Free trade vital to New Zealand economy
New Zealand is a trading nation. We rely on export earnings from free trade for our financial prosperity. But free trade is a two way street – the countries involved open up their borders to allow free movement of goods and services on an equal basis. This includes property ownership.
The pathway to premium export earnings is through innovation and having a point of difference. Access to the latest techniques and innovations is key to New Zealand remaining competitive and market leaders.
The truth here is that to do that, New Zealand needs strong links with the international science community, companies involved in innovation, market leaders and companies with scale and market penetration. Many of those international companies have operations based in New Zealand. Equally, New Zealand also has operations based in their home countries. That involves property ownership. Here, I’m not talking about residential properties.
The importance of trade was recently highlighted in a report by the New Zealand Institute of Economic Research (NZIER). Here are a couple key points from their analysis:
- Trade accounts for $85 billion (43%) of New Zealand’s GDP.
- Trade gives each household in New Zealand improved product choice worth $3.9 billion, or $2,300 per household.
- A US study estimates that trade contributes about 30% to the average US household’s purchasing power. In New Zealand this would be far higher, given how trade reliant we are compared to the US.
- More free trade agreements will increase New Zealand’s GDP by $18 billion and create 42,000 skilled and 20,000 low skilled jobs.
Freeing up trade and keeping trade free are vital for New Zealand’s continued prosperity.
Tightening up on any aspect of our free trade may have a ripple effect. As a country, we do not want to slip into economic decline. So Horticulture New Zealand’s plea to New Zealand’s new government is to keep the previous Government’s free trade agenda running. Foreign investment in New Zealand enhances our economic prosperity.
We need to keep the door open for three key reasons:
- New Zealand’s prosperity depends on free trade – we can’t compete if, due to tariffs and other barriers, our goods and services are more expensive than those from other countries. Simply put, our goods and services will not be purchased.
- Many overseas companies that have invested in New Zealand enhance our ability to be market leaders and innovate, provide many jobs, and contribute to our economic prosperity and ability to buy goods from around the world.
- New Zealand’s companies need to invest in overseas countries to enhance our ability to compete for premium prices and keep ahead of innovations – it is a two way street.
Mike Chapman, CEO