Global trade landscape shifting, APEC must reaffirm open cooperation: NZ ambassador to China

Summary

New Zealand's Ambassador to China, Jonathan Austin, told the 21st Century Business Herald in an interview in Beijing that APEC economies need to stand together to defend the international trading system built up over decades of effort. That system is under pressure, he said, and one of APEC's key values is bringing the region's major economies back to the table to jointly reaffirm their commitment to an open, rules-based and predictable trading system. As a small economy far from other markets, New Zealand cannot prosper on trade with itself alone; it must grow through international trade, and that trade has to rest on a fair, rules-based system.

Austin said China's three priorities for this year — openness, innovation and cooperation — align closely with New Zealand's own thinking and sit at the core of APEC's mission. With divergences growing worldwide, it is important to bring economies together to find common ground, he said. An open trade environment is an important foundation for deepening China-New Zealand commercial ties, he said.

China is New Zealand's largest trading partner, the two economies are highly complementary, and New Zealand exports to China in a single day as much as it exports to Sweden in a whole year. Austin said New Zealand was the first developed country to sign a free trade agreement with China, and that the China-NZ FTA has driven a sharp increase in two-way trade. The two countries are now negotiating on services trade, aiming to lift market openness further on the back of existing FTA cooperation, with an agreement hoped for before the end of the year.

New Zealand and China were both founding members of APEC and have worked closely together on a range of issues over the years, he said.

Commentary

New Zealand's ambassador to China has made clear he wants the China-New Zealand services trade upgrade talks concluded by the end of the year. China is New Zealand's largest trading partner, and the ambassador used the line that a single day's exports to China equal a full year's exports to Sweden to illustrate the depth of that reliance. Services account for about 70% of New Zealand's GDP, yet services exports make up only about 30% of total exports, with education, tourism and professional services the three main pillars.

For NZ SMEs, an upgraded services trade agreement could deliver more immediate opportunities than goods tariffs — in fields such as law, accounting, engineering consultancy and film and television post-production, where lower equity caps, mutual recognition of professional qualifications and fewer restrictions on the movement of business people may be on the table. The caveat is that China has traditionally opened its services market cautiously: the negative list for pilot free trade zones differs from the national version, and local compliance, cross-border data and cultural adaptation costs are high. RCEP's services commitments are relatively conservative, so a higher-standard bilateral deal could create a point of differentiation.

Firms should watch the specific sectors on the negative list, compare the services terms in the existing China-Australia and China-Korea FTAs, and assess whether an onshore entity or a joint venture with a local partner is worth it, rather than relying solely on cross-border delivery.

Keywords: APEC, New Zealand Ambassador to China Jonathan Austin, open cooperation, international trading system, China-New Zealand trade and economic cooperation, services trade negotiations, free trade agreement, China's largest trading partner

Source: Tencent