Govt push for FTAs to cover 90% of export goods coupled with greater role for services

Friday 24th March 2017

The government's newly minted trade agenda wants near-saturation free trade agreement coverage for locally exported goods by 2030, however it doesn't want to pass up opportunities offered by new technology enabling more service exports.

Prime Minister Bill English launched the strategy today, saying there had been greater diversification of the country's exports away from dairy, with growth in other sectors such as tourism, wine, information technology and education. The new strategy will see the Crown pump $91.3 million into various efforts to boost trade, and has been welcomed by business and industry groups, including Business New Zealand, Zespri International, Horticulture New Zealand and the New Zealand Winegrowers Association.

Xero chief executive Rod Drury, whose software development firm is looking to build a global 'financial web' that links SMEs with financial institutions, says the trade agenda "clearly understands its the role of services business to export as well".

He said the document will kick off much-needed conversations "around the role of globalisation and trade with all the protectionism stuff we've seen".

The trade agenda acknowledges the rising tide of protectionism that's achieved a greater voice in major countries around the world and that there's an "urgent need for New Zealand to be even more active in seeking to help safeguard that system and secure and sustain access to the overseas markets that we depend on for our prosperity and economic growth," the report said.

The government's top priority in the new trade strategy is to lift the level of New Zealand's exported goods covered by free trade agreements to 90 percent by 2030 from the 53 percent level it's currently at, principally by signing new deals and expanding on existing ones. Government figures today showed the country exported merchandise goods worth $48.26 billion in the year to Feb 28, of which $26.31 billion was food and live animals.

The second shift aims to target the rise of non-tariff measures, such as labelling requirements, through the World Trade Organisation, setting up a clearing house dedicated to monitoring the barriers as they're introduced and keeping industry informed.

The third goal is to boost the focus on services exports, investment and the digital economy, which it sees as needing greater recognition in free trade agreements, something that became a rallying point for the opposition to the stalled Trans Pacific Partnership trade and investment deal over the treatment of IP and impact on nations' sovereignty.

New Zealand's service exports were worth $21.63 billion in calendar 2016, of which $13.85 billion was in travel and $2.71 billion in transport. Telecommunications, computer and information services accounted for $891 million of exports that year, while research and development totalled $146 million.

Xero's Drury said service business exporters need to be educated how they can use technology to enter overseas markets, which have been opened by global digital platforms.

"We need to be the educators to businesses about how to use technology," he said.

The final leg of the plan is to translate greater access to "market success", which would need greater pooling of resources by government and industry in entering overseas markets to achieve bigger scale. That would also include placing more emphasis on "where the value of New Zealand companies is created, whether on-shore or offshore, provided certain conditions are fulfilled so as to ensure continued benefit to New Zealand".

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