Global Economic and Trade Update for New Zealand Businesses - 18 June 2021

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Global & Multilateral Updates

  • On 4-5 June 2021, the Asia-Pacific Economic Cooperation (APEC) Ministers Responsible for Trade (MRT) took place, chaired by the Minister for Trade and Export Growth Hon Damien O’Connor, with New Zealand represented by the Minister of State for Trade and Export Growth Hon Phil Twyford. APEC Trade Ministers, representing half of global GDP, delivered their most ambitious statement(external link) of political intent for some time. They committed to facilitating trade in vaccines and the products essential to completing vaccination programmes, a critical pre-requisite to reopening borders and growing economies. Trade Ministers also reiterated their support for a well-functioning and responsive World Trade Organization (WTO). They additionally reaffirmed APEC’s role in supporting trade and sustainability outcomes. This included commitments to conclude the WTO fisheries subsidies negotiations by no later than 31 July, progress work on addressing fossil fuel subsidies, and new efforts to enhance trade in environmental goods and services.
  • Discussion of the proposal for a temporary waiver of intellectual property rules under the WTO Trade Related Aspects of Intellectual Property Agreement (TRIP waiver) are ongoing.  India, South Africa and other proponents of the TRIPS waiver proposal have tabled an updated proposal.  New Zealand has noted its support of a waiver in relation to COVID-19 vaccines and the need for the WTO to move to text based discussions. The EU is preparing to table an alternative proposal that brings together WTO work on facilitating trade and assisting increased manufacture of vaccines and other COVID-19 related products alongside proposals to simplify flexibilities within TRIPS rules. The APEC Ministers Responsible for Trade Meeting Joint Statement, included support from APEC economies for text-based negotiation of a waiver in relation to vaccines.  Efforts are continuing within the WTO to urgently consider text to address these issues, however significant differences still exist between members.

Regional Updates

Australia and the Pacific

  • On 8 June, the United Nations membership agreed to postpone to 2024 the graduation of Kiribati and Tuvalu from Least Developed Country status. The decision was a big win for both countries, who were concerned about the impact that graduating would have on their economies, especially as the full economic impact of COVID-19 remains unclear.

Asia

  • In April, the Standing Committee of China’s National People’s Congress released second drafts of two key components of China’s comprehensive cybersecurity and data protection legislative framework in late April: the draft Personal Information Protection Law and the draft Data Security Law. The latter was approved on 10 June with the former’s enactment likely before the end of the year. The scope of the two laws remains broad, meaning they may have implications for foreign companies operating in China, and potentially those based outside the country but handling data of Chinese citizens. 
  • China has enacted a wide-ranging Anti-Foreign Sanctions Law, with the stated purpose being “to counter, fight and oppose unilateral sanctions on China. Under the new law, organisations and individuals (and their immediate families) deemed to be involved in making or implementing discriminatory measures against Chinese entities could face Chinese countermeasures including: visa cancellation; freezing of assets; restrictions on Chinese entities cooperating with listed entities; or “other necessary measures”. The new law is being presented as a response to actions taken by the EU, UK, the US and Canada relating to Xinjiang, Tibet, and Hong Kong. It is as yet unclear what practical impact the law will have. 
  • Coherent with the announcement made by Prime Minister Suga last year, Japan has passed legislation codifying its goal of reaching greenhouse gas emission neutrality by 2050. To achieve its emissions goals, Japan aims to double the number of geothermal power stations by 2030 and ease regulations to allow for the development of geothermal power.
  • Singapore has established the Climate Impact X (CIX) - a Singaporean-based global carbon exchange and marketplace that will focus on using nature-based solutions as carbon off-sets by the commercial sector. The establishment of CIX supports Singapore’s wider aspiration to become a leading carbon-trading hub. CIX, backed by the Singapore Stock Exchange, DBS bank, Temasek, and Standard Chartered, aims to enhance the transparency, integrity and quality of carbon credits in the voluntary carbon market. 
  • Following the second postponement of the start of the Singapore – Hong Kong air travel bubble (in late May), Minister of Transport Iswaran announced on 10 June that respective countries will ‘review the situation’ in earlyJuly and then make a decision about setting a new target launch date. During a short visit by PM Morrison to Singapore on 10 June (on the way to the G7 meeting in the UK), Australia and Singapore announced that they would start laying the groundwork for the eventual establishment of an air travel bubble. PM Morrison noted that ‘while there is some time before Singapore and Australia can open up, the two countries are working on putting systems in place to do so’.

Europe

  • Round Five of New Zealand-UK Free Trade Agreement (FTA) negotiations recently concluded on 14 June. In line with Minister of Trade and Export Growth Damien O’Connor’s agreement to accelerate trade talks with his UK trade counterpart Secretary of State Liz Truss, solid progress was made with three more chapter texts substantially concluded (government procurement, gender equality, and dispute settlement) and several more likely to follow before round six, currently scheduled for late July. As part of that Ministerial commitment, Minister O’Connor has been in London this week to meet with his UK trade and agriculture counterparts to push this negotiation toward conclusion. A press statement is expected to follow. New Zealand continues to be clear that in our FTA negotiation with the UK, tariffs need to be eliminated over commercially meaningful timeframes and that we won’t be compromising the quality of the agreement for speed.
  • A joint webinar will be held on 22 June with NZ and UK Chief Negotiators as panellists who will provide a progress update, and the opportunity for interested stakeholders to ask questions of importance to them.
  • On Wednesday 16 June,  Australia and the UK announced(external link) they have reached agreement in principle on their AUUK FTA negotiations.  While granular detail of the deal remain unclear, tariffs on all products are slated for eventual elimination under that FTA.

Americas

  • On 8 June the US Senate passed the US Innovation and Competition Bill, a $250 billion bill to help boost US competitiveness in science and tech innovation. The US House of Representatives is expected to consider the legislation in the coming weeks.
  • With the 30 day ban on the export of beef scheduled to end on 20 June, it is still not clear as to whether the Argentine government will maintain the closure or restart exports. The export ban has resulted in a greater supply of beef on the domestic market and an apparent fall in the price of beef, although this was not reflected in prices to the public, which increased by 6%. Ahead of a decision by the government, the consortium of meat exporters (ABC) made a second proposal to the government, whereby they would provide a greater volume of beef to the domestic market at affordable prices. Farmers' representatives have warned that they could re-impose protest measures if exports are not reopened.
  • The cryptocurrency Bitcoin will become legal tender in El Salvador, after the country’s Legislative Assembly approved legislation, making it it the first country to do so. Bitcoin is set to operate as a parallel legal tender alongside the U.S. dollar, and the Government has requested technical assistance from the World Bank in order to implement the change, according to Finance Minister Alejandro Zelaya.

Market reports released this week

External links

The following links may provide useful information to businesses:

  • NZTE(external link) has a website focused on providing COVID-19 information for exporters. They’ve also launched myNZTE(external link), an interactive digital portal of insights and tools available to all New Zealand exporters.
  • The Treasury releases a weekly economic update(external link) every Friday. Stats NZ has published a data portal(external link) with near real-time economic indicators.
  • MBIE publishes a sector reports series(external link) which provides regularly updated reports on all industry sectors that make up the New Zealand economy. These include official economic data and the challenges and opportunities that face New Zealand’s industry sectors.
  • business.govt.nz(external link) provides tools and advice from across government to save small businesses’ time and help make the business a success.
  • MFAT has created a tariff finder(external link) which is designed to help goods exporters and importers maximise benefits from New Zealand’s Free Trade Agreements and compare tariffs in 136 other markets.

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Disclaimer

This information released in this report aligns with the provisions of the Official Information Act 1982. The opinions and analysis expressed in this report are the author’s own and do not necessarily reflect the views or official policy position of the New Zealand Government. The Ministry of Foreign Affairs and Trade and the New Zealand Government take no responsibility for the accuracy of this report.

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