Bigger, broader and better-value – that’s the three ways the Government’s new trade strategy should deliver on export markets for food, beverage and grocery producers, according to a new policy plan launched by the Prime Minister last Friday.
It was significant that Bill English was accompanied at the launch of “Trade Agenda 2030” by a bevy of senior Cabinet colleagues. Such high-level enthusiasm for trade policy – normally regarded as the rather dreary arena of a handful of policy wonks and dusty economists – reflects the importance of a modern, forward-looking trade strategy. New Zealand certainly needs to bring its ‘A’ game to ensure we continue to keep pace with competitors and find new opportunities, particularly in these uncertain times, where champions of globalisation can be hard to find. Trade Agenda 2030 (TA2030) is a very good foundation for the coming years.
The strategy proposes four “shifts” in trade strategy, all aimed at creating new opportunities and markets, getting the most out of our existing trade, and increasing the resilience of the export sector. These are, of course, all key concerns for the food and grocery sector, which accounts for nearly three-quarters of New Zealand’s merchandise exports ($31 billion), and directly or indirectly employs around a fifth of the workforce.
Our food, beverage and grocery companies know only too well the challenges of trying to compete offshore with high tariffs and competitors that often have better terms of access, or without cost-effective access to services to support that trade, such as financial, logistics, and distribution services. That’s why the TA2030 goals of extending the coverage of FTAs from 53 percent to 90 percent of our merchandise goods exports, and deepening services trade and digital elements, are critical.
But, of course, success at exporting is not only about tariffs these days. FGC members know full well how challenging it can be to get product into markets where regulatory requirements are unclear or excessive, administrative processes are slow or expensive, food safety measures are not based in science, or labelling requirements are fickle – in other words, where non-tariff barriers (NTBs) are a defining feature. TA2030 tries to address this, too, with a heavy emphasis on tackling such barriers, including establishing a new one-stop shop for exporters, which should help make the engagement with government more effective.
Seeking to address NTBs, alongside support for offshore investment, should also help to enhance New Zealand’s participation in global value chains. Food and beverage has been the highest-performing sector in this area to date, but it’s clear we have a way to go to fulfil our potential for this increasingly important global business model. TA2030 should help companies to explore what’s possible.
More broadly, the mechanisms in place for enhanced engagement with business – such as the newly-established Ministerial Advisory Group to provide ongoing input to the Government on priorities and concerns – will be critical. It is only through the Government working effectively together with business that the goals of TA2030 can be fully realised.
Also welcome is the investment of an extra $91.3 million into the Government’s trade budget. Part of this will go to opening new diplomatic posts in Sri Lanka and Dublin.
These are good strategic choices: the Dublin post will be important as the Brexit process unfolds, helping to deepen our relationships in Europe as one of our traditional like-minded partners bows out of the EU; and Sri Lanka broadens our links with the global economic powerhouse Asian region, as well as being potentially a very important market for our food exports in its own right. The bulk of the new funding, however, will go to increasing the resource available in the key ministries (MFAT and MPI) to ensure we are able both to secure and to make the most effective use of existing and new opportunities.
Of course, though essential, money is only part of the solution. The question of finding sufficient human capital, even with the benefit of this very welcome funding, is something that I imagine will be at least a short-term challenge for the leadership teams of both ministries.