February 2019 Trade Update

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February 2019 Trade Update

25 Feb 2019 | BusinessNZ

February 2019 Trade Update

CPTPP

The good news is that CPTPP is up and running and that it is likely to get bigger.  No decisions on new members is likely until mid-year but there are several countries interested.

EU

Negotiations with the EU continue.  This negotiation is far more difficult than some seem to think. Talk of an outcome by the end of the year is extremely optimistic.   While agreement on many issues is relatively straight forward there are some big issues on services, and agriculture that need resolution.

UK

Uncertainty over the shape and timing of any Brexit remains.  Until this is known it remains unclear as to whether the UK can negotiate FTAs with other economies independent from the EU.  Negotiation with the UK might be possible if Brexit occurs.  The UK seems both keen on a bilateral negotiation with New Zealand and on possibly joining CPTPP.

Brexit itself causes some uncertainty for exporters to the UK.  If we have a border between the UK and EU on 29 March there is the potential for delays in export processing.  MFAT and NZTE are providing very good advice on this.

China

There is much speculation in the media on the state of the New Zealand-China relationship.  It does seem as though there are some challenges on the political front.  But there is very little evidence to suggest that these differences are going to flow over into the wider trade and economic relationship.

Delays at the border when exporting into China are relatively common.  They can be caused for a variety of reasons.  Teething issues associated with the merger of border control agencies in China last year is one of these.

Likewise declines in international student numbers could be impacted by a range of factors other than the state of the wider political relationship.  In 2018 there were changes announced to post-study work rights and to English language testing requirements.  The secondary school qualification regime – NCEA – was also under review.  All these policies, and the uncertainties they have caused, are far more likely to be impacting demand from China than political tensions.

Year on year tourist numbers are still showing good growth.  December 2018 is down slightly on 2017.  It is still too early to reach any conclusions about a potential tourist slowdown.

We are watching this situation closely and if our assessment changes we will communicate this immediately.  But at this stage we believe that some of the fears reported in the media are overstated.  Should you experience any difficulties in your exports to China, that do not have an obvious explanation, then please advise MFAT and NZTE straight away.

Other negotiations

The bad news is that there is no progress in any other negotiations.  The Pacific Alliance negotiation has actually gone backwards with the new Mexican Government joining Colombia in questioning the FTA process.  No progress has been achieved on the GCC process or RCEP since our last report.