Pretoria at: Georgina.Roberts@mfat.govt.nz
The fourth PACER Plus meeting is scheduled for 26-29 March 2012 in Brisbane, Australia. PACER Plus members (NZ, Australia and Forum Island Countries) will meet with private sector and civil society groups from the region on 26 March, followed by an officials meeting from 27-29 March.
The main issues PACER Plus members will discuss are focused on labour mobility, rules of origin and customs procedures. The discussions build on the third PACER Plus meeting held in Palau earlier this year. New Zealand’s objective in pursuing PACER Plus is assist Pacific Island countries to capitalise on the potential for trade and to promote sustainable economic development in the Pacific.
For further information please contact Koro Dickinson, Pacific Division, koro.dickinson@mfat.govt.nz or 04 439 7950.
The APEC Economic Leaders’ Meeting took place in Honolulu on 12-13 November. Deputy Prime Minister English represented New Zealand, along with Foreign Minister McCully and Trade Minister Groser for the annual APEC Ministers’ Meeting on 11 November, and Secretary of the Treasury Makhlouf for the APEC Finance Ministers’ Meeting on 10 November.
New Zealand had a successful year in APEC under the US’ hosting in 2011, with TPP outcomes a particular highlight. Real progress was also achieved on next generation regional integration issues (in particular innovation), green growth, and regulatory cooperation.
The baton now passes to Russia, as 2012 APEC hosts, with a first Informal Senior Officials’ Meeting in St Petersburg on 12 and 13 December. Senior Officials will also meet in Moscow in early February, and alongside Trade Ministers in Kazan in June, and APEC Economic Leaders in September in Vladivostok.
Russia’s theme for the 2012 APEC year is: “Integrate to Grow, Innovate to Prosper”. It has identified four priority areas of work for the year:
Statements issued by Ministers and Leaders at the end of the 2011 APEC year are available on MFAT’s APEC website.
