New Zealand is making a major effort to forge closer ties with Asean and the rest Asia, pinning its hopes on a conclusion to the Regional Comprehensive Economic Partnership (RCEP), as world trade is being disrupted by US-China tensions, the country's trade minister says.
Damien O'Connor says the RCEP will benefit small countries like New Zealand by providing better connections with huge markets including China and India.
"Most people don't know about New Zealand or they know very little about it, so we've got to build awareness around things that are possible to expand trade. It can be education, food and tourism," he told Asia Focus during a visit to Bangkok.
"As a country that is highly dependent on exports for our wealth creation, we have to open the door to every country in terms of two-way trade, with very few tariffs or restrictions."
The RCEP, covering half the world's population, involves the 10 Asean countries and six dialogue partners: India, China, Japan, South Korea, Australia and New Zealand. It was first announced in 2012 but negotiations have been long and difficult. Participants hope to conclude the talks this year for a deal to be signed in 2020. The RCEP countries together account for more than half of New Zealand's total exports.
"Negotiations are continuing with momentum. The ambition is to try to conclude by November," said Mr O'Connor, who was in the Thai capital in September and October for talks. "There is still some way to go with the bilateral arrangements with a number of countries.
"No trade negotiation is perfect, inevitably. It needs the willingness of countries to compromise or ensure that they have the mandate to do so."
He noted specifically that India, with a GDP of US$2.6 trillion in 2018, still needs to address some challenges within its own economy in order to conclude a deal. In terms of a bilateral agreement with New Zealand, the dairy industry is sensitive since India's is large and inefficient while New Zealand's is small but highly advanced, making the latter a world-class dairy exporter.
"We have been talking for seven years about ensuring India can reach agreement in enough areas of trade to be part of the RCEP. That is the desire of us all," said Mr O'Connor, who is also his country's agriculture minister.
Asean is the fourth largest trading partner of New Zealand after China, Australia and the US. Bilateral trade with Asean has doubled since 2010 to reach NZ$19 billion. Within Asean, Singapore tops the table, followed by Thailand and Malaysia.
"We have not seen that kind of growth in any other markets except China, so we want to continue," said Mr O'Connor. "We are looking for opportunities in each of the Asean countries but the RCEP will allow us to have better access to 16 countries."
Thailand, meanwhile, is New Zealand's eighth largest trading partner, with New Zealand food and beverage good exports to Thailand reaching NZ$615 million. Trade value has grown by almost 150% since a bilateral free-trade agreement was signed in 2005.
In early August, New Zealand launched a year-long food and beverage campaign called "Taste of New Zealand" to further strengthen trade ties with Thailand.
Spearheaded by New Zealand Trade and Enterprise (NZTE), the campaign will build on existing food and beverage partnerships and will introduce more Thais to the diverse range of high-quality products from New Zealand. Thai consumers can experience that diversity at events being held at Central Food Hall and Tesco Lotus.
The value of New Zealand's food and beverage exports to Thailand grew from 9.8 billion baht in 2013 to 12.5 billion in 2018. Dairy products (8.3 billion) and fresh produce (1.4 billion) are some of the largest contributors.
Damien O'Connor, New Zealand's Minister for Trade and Export Growth Photo: Apichart Jinakul
GLOBAL CHALLENGES
Like many Asian countries, New Zealand is feeling the impacts of the US-China trade dispute, given that the two giants are among the country's three largest trading partners.
"We are impacted by the disputes and we hope to see it resolved. The impact now is from uncertainty, which is not something that companies or countries desire," said Mr O'Connor.
With positive trading and diplomatic relations with both the US and China, Mr O'Connor said New Zealand has been encouraging Washington and Beijing to resolve their differences.
"We are on the sidelines. We wish for more stability, more certainty at the moment, particularly with what is happening in the UK and the EU, we are facing some challenging times," he said, referring to Brexit.
With protectionism on the rise and growing pressure on the international rules-based trading system, the World Trade Organization (WTO) needs to ensure that the organisation itself and the free-trade system remain relevant and effective, said the minister.
"We need to ensure that the WTO remains relevant and people buy into its implementation, not just the rhetoric."
Given the uncertainties elsewhere in the world, the stability of the Asean market is hugely important for New Zealand, said Mr O'Connor.
"The growth of the economy and the size of the population means we see a huge opportunity," he said. "We want fair rules for trade and certainty for our companies so we can share the benefits of valuable trade."
New Zealand has bilateral agreements with many Asia countries and aims to upgrade some of them, "and the RCEP will underpin all of the bilateral negotiations", he stressed.
TOURISM & EDUCATION
Besides trade, the movement of people through tourism and education is an area where New Zealand looks to strengthen the relationship with Asean. About 125,400 students from over 100 nations were enrolled in New Zealand schools and universities in 2017, making international education the country's fourth largest export industry.
With nearly 4,000 students studying in New Zealand, Thailand is seventh largest source country, and the second largest from Asean after the Philippines.
"That is a very positive thing for us and for the students, to build relationships and understanding between our countries," said Mr O'Connor.
The New Zealand International Education Strategy 2018-2030, released in August 2018, outlines the importance of sustainable growth, an excellent student experience, and developing global citizens. It reflects the fact that while economic contribution is one positive aspect of international education, it also brings a range of social and cultural benefits.
Thailand is part of that strategy. Auckland University of Technology (AUT) last month joined with Rajamangala University of Technology Thanyaburi (RMUTT) to establish the Thai New Zealand Study Centre (TNZC) at the RMUTT Innovation and Knowledge Centre in Chatuchak, Bangkok.
The TNZC is the first campus of a New Zealand university in the Thai capital. Its establishment also marks the first time that New Zealand government has authorised the establishment of a government-funded university on foreign soil.
Taha Macpherson, the New Zealand ambassador to Thailand, said at the opening of the centre that education has long been a critical foundation of the relationship between the two countries.
"In many areas, the close and warm ties between New Zealand and Thailand have been led by Thai students who have studied in New Zealand, and then gone on to influential positions in many different sectors -- including government, politics, or business or civil society," he said.
As Thailand's economy continues to grow and modernise, there will be more demand for skilled and innovative workers. This includes filling the many vocational and technical roles that will be critical to ensuring that Thailand continues to prosper, he added.
New Zealand is the number one English-speaking country in the Educating for the Future Index complied by the Economist Intelligence Unit. AUT has been the country's fastest-rising university, ranking in the top 350 globally in the 2019 Times Higher Education World University Rankings, noted the ambassador.
Mr O'Connor said tourism also represents a growing opportunity. Thai Airways International has had direct flights between Auckland and Bangkok for 30 years, which has been a big plus.
"The link has been there but I think the awareness of Asean and the potential of Bangkok are huge," he said. "Bangkok is the most visited city in the world and a lot of New Zealanders would love to come up here. It gets easier with increasing flights and is very competitive."
New Zealand is also proud of its emerging areas of technology, notably rocket science, according to Mr O'Connor. The country is launching satellites into orbit every two weeks.
Engineering is another area where New Zealand is increasing its presence in Thailand and Asean overall. Beca, an engineering services company with 17 offices across the region, eight of them in New Zealand, is taking part in the development of One Bangkok, the $3.5-billion mixed-use project at Rama IV and Wireless roads, due to be completed 2025.
Other Beca projects in Thailand include Green Spot's $120-million Vitamilk soy milk facility in Saraburi. The Thai company also uses New Zealand milk powder.
