This is an ideal time to bring a New Zealand trade delegation to Manila. Just as the Philippine economy has outperformed most of the world in the past two years, the New Zealand economy has turned the corner following the Global Financial Crisis.
Earlier this year, the New Zealand economy was described by one commentator as the “rock star†of the developed world due to its positive growth outlook and return to fiscal surplus. While that’s good news, there is no sense of complacency in New Zealand. As a small country distant from world markets, our companies — most of them SMEs — know that exporting is fundamental to growth.
I have spent much of my professional career seeking access to markets for New Zealand exporters. The entry of our largest trading partner, the United Kingdom, into the European Economic Community in 1973 prompted New Zealand to embark on a mission to diversify its export markets. The strategy has been outstandingly successful, and much has changed in the following four decades. But it was not always easy.
New Zealand was in the 1970s one of the most inward looking economies in the developed world. The process of domestic economic liberalisation started with a free trade agreement with our closest neighbor, Australia, in 1983. In recent years, further FTAs with China and ASEAN in particular have broadened the palette of market access opportunities that are so critical to the New Zealand economy. FTAs now cover over half of New Zealand’s total trade, and further negotiations are well advanced with Korea, India, and the states of the Arabian Gulf.
New Zealand’s quest for access to export markets also recognises that modern supply chains are changing the way companies do business. Just as Philippine electronic exports rely on components imported from some markets, for the export of final products to others, the complex flow of goods across the Asia-Pacific region demands a more integrated set of agreements between governments. And services are becoming more globalised too, with few better examples than the booming business processing sector in the Philippines. Free Trade Agreements have the potential to boost employment and unleash even higher growth rates.
Nowhere is the process of trade and economic integration more dynamic and exciting than in the Asia-Pacific region. New Zealand has joined the Philippines, its ASEAN partners, and five other regional economies in negotiations towards a Regional Comprehensive Economic Partnership. At the same time, New Zealand is negotiating a Trans-Pacific Partnership that will link major economies in the Americas with Asia.
TPP is now at a crucial stage. The first part is a negotiation over rules designed to meet the realities of business in the 21st century. The second is a negotiation over market access. The two are inextricably linked.
If the 12 participating countries are successful in completing the negotiation, then the TPP bus will carry on to other destinations in the Asia Pacific. Though TPP may yet still stumble if Governments do not take the final decisive decisions to confront protected sectors, there is every reason to believe TPP will be the decisive influence in creating a framework that addresses 21st century business needs in this rapidly evolving region.
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(Tim Groser is New Zealand’s trade minister.)