Watch Stephen discuss the implications of the US/China trade war

Stephen and Liam Dann, NZ Herald, discuss the fall-out from the first shots fired in Trump’s trade war:

Making trade work better – remarks to London JustShare event

On 30 May 2018 Stephen spoke to an event organised by JustShare at St Mary-le-Bow church in the City of London.  The theme was how trade can be made to work better for people including women, indigenous people and sectors like small business.  Here is what he had to say:

 

Thank you JustShare and Fr George Bush at St Mary-Le-Bow for the kind introduction to join this distinguished panel for our discussion this evening.

I bring greetings from the other side of the world, from Aotearoa-New Zealand, where we too experience the need for a different kind of conversation about trade, one that puts people at the centre.

There is a much-loved saying of the Maori people – “He aha te mea nui i tea o?  He tangata, he tangata, he tangata” – what is the greatest thing in the world?  It is people, it is people, it is people”.

 For the longest time trade has mostly been a conversation about business, but, at a time when globalisation is under more intense scrutiny, it’s good to be talking about how trade can be made to work better for people.

It’s a particular pleasure for me too to be in this church of St Mary-Le-Bow – my mother was born within the sound of these bells:  while she lived more than half her life in New Zealand, the spirit of the Londoner was always part of her and so I dedicate what I have to say tonight to the memory of Florence Alice Bennett.

I’d like to introduce tonight’s discussion with some initial thoughts – around New Zealand’s approach to trade, around some of the criticisms we see of globalisation today and how we might begin to address these.

New Zealand’s approach to trade

It’s sometimes said that to live in New Zealand and to be involved in trade, you have to be an optimist.

Our small nation of just 5 million people, once described as the last bus stop on the planet, is a long way away from global markets, yet we produce more food than we can eat and the small scale of our market means we can’t manufacture all the products we need.

Much of the history of our trade policy has been about trying to overcome what we call the “tyranny of distance” and trying to get closer to our trading partners.

Of course, New Zealand has some advantages – we are a developed economy, albeit with the economic profile resembling a developing country with a high proportion of primary exports; we have well-educated people, stable and for the most part reliable government, some world-class production capabilities, not just in agriculture and other natural resources, but also in niche industries and the new and “weightless” economy – the creative sector especially – and a “can-do” attitude.

As a small economy, we rely more than larger ones on the rule of trade law and especially on institutions like the World Trade Organisation, where we have never lost a dispute settlement case but have challenged successfully the EU, the United States, Canada and Australia.

The current trade friction in the WTO between the United States and China and the delay in appointing judges to the WTO Appellate Body is a particular concern.

We have also pursued high quality, ambitious and comprehensive free trade agreements with many partners especially in the Asia Pacific region.

Amongst others, we have FTAs with China, Hong Kong and Chinese Taipei and the Comprehensive and Progressive Agreement on Trans Pacific Partnership – CPTPP – a veritable mouthful of an agreement – positions us well for the future, with new accessions to the fellowship of 11 existing partners, alas without the United States.

An FTA negotiation with the European Union is about to get underway and we have strong interest in a future FTA with Britain once the complex arrangements around leaving the Union have been sorted out.

New Zealand has long been attached to the concept of comprehensiveness – by which we mean including all products, agriculture as well as industrials, services as well as goods, investment as well as trade and the raft of other measures relevant to doing business in the 21st century.

Our newly elected Government is also keenly interested in the concept of progressive trade policy by which is meant trade to benefit everyone especially those who may not have participated fully in the past – women, small business, indigenous – and where the externalities of trade are better taken into account – environment, climate change, labour.

Our Government feels it can tell the story of trade better – three cheers for that – but that we also need a better story to tell.

Criticisms of globalisation

 Having a better story to tell has become more of a necessity in recent years.

Partly this is a response to public pressure – at the time of the signing of the first TPP (the one with the United States…) in Auckland in February 2016, the city was gridlocked by protestors.

While the protestors’ specific concerns were varied, they reflected world-wide unease about the pace of globalisation and a sense that the benefits had been poorly shared.

Trade is sometimes treated a little unfairly in these criticisms – technological advancement and the digital revolution have been greater drivers of productivity change and shifting patterns of employment – but it is certainly true that greater trade openness can lead to job losses in some sectors while job gains take time to realise.

But this is only part of the story – there is also the concern that by not including all sectors of the economy, some important gains of trade have not been realised.

Take women for example[1].

Women are certainly under-represented in export activity, and their participation tends to be concentrated in traditional sectors (agriculture, textiles and clothing) and a few service sectors (tourism, education and information communication technology services).

Globally, only one in five exporting firms are led by a woman.

Yet women-owned businesses which export report substantially higher sales than their non-exporting counterparts.

Exporting firms especially in developing countries also employ more women than non-exporters.

So, this under-representation matters, because we know that trade does bring benefits in terms of better jobs, higher wages and living standards and women appear to be missing out on these benefits.

Similar arguments could be made about the lack of inclusion of small business, as well as in New Zealand’s case the Maori economy valued at around $40 billion.

The point is that the argument is not just about individuals or sectors within an economy not sharing the globalisation dividend, it’s that the dividend is that much smaller because there is not better access and inclusion.

The more we can expand participation and inclusion, the better the results will be.

And this point is valid not just within economies but between economies as well.

As the World Bank tells us, trade has helped reduce by half the proportion of the global population living in extreme poverty (1990-2010)[2].

But in many parts of the world, and especially in Africa, the participation of countries in the global economy is hindered by production and export subsidies and continuing protectionism in the developed world.

That the global community could not find a way to conclude the WTO Doha Development Agenda, once dubbed “the development round” is a shocking indictment on all WTO members.

The risk of current global trade tension is that the needs of the poorest economies will once again be shoved to the back of the queue.

So, while we think about fostering greater inclusion at home, let’s also remember that the global environment has its particular and persisting forms of exclusion.

Finding solutions

What seems clear is that finding solutions to these problems, both local and global, will require some new thinking and a whole lot of us to do it!

This is not just something just for governments – it’s far too important for that!

Business has a role to play – not just because it is the right thing to do but because it is good for business.

Other stakeholder groups – including the church – have their own useful perspectives and need to be part of this conversation.

The good news is that business increasingly gets it.

I have the honour of serving as an Alternate Member of the  APEC Business Advisory Council, a group of business leaders who advise 21 Asia Pacific governments on the APEC agenda for sustainable and inclusive economic growth.

Making trade and globalisation work better is a theme that has come up repeatedly in recent years.

Last year we tasked the MBA programme at the USC Marshall School of Business in Los Angeles to survey business opinion in the region and come up with some recommendations.

The Marshall School team report[3], based on close to 500 interviews with business and thought leaders in APEC makes for useful reading.

The team found that whereas 94 percent of those interviewed expected cross-border trade in the region would increase there were fairly high levels of uncertainty around the political environment for this growth.

Over 90 percent supported the idea of better policy approaches to manage adverse impacts of globalisation – over a third went further to suggest more radical approaches to better inclusion and fairer distribution of benefits.

Amongst the possible approaches cited include:

  • Creating “springboards” rather than just focusing on safety nets – citizens need to be assisted for the jobs of tomorrow not just for those of today
  • Promoting synergistic eco-systems – uniting governments, business, unions, education providers and other stakeholders to enhance opportunities for young workers, women and small business owners
  • Enhancing job mobility – fostering labour market reforms and adopting policies and programmes to help people to move where new opportunities open up
  • Reinventing life-long education – fostering greater resilience amongst workers to adapt to changing technologies and working conditions
  • Bringing business into this dialogue, engaging organized labour and having more conversations about income redistribution were also considered important.

Many of these recommendations focus on policies and programmes to accompany trade liberalisation.

But trade liberalisation remains important too.

We know that protectionism penalises small businesses more than larger ones because they lack the resources to address barriers head on or to find work arounds.

Reducing trade barriers and putting in place better trade rules, particularly ones that target inclusion and take account of the externalities of trade, are also building blocks for a fairer, more inclusive trading system.

Or to put it another way, protectionism and inward looking policies are a sure fire way of restricting growth and inhibiting social progress.

With a new generation of trade agreements, we can target more effectively women, small business and indigenous people.

New Zealand is a nation of SMEs with Maori and women wanting “in” more than ever before

It follows that if New Zealand wants to take a new giant leap forward into the global economy, it must do so off the back of SMEs.

 Smaller firms say they find it hard to get hold of market intelligence and the information they need about trade requirements.

They often struggle to access foreign distribution networks and customers.

There’s clearly an information deficit, and a need to build deeper and broader international connections.

Red tape and compliance costs for meeting standards or regulatory requirements in overseas markets disproportionately affect smaller firms.

So CPTPP for instance contains specific commitments designed to make it easier for SMEs to do business in the region.

CPTPP governments have agreed to set up websites containing information about all aspects of the agreement – whether SMEs are looking for tariff rates, or Customs regulations or procedures, or information about technical standards or regulatory requirements, or relevant business, tax or employment regulations. A working group will meet regularly to share experiences on best practice to support SME exporters, to identify ways to assist SMEs to take advantage of the new commercial opportunities generated by the agreement, and to develop capacity-building programmes, training and other forms of assistance, for example around trade financing.

I give this example not to praise the merits of CPTPP, but to illustrate that a new generation of FTAs, can be part of the solution to addressing inclusion and equity.

Conclusion

Kiwis are optimists when it comes to most things, trade included.

But if we are to make trade to work for people, we need both optimism and good ideas, to take us forward.

Tonight’s discussion is an excellent opportunity to engage all of you in that task and I’m delighted that a business guy from far away can share a perspective.

He aha te mea nui o te ao?  He tangata, he tangata, he tangata.



[1] Honey, Stephanie: Will CPTPP Offer Tangible Improvements for Women? – CIGI, Geneva, May 2018

 

[2] Lagarde, Christine: “Making Globalisation work for all” – address to Sylvia Ostry Lecture, Toronto, 13 September 2016

 

[3]APEC’s New Challenge – Inclusive growth througher smarter globalisation and technological progress” – a report by the USC Marshall School of Business, prepared for ABAC, November 2017

NZ China Council releases Belt and Road report

On 1 May 2018 Stephen joined in launching the NZ China Council’s report “Belt and Road Initiative – A Strategic Pathway”, prepared by PwC.  Full details can be found at www.beltandroad.co.nz. Here’s what Stephen had to say at the launch:

It is a pleasure to be able to join in launching this report today and I want to add my thanks to Colum Rice and the PwC team, as well as our other partners who have worked together to help build this strategic pathway for New Zealand’s engagement in the Belt and Road Initiative.

I’m sure you all know already that BRI is aimed at achieving development-led growth along ancient trade routes linking China across Eurasia to Europe, as well as more modern trade routes including from China across the South Pacific to New Zealand and on to Latin America.

What is not so well known is how a distant nation like New Zealand can co-operate with this initiative and how it can add value to New Zealand’s relationship with China and other countries along the Belt and Road.

That is the purpose of this report.

In March 2017, New Zealand and China signed a Memorandum of Arrangement (MoA) under which the two countries undertook to explore ways of working together in relation to BRI.

In August 2017, the Council commissioned PwC under the leadership of Colum Rice to prepare a report which placed BRI in context for New Zealand and set out a range of options to enhance connectivity with China and other BRI countries.

The options outlined in the report are not intended to be exhaustive but an illustrative indication of what could be developed under this new framework.

Our intention is to begin a discussion with New Zealand stakeholders about BRI and we are starting this discussion today.

Having spent some time now thinking about the place of New Zealand in BRI, it seems to me that the best place to begin is not with a map of trade routes.

There are multiple maps in circulation about BRI and most of them manage not to include New Zealand!

Our report does have a map, as you see here, a rather complicated one, with New Zealand and the Pacific firmly on it.

For New Zealand, the starting point for any discussion of Belt and Road really has to be the positive relationship between China and New Zealand which has grown significantly in recent years and more particularly since the conclusion of our groundbreaking FTA.

As we consider the future of the relationship, it is clear to us at the NZ China Council that the future is not likely to be a continuation of the past.

For New Zealand, the strategic context for our consideration of BRI is how we can maintain the momentum of the relationship into the future.

Today New Zealand is facing greater competition than ever for attention in China.

Australia has negotiated a very good FTA, Chile has already upgraded its FTA, European states are making a huge push to develop people-to-people links, and countries in Europe, Asia and even Latin America are already staking out their roles in the BRI.

Our relationship with China is not just about trade and investment and nor is BRI.

What is clear is that BRI is at the centre of Chinese policy and at the very core of China’s country to country relationships.

BRI matters to China and therefore, if we want to continue to expand our relationship, it has to matter to New Zealand as well.

At the time of writing some 69 countries and organisations had identified that they wish to co-operate with China in BRI – the number has continued to expand to more than 80 today.

BRI is not without its sceptics and critics so we also need to be alert to the implications of a fundamentally bilateral initiative, with China at the centre, for the region’s wider trade and economic architecture, as well as any reputational or geo-strategic risks that might arise.

Our report identifies these risks and we have considered them in relation to the specific opportunities we have presented for further discussion.

It is really up to each country to decide for itself the extent to which they choose to engage with BRI.

Having already signaled a willingness to consider engaging with BRI, we in New Zealand must now do the work to determine the depth and breadth of our engagement, consistent with our interests and our values.

BRI is dynamic and continues to evolve as the priorities and interests of China and other Belt and Road countries change.

This changing nature of BRI means it can be challenging to define clearly the opportunities it presents and hence the need for guidance such as that offered in this report.

BRI is perhaps best known for its massive infrastructure construction programme, but it is important to note, as you see here, that infrastructure is only one of five policy priorities under BRI.

It is in the area of connectivity that the Council believes BRI could provide a significant opportunity for New Zealand.

This does not mean that there will not be opportunities in the infrastructure space, both in New Zealand and offshore, but the emphasis in this report is how we can leverage BRI to expand and enhance connectivity with China and other countries along the Belt and Road.

As well as putting BRI in context for New Zealand the report identifies a number of opportunities that can be further developed in a BRI framework.

As noted earlier these opportunities are not designed to be exhaustive but indicative of the range of projects that could be developed.

PwC engaged with our stakeholder group, to capture, first of all, a range of actionable options by identifying a wide variety of initiatives that New Zealand could pursue.

PwC then helped us narrow down the suite of possible options by assessing them against six key criteria:

  • Alignment with New Zealand’s comparative advantage
  • Value to New Zealand – with a weighting to those options which had broader application in BRI
  • Ease of implementation
  • Potential to interest our Chinese partners
  • Benefits vs costs
  • Reputational risk

The outcome of this “diverge/converge” process is eight specific opportunities grouped under four categories

Each of these has been assessed against the criteria and presents, we believe, a viable opportunity for New Zealand to engage with BRI.

All the categories are in connectivity space:

  • trade facilitation (incorporating biosecurity, customs clearance and supply chain hubbing)
  • New Zealand as a conduit to Latin America
  • innovation; and
  • the creative sector

Trade facilitation could leverage our world class biosecurity regime, expertise in cross border movement of goods, and experience in working across jurisdictions in supply chain hubs.

Our geographic location and existing trade and tourism relationships with China and South America position us well as a natural connection between the two.

In the innovation space, New Zealand can utilise its strong capability in science and technology and advance our existing collaboration and promote greater commercialization of ideas.

For the creative sector, opportunities exist to use creative strengths in web solutions, gaming and other properties to expand people to people links, cultural awareness, understanding and exchange.

These opportunities can be implemented by the two governments, agencies, cities or the private sector.

Under each category the report provides some further ideas that could be explored, representing different levels of engagement.

Some might well ask – aren’t these things we are doing already and the answer is yes!

But BRI is about leverage – how can we focus the attention of partners in China on these opportunities and open up new sources of support and funding by placing existing work streams in a BRI framework.

Going forward, we are particularly keen to engage with any groups interested to be part of the conversation and thinking about how they can be involved in BRI.

We are planning a series of discussions around the country with interested stakeholders – a Christchurch event will be held on 17 May and events in other centres will follow from July.

This morning we are also launching a dedicated Belt and Road page on the Council website which can serve as a repository for our report and New Zealand-related information and commentary about BRI.

The page – which will enable you to download the report itself – can be accessed from our website at www.nzchinacouncil.com or directly from www.beltandroad.co.nz.

The web page will help deepen New Zealanders’ understanding of BRI and inform the discussions we will be having around the country.

BRI represents an opportunity for New Zealand.

It is an opportunity which is up to us to grab hold of or leave to others.

We need to move forward aware of both opportunities and risks and determine how it serves our national interest to be involved.

The China Council hopes this report is the beginning of a national conversation and looks forward to pursuing that conversation with the Government and interested groups around New Zealand

PM’s Europe visit – Stephen comments on Radio NZ website

Radio NZ asked Stephen to comment on PM Jacinda Ardern’s visit to London – read what he said here.

Earlier Stephen commented on the PM’s stops in Paris and Berlin – see here.

Finally Radio NZ asked Stephen to comment on Foreign Minister Winston Peters’ proposal for a Commonwealth Free Trade Agreement – not as unlikely as it sounds, see here.

CPTPP: Six ways and more to help #SME Leap

Stephen addressed the SME Leap Summit in Auckland on 31 January.  Here’s what he had to say: 

It’s great to be here and thank you Tenby Powell for the invitation and for your leadership in putting this event together.

Tenby has not only shown considerable foresight in arranging this LEAP Summit the day before the meeting of the APEC Business Advisory Council (ABAC) here in Auckland, but also an uncanny sense of timing in that it takes place just days after the announcement of the conclusion of CPTPP in Tokyo.

CPTPP – that’s the Comprehensive and Progressive Agreement on Trans Pacific Partnership – quite mouthful, and, as I’ll explain, quite an opportunity!

Even for someone like me who has been following CPTPP closely, the announcement came as something of surprise – a real Hallelujah moment for those of us working for better market access and better trade rules in the region.

Today I’d like to cover three things:

  • first, I’d like to talk about SMEs and international trade
  • then, a closer look at what’s in CPTPP for SMEs
  • and lastly, I’d like to suggest what we – you and me – need to be doing now to prepare to “leap” at the CPTPP opportunity.

I’m speaking myself as the owner of a small consulting business among whose clients are a number of enterprises grouped in the NZ International Business Forum – known more by our Tradeworks campaign which seeks to explain trade to New Zealanders (please sign up to our website www.tradeworks.org.nz and follow us on Facebook, Twitter, LinkedIn and Youtube).

SMEs and trade: what’s the problem?

Let me start with something I can’t stress enough –  the benefits of trade are not just for larger companies.

As a small, open economy, New Zealand makes its living largely through trade and is mostly made up of small and medium-sized businesses.

It follows that if New Zealand wants to take a new giant leap forward into the global economy, it must do so off the back of SMEs.

But there is a disconnect – the statistics on SMEs and trade tell us that  80% of New Zealand MSMEs have never generated overseas income.[1]

This isn’t just a New Zealand thing: in economies around the Asia-Pacific region, smaller firms contribute on average around half of GDP, but less than a third of direct exports, and in some economies only a tiny fraction of that.[2]

Research shows that small firms which export employ more people, for higher wages; enjoy higher productivity; are more innovative; and expand faster.[3]

So, what can we do to ensure that SMEs are more successful at trade?

 Surveys by MBIE[4] and others in New Zealand reveal that small firms say they find it hard to get hold of market intelligence and the information they need about trade requirements.

They often struggle to access foreign distribution networks and customers.

There’s clearly an information deficit, and a need to build deeper and broader international connections.

Many New Zealand SMEs also cite distance from markets as a barrier and services such as logistics and transport tend to cost proportionately more for SMEs.

SMEs are also particularly impacted by the domestic business environment, typically much more so than larger firms.

That’s an ongoing challenge I know a lot of speakers will cover today.

But there’s a cross-border element too: red tape and compliance costs for meeting standards or regulatory requirements in overseas markets disproportionately affect small firms.

SMEs trying to operate across a lot of different markets can face the extra challenge of having to meet a myriad of diverse and often conflicting or unjustified requirements for the same product or service.

In the jargon we call these “non-tariff barriers or NTBs – we need to do something about those too.

Finally, access to finance is seen a major impediment to SME participation in Asia-Pacific trade.

More positively recent MBIE survey reports that 94% of SMEs say they can access debt financing on acceptable terms, and 88% can access acceptable equity finance.

But specific trade-related financing may be a different story.

Now, if these trade barriers hurt small firms more than bigger firms, then removing obstacles to trade in turn should also benefit SMEs more than larger firms.[5]

What’s CPTPP got to do with it?  

Here’s the thing – CPTPP, and other high quality trade agreements like it, can offer SMEs a real springboard into trade.

CPTPP linking eleven economies in the Asia Pacific region does this in at least six important ways.

 First, CPTPP cuts tariffs and improves market access, especially in the four economies with which we do not already have free trade arrangements –Japan, Canada, Mexico and Peru (that’s over $4 billion of trade in goods and over $1 billion trade in services).

Some improvements are also made to existing FTAs with Malaysia and Viet Nam.

Over time tariffs are reduced and eliminated on New Zealand’s key export products – dairy, meat, horticulture, wood, wine, seafood, manufactured products like agricultural machinery and medical devices.

You can find the detail by using MFAT’s tariff finder at https://tariff-finder.fta.govt.nz.

This reduces the cost of doing business – costs which weigh even more heavily on SMEs than larger enterprises.

Second, CPTPP includes disciplines to address those non tariff barriers.

Identifying and addressing NTBs is never easy, but CPTPP helps this process by providing ways to limit the impact of technical barriers to trade like rules, regulations and standards and promoting sound regulatory practices.

Much of this draws on practices and experience we have become used to in CER and APEC.

MFAT has established a new web portal for companies reporting specific problems to have these investigated and addressed – check this out at  https://tradebarriers.govt.nz – it’s a great new resource for exporters.

Third, CPTPP addresses not just goods but services– a range of measures to open services markets and are designed to assist our services exporters in sectors like consultancy, education and information technology.

Services are distinct from goods – they have been described as anything you can’t drop on your foot – but they represent an increasingly important part of international trade and are often directly connected with the export of goods.

CPTPP provides for better conditions for services trade including the right to establish operations in other markets, to obtain visas to visit the market and to engage in cross border e-commerce.

For those of you look to add value in smart, innovative, knowledge-heavy sectors such as consultancy, technical services, transport, logistics, distribution or computer services and IT, CTPP should generate some great new opportunities in overseas markets.

Fourth, CPTPP includes the first-ever commitments in a trade agreement to promote an open digital economy.

E-commerce and digitally-provided services have meant that SMEs can engage across borders in a way that could not have been imagined even a decade ago.

Smaller firms can connect directly, immediately and at low cost with any number of customers offshore.

Restrictions on cross-border data flows, expensive Customs processing for the small shipments that are typical with e-commerce, and restrictive rules on e-payments, can all undermine the benefits of digital transformation.

CPTPP puts in place new rules to ensure that the lifeblood of the digital economy – data flows – continue to circulate freely subject to reasonable safeguards for privacy and consumer protection.

CPTPP requires governments to secure the necessary tools for trade in the digital environment by enabling e-payments and allowing express delivery services.

CPTPP prevents governments from requiring firms to store customer details in local data centres, so-called ‘forced data localisation’;  it prohibits customs duties on electronic transmissions.

All of this is aimed at ensuring SMEs can sell services and goods to customers around the world without needing to invest in local infrastructure or rely on expensive or insecure payment systems.

Fifth, CPTPP contains specific commitments designed to make it easier for SMEs to do business in the region.   

Remember that one of the major impediments that SMEs have identified is a lack of information about markets and trade requirements.

CPTPP governments have agreed to set up websites containing information about all aspects of the agreement – whether SMEs are looking for tariff rates, or Customs regulations or procedures, or information about technical standards or regulatory requirements, or relevant business, tax or employment regulations.

A working group will meet regularly to share experiences on best practice to support SME exporters, to identify ways to assist SMEs to take advantage of the new commercial opportunities generated by the agreement, and to develop capacity-building programmes, training and other forms of assistance, for example around trade financing.

All of this should help to mean that, where the other chapters of CPTPP open the door for SMEs to trade, it is also enabling those small firms to walk through that door with confidence.

Sixth, the beauty of CPTPP is that it sets up a framework of rules designed to strip out exactly those trade costs and other hurdles that make life so difficult for SMEs in the international arena.

Those rules take in all aspects of doing business, including, for example, the right to sell into government procurement in CPTPP economies, as well as the need to promote good environmental practices and decent labour standards.

CPTPP is about creating the best possible conditions for modern models of business and trade, such as so-called “global value chains”.

In a global value chain, production is fragmented across multiple markets, using inputs of goods and services from a range of different countries, sourced from large and small firms, before the finished output gets to the final consumer.

New Zealand SMEs, where they do participate in trade, report that they mostly sell goods or services for use by other businesses in those global value chains, rather than directly to end consumers.   And that’s typical around the region for SMEs.

Because CPTPP streamlines the rules for trade across markets, it gives small firms the opportunity not only to step onto the international ladder, but also to move up the rungs as they develop capability, efficiency and innovation thanks to the connections they make and the skills they gain from working in value chains.

Other GVC-friendly elements of the CPTPP that will help SME goods producers include new rules that try to smooth out Customs procedures, facilitate goods trade, and provide frameworks for developing consistent, evidence-based technical rules, biosecurity and food safety measures.

All of these new rules will help to reduce the costs of doing business and address non-tariff barriers for SMEs, in whichever sector they may be operating.

So what do we do now?

 I’ve outlined six ways in which CPTPP could work to assist SMEs, but it will not happen by magic.

CPTPP still needs to be signed and ratified but there are things we collectively – and most particularly you, with our help – need to be doing to get ready.

First, be informed.

That applies particularly to business with interests in Japan, Mexico, Canada and Peru who need to familiarize themselves with the market access outcome.

Check out MFAT website (www.mfat.org.nz); there will be seminars etc after 8 March signing – watch out for those.

Get the business organisations you belong put out info to members and organize discussions with MFAT, NZTE, MBIE and other agencies.

Second, organize.

Work in clusters to figure out the change CPTPP could make to your sector.

Review your strategic plan and business plan, particularly from the perspective of how you can link more closely to global value chains.

Third, influence.

The ratification process in New Zealand will also require submissions to the Parliamentary Select Committee – think about participating in the public debate that will invariably come back about the benefits of the agreement.

Engage with officials – when it comes to the implementation of this agreement, and the negotiation of others in the pipeline, they need real-word stories of challenges, problems and successes in offshore markets.

Report the problems you are facing in offshore markets.

Only business knows how business is done; only SME owners know the challenges they face.

I am certainly hopeful that the discussions you will be having around this Summit will put in place the structures required to enable more effective sharing of information between SMEs and officials.

Conclusion

I said at the beginning: the benefits are not just for the bigger companies.

CPTPP has been conceived with SMEs in mind and its success for New Zealand will ultimately depend on SMEs making use of those six benefits I have outlined.

I’d like to leave you with another simple idea: it’s that all of us in this room, and New Zealand SMEs across the board, need to raise our eyes above the New Zealand horizon and look more ambitiously outward to the world beyond and particularly the Asia Pacific region.

The Asia-Pacific will be the centre of economic gravity for at least all of our lifetimes, and very probably for the lifetimes of our children too.

In New Zealand we are blessed with fantastic commercial prospects as well as the potential to develop our skills, productivity and competitiveness: now also we have the means through CPTPP to engage more easily and seamlessly across borders.

New Zealand SMEs should seize those opportunities – and trade agreements like CPTPP give us a perfect leaping-off point to do so.



[1] MBIE Small Business Sector Report 2014

[3] WTO (2016), ‘Levelling the Trading Field for SMEs’, World Trade Report 2016, page 75; see https://www.wto.org/english/res_e/booksp_e/world_trade_report16_e.pdf

[4] Ministry of Business, Innovation and Employment, Small Business Sector Report, 2014, page 47.  See also WTO (2016), page 77.

[5] WTO (2016), pages 78-106.

What is China’s New Silk Road ?

Watch Stephen explain China’s “Belt and Road” Initiative to Eric Young on TV3′s AM Show on 11 July 2017

 

NZ/Pacific Alliance – game on!

Stephen welcomes the launch of FTA negotiations between NZ and the Pacific Alliance – see the NZIBF statement on the Tradeworks site here.

TPP needed now more than ever

On behalf of the NZ International Business Forum Stephen welcomes the announcement that the remaining 11 members of the Trans Pacific Partnership (TPP) are planning to continue to implement TPP.  See his statement on the Tradeworks site here.

Trading in an uncertain world – the post-TPP agenda for New Zealand and Asia

On 6 April 2017 Stephen addressed the World Services Group in Auckland – read his remarks on the Tradeworks website here.

A Trade Policy for Our Times (reprise)

Read Stephen’s assessment of the Trade Agenda 2030 released by Prime Minister Bill English on 24 March 2017 – here.

Further information on Trade Agenda 2030 can be found here.