Source: New Zealand Government
Distinguished guests, ladies and gentlemen. Tena koutou katoa. Good morning.
It is my pleasure to join you today for this China Business Summit – my first as Minister for Trade and Export Growth as well as Minister of Agriculture – and to have the opportunity to speak to you about the New Zealand-China trade relationship.
I would like to join the Prime Minister in thanking the organisers, especially Fran O’Sullivan. This Summit is now a celebrated fixture on the annual event calendar. And the stage has certainly been set for a rich set of discussions over the course of today.
Update on the bilateral trade relationship
Let me echo, too, the Prime Minister’s comment that New Zealand’s relationship with China is one of our most significant.
Everyone in this room understands the extraordinary success story of our bilateral trade, propelled by the Free Trade Agreement we signed in 2008. Pre-COVID-19, two-way goods and services trade totalled more than $33 billion annually.
Ours is a trade relationship that is complementary, and from which both sides benefit.
I have been fortunate to have been involved in it as Minister of Agriculture – and now as Minister for Trade and Export Growth. In that time I have worked with both my Ministerial counterparts in China, and with New Zealand exporters, especially in the primary industries.
And although the advent of COVID-19 has disrupted so much, in fact our bilateral goods trade has held up pretty well. New Zealand exports by value were down less than 1 percent in 2020 when compared to 2019, itself a record year for our trade.
Of course, individual sectors have had different experiences. Dairy, our largest export to China, grew in 2020 despite COVID-19. Others, including forestry and seafood, were hit particularly hard early on by the challenging market conditions that COVID helped create. But they are recovering well.
By contrast, our main services exporters continue to face huge challenges due to the ongoing border and market restrictions COVID-19 has necessitated. I refer in particular to the international education and tourism sectors, for which China was an important market prior to COVID-19. I want to acknowledge those of you in the room impacted by this.
Adaptation and innovation
New Zealand has long been a nation of innovators. And through the pandemic I have been impressed and inspired by the many ways in which New Zealand businesses have adapted.
In China, we have seen New Zealand businesses pivoting to e-commerce channels, as a way of ensuring their products get to their customers. And, in the absence of travel, we have seen a real investment by New Zealand businesses in maintaining their connection to market, whether that be over digital platforms, through their local business partners, or the in-market NZ Inc team. It was excellent to see, for example, so many New Zealand companies participating in the China International Import Expo in Shanghai last November.
I recently spoke to a range of China-based business people at a virtual NZ Business Roundtable China event and was impressed with how they have adapted to the challenges of COVID and are managing the ongoing disruption to supply chains. They remain optimistic about the Chinese market, and a number of them spoke about launching new products and the ongoing innovation work they are doing to meet the changes in Chinese consumer preferences.
A number of our companies have used the pandemic as an impetus for positive change. Take, for example, Les Mills International. With the gym industry one of the hardest hit, Les Mills used the disruption as an opportunity to accelerate its digital initiatives. One of these was the creation of a new online instructor training programme, which saw the company able to train 2,800 instructors in one online session – many of whom participated from their homes.
Les Mills also launched a WeChat Mini Program to provide free workouts and other content, allowing Chinese consumers holed up in their apartments to stay healthy. They also launched paid livestream classes. It is clear that the company is now well placed to take advantage of the steep uptick of both in-home exercising and livestreaming.
Then there’s Magic Memories. You might be surprised to hear about a New Zealand attraction photography business securing a big win in the midst of COVID-19, when travel and visits to attractions are restricted. But that’s just what Magic Memories did when it successfully secured a strategic partnership with Merlin Entertainment Group in Asia in November 2020. Without any staff in China, and with the help of NZTE, Magic Memories was able to successfully deliver projects in nine sites on time, and set up a presence in Shanghai in January this year.
And there’s Fisher&Paykel appliances who, at the peak of the pandemic, successfully signed four new strategic partnerships with some of China’s top real estate developers. This meant they could deliver full kitchen solutions to over 2,000 new Chinese families. Taking advantage of the significant opportunity in China’s home development sector, Fisher & Paykel continues to expand into luxury retail with the opening of up to 10 Fisher & Paykel stores per year planned through to 2024.
Separately, of course, Fisher&Paykel healthcare has continued to supply much-needed respiratory products globally throughout the pandemic.
These are just some great examples of our companies working well despite the current challenges.
This Government is also investing in its international relationships during these challenging times.
I’m pleased that New Zealand and China have maintained our regular engagement and dialogue, even in the absence of high-level visits.
Personally, I have valued the opportunity to connect recently with my Chinese ministerial counterpart, Commerce Minister Wang Wentao. In that discussion, we took stock of how our bilateral trade was faring in the COVID-19 context, and exchanged views on issues relating to APEC and the World Trade Organisation. It was good to connect with Minister Wang so soon after he took up his portfolio.
Trade policy outcomes
During the same engagement, Minister Wang and I also signed, virtually, the Upgrade to our bilateral Free Trade Agreement. The Upgrade modernises our existing FTA by updating the rules underpinning our trade to ensure they remain fit for purpose.
Already, 98 percent of New Zealand’s current goods exports by value have duty-free access to China under the 2008 FTA. The Upgrade builds on that further with new goods and services market access and trade facilitation measures. In terms of goods, the Upgrade will result in tariff-free access for 99 percent of New Zealand’s nearly $3 billion wood and paper trade to China.
In services, we have new commitments across a number of sectors, and provisions to protect New Zealand’s future competitive advantage by ensuring we benefit from additional commitments China may make to other trading partners in future. The Upgrade will also add a number of new chapters to the FTA in areas like e-commerce, government procurement and the most ambitious environment chapter commitments in any of China’s FTAs. We look forward to the Upgrade coming into force.
Another highlight in terms of the architecture of our trading relationship was the signature in November of the Regional Comprehensive Economic Partnership. Both New Zealand and China are parties to this agreement, along with 13 others from our region. Collectively, the RCEP membership accounts for nearly a third of the world’s population, and over half of New Zealand’s exports.
Separate to these ‘big announcements’, New Zealand agencies have continued to work closely with Chinese counterparts to support the continuation of trade as much as possible, despite COVID-19.
We’ve kept up the formal bilateral talks that underpin the relationship, from trade to agriculture and education. And we’ve continued to cooperate in areas of shared interest, for example in maintaining supply chains for essential goods, and on ways to improve the business environment.
Our NZ Inc team up in China work alongside New Zealand businesses every day, working to resolve any issues as they arise and providing information and support.
Because issues do arise, as you would expect in a trading relationship of this size, and in a market as multi-faceted as China. In the past year, both importers and exporters have also faced the added challenges of disruption caused by COVID-19 globally. This includes navigating shifting requirements and expectations relating to management of the global risk posed by COVID-19, whether that be at the border or in our exporting premises. Government agencies will continue to work closely with both business and their Chinese counterparts on these issues.
Our wider efforts
All these efforts contribute to the Government’s trade recovery strategy, which aims to put exporters at the centre of New Zealand’s economic recovery from COVID-19.
The Strategy has four areas of focus:
We’re retooling exporter support, by providing tools, support, and market intelligence to businesses, especially those that may not be able to be physically present in the market due to travel restrictions.
We’re reinvigorating international trade architecture. This means supporting international trade rules and organisations, which have become more important than ever. We are working with China and others to reform and strengthen the WTO, to ensure it remains effective and can contribute to solving contemporary global challenges. We are continuing negotiations on important new trade agreements, including FTAs with the European Union and the United Kingdom. And we are advancing concerted open plurilateral initiatives – ambitious trade outcomes negotiated by small groups, and which will be open to all who can meet the standard to join. Recent examples include the Digital Economy Partnership Agreement and the work we are doing on the Agreement on Climate Change, Trade and Sustainability.
We’re refreshing key trade relationships, including to ensure our businesses have many overseas market options. Diversification has long been a key principle of New Zealand’s trade policy, and Government will continue to encourage all businesses to consider their market concentration and exposure risks. Here I want to echo comments made recently by my colleague, Minister of Foreign Affairs, Hon Nanaia Mahuta, that New Zealand must avoid overreliance on any one trading partner. It is important to our long term economic resilience and well-being that we do so.
And finally we’re looking to take the lessons of COVID-19 to build New Zealand’s future resilience against economic shocks.
This strategy is important for New Zealand. Because although China is recovering quickly in economic terms from the pandemic, the global economic outlook for our exporters remains challenging. We’ll need to be deliberate and targeted in response.
The Prime Minister has outlined this morning some of the priorities we will pursue as APEC hosts this year, including with China. New Zealand is working with the 20 other APEC economies to lead a collaborative economic response to COVID-19. For example, we are wanting to ensure we have resilient supply chains for essential medical products related to the ongoing pandemic. The deep interlinkages between the APEC economies mean that we all have a stake in each other’s successful return to growth, and the rebuilding of trade and movement of people.
At the same time, we need to bear in mind other enduring benefits that economic cooperation can create as we recover from COVID-19. These include progress on sustainability, ensuring widespread adoption of digital tools to drive productivity, and creating inclusive plans that create opportunities for indigenous people and women. Together we can lift each other up, and grow again.
Without any doubt, APEC is important to New Zealand business.
Working together with other APEC member economies over many years, we have improved the trade environment in the Asia-Pacific. The streamlined import and export processes promoted by APEC, for example, mean exports take less time to get to where they are going, and at a lower cost.
This comes through clearly in the figures. Trade between APEC economies is now eight times greater than it was in 1989. 14 of New Zealand’s top 20 export markets are APEC members, including the three largest economies in the world – the United States, China and Japan.
For New Zealand, almost three-quarters of our exports go to APEC member economies. It is no coincidence that all our free trade deals are centred around APEC economies, as this reflects the understandings and relationships we have built through APEC.
Vaccines and borders
Finally, a word on travel. I spoke earlier about how impressed I have been with the way in which New Zealand businesses have adapted to COVID-19 realities, including limitations on travel. But we all acknowledge that in-person relationships are a critical underpinning of business success.
The Government recognises that safe international connectivity is fundamental to the economic, cultural and social wellbeing of New Zealanders. However, managing the relaxation of our borders will need to be done very carefully to preserve the health outcomes we have achieved through our COVID response strategy. Vaccines, vaccine certification, testing and managed isolation and quarantine are all tools we can use to manage risk. These are complex issues to work through for any governments, including both New Zealand and China, and so they will take time.
For now, let me just join you in looking forward to the day when we can travel freely and safely again. You can be sure our Government will do all it can to get us to this outcome.
Ladies and gentlemen, let me conclude by reaffirming the Government’s commitment to New Zealand’s trade relationship with China, an important market for us.
And I want to pay tribute to all of you in attendance today, for the valuable contributions you make to this relationship and to New Zealand more broadly.
As the Prime Minister said, Government is here to support you as much as we can as we navigate these complex times together.