Australia is New Zealand’s second largest bilateral trading partner and the two countries share a very close and significant relationship. The shared historical links, the proximity, common values, and substantial people-to-people links support and aid close cooperation in trade and economic issues.
The two countries work closely on a range of foreign policy and trade matters and this is supported by extensive bilateral political engagement to further develop the existing relationship.
Australia is often the first export market for many New Zealand companies looking to grow abroad. New Zealand companies choose Australia as their first export destination as its close proximity and relatively similar culture make it an easy choice for many companies. A strong sense of Trans-Tasman identity has also been vital in forging close relationships and helped in trade relations.
New Zealand has a majority of tourists visiting from Australia year after year and also has a substantial sized resident population of Australians which further forges strong people-to-people links. The Trans-Tasman Travel Arrangement allows New Zealand citizens and Australian residents the freedom of movement to enter, reside and work in each other’s country. New Zealanders and Australians make over two million short term visits across the Tasman each year.
BILATERAL TRADE: AUSTRALIA - NZ
Australia is New Zealand’s top destination for overseas investment. New Zealand has direct investment stocks of NZ$13 billion in Australia. Australia is the largest source of foreign direct investment in New Zealand, with NZ$53billion invested (September 2014).
The top five import and export commodities (largest movement in value over ten years for period ended August 2014) are as follows:
- Crude oil – up from $252 million in 2004 to $1.2 billion in 2014
- Precious metals, jewellery, and coins – up from $312 million in 2004 to $725 million in 2014
- Wine – up from $62 million in 2004 to $375 million in 2014
- Miscellaneous edible preparations – up from $167 million in 2004 to $385 million in 2014
- Milk powder, butter, and cheese – up from $235 million in 2004 to $488 million in 2014
- Petroleum and products – down from $790 million in 2004 to $114 million in 2014
- Vehicles, parts, and accessories – down from $778 million in 2004 to $528 million in 2014
- Mechanical machinery and equipment – down from $595 million in 2004 to $402 million in 2014
- Paper and paperboard, and articles – down from $426 million in 2004 to $280 million in 2014
- Food residues, wastes and fodder – up from 55 million in 20014 to 184 million in 2014
CLOSER ECONOMIC RELATIONS (CER)
CER is a series of agreements and arrangements governing trade and economic relations between Australia and New Zealand, built on the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) which took effect on 1 January 1983. This is one of the first bilateral trade agreements in the world and has been described by the World Trade Organisation as “the world’s most comprehensive, effective and mutually compatible free trade agreement.” Trans-Tasman trade has increased steadily since CER came into force in 1983.
Key Aspects of CER
- Free trade in all goods involves removal of all tariffs and quantitative restrictions
- Free trade in nearly all services under the 1988 Services Protocol allows Australian and New Zealand service providers access to each other’s market on the basis of national treatment
- Mutual Recognition of goods and occupations under the 1998 Trans-Tasman Mutual Recognition Arrangement (TTMRA) wherein ‘most ‘goods legally sold in one country can be legally sold in the other, and persons who are registered to practise an occupation in one country can register to practise an equivalent occupation in the other country
- The Investment Protocol ensures that the package of trade and economic agreements between New Zealand and Australia remains the most comprehensive of our free trade agreements, and that New Zealand investors receive the most advantageous treatment offered to any foreign investors in Australia, and vice versa.
- Free Labour Market: Trans-Tasman Travel Arrangement under the Trans-Tasman Travel Arrangement, allows New Zealand citizens and Australian residents to enter, live and work freely in each other’s country
- Joint Agencies: the Joint Accreditation System of Australia and New Zealand establishes an internationally recognised accreditation system to generate international confidence in Australian and New Zealand producers and products.
- Joint Food Standards (Food Standards Australia and New Zealand (FSANZ)) was formed to develop joint food standards for both countries
The Single Economic Market (SEM) Agenda aims to establish a seamless trans-Tasman business environment and has already brought significant economic benefits to both countries by lowering business costs and increasing the ease with which both businesses and people can operate trans-Tasman. The initiative is in progress under the following four themes:
- Reducing the impact of borders
- Improving the business environment through regulatory coordination
- Improving regulatory effectiveness
- Supporting business opportunities
Population: 23.5 million
Population growth rate: 1.6%
GDP growth rate: 2014 2.7%
GDP per capita: 2014 US$45,588
Exchange rate: US$ - AU$1.16
Annual inflation: 1.7%
Sources: Including Ministry of Foreign Affairs & Trade, New Zealand, Global Trade Atlas, Economist Intelligence Unit, Statistics New Zealand, Australian Bureau of Statistics, New Zealand Treasury, Reserve Bank of Australia, Reserve Bank of New Zealand.