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June
Ministers attending closer economic relations forum
Ministers attending closer economic relations forum
23 June - The Ministers of Commerce, Agriculture, and Trade are meeting with their Australian counterparts in Canberra tomorrow for the annual Closer Economic Relations Ministerial Forum.
The forum provides an opportunity for New Zealand and Australia to review and progress the bilateral trade and economic relationship.
"In the current economic climate it's critical we work together towards a truly single economic market, which will have benefits for both countries in reducing business costs, and increasing productivity and innovation," Commerce Minister Simon Power said.
"There's a high level of shared political commitment on both sides of the Tasman to strengthen and deepen our relationship and I believe this meeting will see more good progress on achieving our ultimate goal of a single economic market."
The agenda includes progressing the 27 regulatory outcomes identified by the Australian and New Zealand Prime Ministers in August last year, as well as comparing notes on domestic developments.
Trade Minister Tim Groser said Ministers will also have a chance to discuss a number of broader issues of shared interest.
"Australia remains New Zealand's closest partner, and I look forward to reaffirming and strengthening our close cooperation on regional and global trade and economic issues that matter to Australasia, including the WTO Doha Round negotiations and the prospect of a Trans-Pacific Partnership Free Trade Agreement."
Agriculture and Forestry Minister David Carter said the meeting was timely on several fronts.
"It provides a valuable opportunity to update Australia on the development of the Global Research Alliance and other climate change initiatives, progress the streamlining of trans-Tasman travel, and examine ways we can work together to combat illegal logging."
The forum is also the final opportunity to resolve any outstanding bilateral issues before the visit of Australian Prime Minister Kevin Rudd to New Zealand on 29 June.
Australia will be represented at the forum by Trade Minister Simon Crean, Financial Services, Superannuation and Corporate Law Minister Chris Bowen, and Agriculture Fisheries and Forestry Minister Tony Burke.
May
Business Delegation – end of August 2010
12 May - An Argentinean agricultural/technological trade mission visit is being planned for August/September 2010 by ProArgentina (a program from the Ministry of Industry and Tourism) in conjunction with CIDETER (Cluster of Agricultural Machinery & Agroparts) & INTA ( National Institute of Agricultural Technology) with the local support of the Embassy of Argentina in NZ.
In order to prepare for this trade mission, 2 delegates will be visiting NZ (Wellington, Auckland & Hamilton) between 19th - 21st May. Their aim is to meet up with people from the agricultural sector (producers & growers associations, agricultural machinery association, importers of agricultural machinery, etc.) as well as people dedicated to research & investigation of new production techniques and machinery and any other interested parties.
Argentina is being considered by many countries as an example of efficient agricultural production, meaning a country that produces food at lower costs than others, partly due to the technological advantage gained with direct seeding, right fertilization, crop rotation, precision agriculture, and the support of the INTA’s know how. The INTA is the only institution in Latin America that combines research with the agricultural sector and other parties (Cluster of Agricultural machinery, animal & vegetable genetics, labs, etc), all working towards developing a strong agricultural industry.
The sector of agricultural machinery represents more than 730 medium & small enterprises, which has been growing constantly over the past years. Nowadays the exports of this sector represent over 1 billion U$S, and the main destinations are Brazil, Venezuela, Russia, Canada, Australia, Spain, USA and Italy. For further information of the current situation of the industry and its events, please visit: http://www.expoagro.com.ar/english/index_eng.php and http://www.agroshowroom.com.ar/en/inicio.aspx
The Embassy of Argentina in NZ and Latin America NZ Business Council Seminar
The Embassy of Argentina in New Zealand and Latin America New Zealand Business Council are hosting a Seminar in Auckland. This meeting will be a good opportunity to present information about Argentina and its economic situation and therefore promote the trade between both countries.
The meetings will provide a unique opportunity for your company to gain contacts within the Argentine business sector with the help of the Embassy. Your presence would be highly valued and will enhance the ties between our two countries in the trade sector.
Ambassador Pedro R. Herrera will give a presentation on our bilateral relations over the past 50 years. Secretary Marotta will follow with a presentation of economic data and an outlook of Argentina’s exports and imports, as well as outline the opportunities and incentives available for companies interested in investing in Argentina. A representative of Aerolineas Argentinas will then offer a short presentation about the company. After these presentations there will be time for questions and answers and, for those interested, time for interviews with Embassy staff.
We welcome managers and leaders from industry, suppliers of goods and services, exporters, importers, agents, distributors and any other person interested in learning more about Argentina and wanting to explore new business opportunities.
Limited spaces available. Click here to download the programme.
Please email Verónica Hennig, Embassy of Argentina, at commercial.affairs1@arg.org.nz
or phone (04) 472 8330 Ext 4 to reigster.
Round One of NZ/India FTA negotiations
The first round of New Zealand’s Free Trade Agreement/Comprehensive Economic Cooperation Agreement negotiations with India was held in Wellington on 7 and 8 April. The two-day round was exploratory in nature but did raise all subjects that each country is interested in negotiating on. Both sides had an opportunity to outline their normal approach to negotiations in each chapter area and to put forth their views about the substance of the agreement.
In terms of what is on the agenda for negotiations, a key priority in this FTA for New Zealand will be the elimination of India's tariff duties. India’s average applied tariff overall is 11.9% but this varies markedly across sectors, with higher tariffs being applied on many of the goods that are of interest to us.
It is too early to define exactly what the scope of negotiations will extend to but other areas that will be definitely be covered in the negotiations include services, investment, technical barriers to trade, sanitary and phyto-sanitary measures. We also seek commitments in relation to intellectual property, competition policy, government procurement, trade and labour and trade and the environment.
The next round will be held in New Delhi. No dates have been fixed for that round yet but it is hoped it will take place in late July or August.
We are keen to hear about the barriers to market entry that New Zealand firms are experiencing in India, so that we can seek to address these through the negotiations. We welcome input at any stage.
For further information or to make any comment, please contact Joanne Dow, India FTA Coordinator, joanne.dow@mfat.govt.nz or 04 439 8084.
April 2010
Countdown to World Expo begins
1 April 2010 - With just a month until the World Expo 2010 in Shanghai officially opens, New Zealand businesses are seizing the opportunity to be part of what is set to be the biggest expo in world history.
One of the main objectives of New Zealand’s decision to participate in the world expo, which opens on 1 May, was to provide a platform for New Zealand businesses to develop and strengthen trade links with the world’s most dynamic economy.
The opportunity has been grasped with both hands.
“More than 160 companies and businesses have already committed to being involved in activities at the New Zealand pavilion, either individually or as part of ministerial or regional delegations,” says Phillip Gibson, New Zealand’s commissioner-general at the expo.
“We have 175 functions booked at the pavilion to date, involving nearly 7000 guests, and we expect this to increase considerably over the next few months.”
“It is fantastic to see New Zealand businesses take up the opportunity to be involved with such a historic event. Some 70 million visitors are expected over the six months of the expo, and we are expecting that more than seven million visitors will experience the New Zealand pavilion.
“The excitement is beginning to build now that the opening is just a few short weeks away.”
Mr Gibson says that there will be six high-level missions, led by the Prime Minister and other Ministers, to Shanghai during the six-month course of the expo. In addition, regional delegations from Wellington, Otago, Hawkes Bay, Tauranga and South Canterbury would visit, with others likely when arrangements now in train are finalised.
New Zealand Trade and Enterprise, which has overall responsibility for the Shanghai expo project, has established a leveraging programme, aimed at assisting New Zealand businesses to maximise the opportunities presented by New Zealand’s participation in the expo.
“The World Expo, and the New Zealand Pavilion, offers New Zealand businesses the opportunity develop and build international relationships in China, and host their guests in an environment that features a unique showcase of New Zealand culture, innovation and technology,” says Mr Gibson.
The New Zealand Pavilion is close to completion at the Expo Park, and the finishing touches are expected to be added over the next few weeks. Sponsors of the pavilion include Air New Zealand, ANZ Bank, Fonterra, Ngāi Tahu, Solid Energy, Zespri and two yet-to-be named Chinese companies with major interests in New Zealand.
Business interested in participating in NZTE’s VIP corporate hosting programme and spending dedicated time with international contacts at the New Zealand Pavilion are encouraged to visit www.shanghaiexpo2010.nzte.govt.nz for more information or email expo2010@nzte.govt.nz.
March
Appointment of new director, Auckland Office
23 March - Senior diplomat will become the new Director of the Auckland Office of the Ministry of Foreign Affairs and Trade, MFAT Chief Executive John Allen has announced.
Mr Allen made the announcement while speaking to a meeting of members of Export New Zealand in Auckland today,
“Our Auckland office is a key outreach post in New Zealand’s biggest and most dynamic regional economy.
“The Ministry is committed to supporting New Zealand’s export sector boost its overseas earnings both through opening new markets and expanding access to existing markets
“Having an office in Auckland allows us to underpin and grow the connections between Auckland and the ministry’s negotiators, policy officers and our network of posts offshore,” Mr Allen said.
He said Mr Hawker was well suited to undertake this role, particularly with his familiarity with Asia, Australia, the Pacific and the Middle East, which makes him especially well placed to support the fast-growing relationships in these key regions.
Mr Hawker has a strong trade background, having started his career with the Department of Trade and Industry. He has served as Trade Commissioner in Singapore, Fiji and New Zealand Consul and Trade Commissioner in Adelaide.
As a diplomat he has been the Deputy High Commissioner in Malaysia, the Deputy Chief of Mission in China, the Ambassador to Iran and the High Commissioner to Tonga.
More recently, Mr Hawker has worked in the Ministry’s Pacific and Australia Divisions in Wellington.
In addition to working with the Ministry over the past decade Mr Hawker has had first-hand experience in the wine business, having worked with his wife Jenny to develop the Pisa Range vineyard in Central Otago.
Mr Hawker will replace veteran diplomat Michael Chilton as the Director of the Auckland Office. He will take up the position at the beginning of May.
Small businesses encouraged to protect their brands
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16 March Businesses are too often overlooking brand protection as a crucial component of their intellectual property (IP) says Australian Parliamentary Secretary for Innovation and Industry, Richard Marles, said
“Not only is it important for a business to create a strong brand and business reputation, they should safeguard these assets with a registered trade mark,” Mr Marles said.
“In 2009, the Sensis Small Business Index showed 31 per cent of small businesses were not aware of the IP in their business.
“This figure shows an alarmingly significant portion of Australian small businesses aren’t using the trade mark system strategically,” Mr Marles said.
Tomorrow's seminar will be headlined by, Shane Radbone, who manages well-known brands
Mr Radbone, chief executive of Allied Brands who manage Baskin and Robbins and Cookie Man,.has broad knowledge in branding and IP having established his first business at the age of 20 says, “IP protection is vital to Allied Brands’ business and expansion plans. For example, we had a very significant trade mark registration program in China and India before entering those markets which enabled us to actively defend our brands when needed,” Mr Radbone said.
February
NZ-India FTA negotiation set to begin
Trade Minister Tim Groser and Indian Commerce Minister, Sri Anand Sharma announced today the start of negotiations towards a free trade agreement between New Zealand and India.
Mr Groser, attending a meeting of WTO Trade Ministers in Davos, Switzerland alongside Mr Sharma, welcomed the Indian Government's confirmation that it will open negotiations with New Zealand.
"A free trade agreement with India offers great promise for New Zealand businesses. India is already one of our fastest growing markets, with New Zealand exports having tripled over the last decade.
"Our negotiators will target the currently high barriers facing New Zealand exporters to India so that trade can further flourish," Mr Groser said.
Mr Groser also emphasised the strategic importance to New Zealand of the growing Indian economy - forecast to grow at almost 8 percent in 2010.
"India has a population of over one billion people. By 2025, India will almost certainly be the third largest economy in the world."
The New Zealand Cabinet approved the start of negotiations in March last year and the relevant Indian Cabinet Committee last week approved the proposal - a decision delayed until now by India's mid-year election in 2009.
"I expect negotiations to start soon and am confident we can deliver a high quality agreement with significant benefits to New Zealand exporters," Mr Groser said.
www.beehive.govt.nz
January 2010
Overseas Merchandise Trade: December 2009
29 January - Removing seasonal effects, merchandise import values declined 3.2 percent in the December 2009 quarter, compared with the September 2009 quarter, the fifth consecutive quarterly fall, Statistics New Zealand said today. The decline for the December 2009 quarter was widespread, with falls in capital goods, intermediate goods, and consumption goods being partly offset by increases in passenger cars and petrol and avgas.
Similarly, merchandise export values fell 2.8 percent in the December 2009 quarter, after removing seasonal effects, the fourth consecutive quarterly decrease for exports. The decline for the December 2009 quarter was dominated by falls in milk powder, butter, and cheese, and crude oil. In the December 2009 quarter milk powder, butter, and cheese recorded the largest decrease and is now at its lowest value since the September 2007 quarter.
Quarterly seasonally adjusted imports and exports both recorded their highest ever values in the 2008 year, and have consistently declined since then. Imports have dropped 24.6 percent since peaking in the September 2008 quarter, while exports have dropped 17.3 percent since peaking in the December 2008 quarter.
The seasonally adjusted trade balance for the December 2009 quarter was a deficit of $170 million (1.8 percent of exports), following deficits of 2.6 percent and 2.3 percent of exports in the June and September 2009 quarters respectively. The most recent quarterly seasonally adjusted trade surplus was in the December 2001 quarter.
In the month of December 2009, merchandise imports declined 18.6 percent ($776 million) from December 2008, led by mechanical machinery and equipment. Merchandise exports declined 11.3 percent ($433 million) in December 2009, compared with December 2008, with the largest falls coming from milk powder, butter, and cheese; aircraft and parts; and meat and edible offal. Since peaking in the latter part of 2008 the trends for imports and exports have declined 25.0 percent and 14.9 percent respectively, although the rate of decline appears to have eased in recent months.
http://stats.govt.nz
OCR unchanged at 2.5 percent
28 January 2010 - The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: "The outlook for the New Zealand economy remains consistent with the projections underlying the December Monetary Policy Statement.
"Global activity continues to recover, helping push New Zealand's export commodity prices higher. Economic growth is most apparent in China, Australia, and emerging Asia. However, sustained growth throughout our trading partners is not assured, with many still facing impaired financial sectors and overall activity still reliant on policy support.
"Similarly, the New Zealand economy continues to recover. Policy stimulus and improving export earnings have seen a pickup in household spending. That said, households remain cautious, with credit growth subdued. Business spending remains weak.
"Annual CPI inflation is currently at the centre of the target band, and is expected to track comfortably within the band over the medium term.
"The economy is being assisted by both monetary and fiscal policy support. As growth becomes self sustaining, fiscal consolidation would help reduce the work that monetary policy might otherwise need to do.
"If the economy continues to recover in line with our December projections, we would expect to begin removing policy stimulus around the middle of 2010."
December 2009
USTR: Obama Administration announces intent to negotioate 21st Centry Regional Trade Agreement with Trans-Pacific Partnership
15 December - Washington, D.C. – United States Trade Representative Ron Kirk today notified Congress that President Obama intends to enter into negotiations of a regional, Asia-Pacific trade agreement, known as the Trans-Pacific Partnership (TPP) Agreement with the objective of shaping a high-standard, broad-based regional pact.
In letters to Speaker of the House Nancy Pelosi (D-Calif.) and Senate President Pro Tempore Robert Byrd (D-W.Va.), Ambassador Kirk said that such an agreement would help to expand American exports, saving and creating good jobs here at home. The first round of negotiations has already been announced by the current Trans-Pacific Partnership members for March 2010.
“USTR will now intensify consultations with Congress and with American stakeholders to develop objectives for the Trans-Pacific Partnership agreement negotiations, in order to enter already-scheduled talks in March with a robust U.S. view that seeks the highest economic benefit for America’s workers, farmers, ranchers, manufacturers, and service providers, and that reflects our shared values on labor, the environment, and other key issues,” said Kirk.
“The development of our negotiating positions will be a collaborative effort with elected leaders and stakeholders here at home, in order to shape an eventual Trans-Pacific Partnership Agreement that is a new kind of trade agreement for the 21st century, bringing home the jobs and economic opportunity we want all our trade deals to deliver.”
This week, USTR will publish in the Federal Register a notice requesting public input on the direction, focus, and content of Tran-Pacific Partnership negotiations. USTR has also created a new webpage – www.ustr.gov/tpp – to centralize Trans-Pacific Partnership information for the public.
On November 14, 2009, during his first trip to Asia as President of the United States, President Obama first announced the United States’ intention to engage with the Trans-Pacific Partnership countries to shape a regional agreement.
Since then, USTR staff have begun preliminary consultations with committees of jurisdiction in Congress, with stakeholders in American industry, agriculture, and other sectors, and with labor and environment advisors. The USTR team also has met with current Trans-Pacific Partnership members and with countries that have expressed interest in potentially joining the negotiations.
KEY LINKS:
New USTR.gov webpage for Trans-Pacific Partnership information: http://www.ustr.gov/tpp
The Official Cash Rate (OCR) remains unchanged at 2.5 percent.
10 December - Reserve Bank Governor Alan Bollard said: "The New Zealand economy continues to recover but there remains considerable uncertainty about the durability of the expansion.
"Global activity has continued to rebound. Most obviously, activity in Australia, China and emerging Asia continues to increase and solid growth is expected over the next few years.
"The picture is more mixed in the major developed economies. While activity is expanding, sustained growth is not assured. Financial sectors are still impaired in a number of economies and economic activity is still heavily dependent on policy support.
"In New Zealand, the economy continues to recover, reflecting improved world growth, higher export commodity prices, increased government spending and housing strength. A key uncertainty is the extent to which higher house prices are eventually reflected in increased consumer spending. At this point credit growth remains subdued suggesting households are being relatively cautious.
"While business confidence has improved, actual business spending remains weak. In addition, the high level of the New Zealand dollar has limited the scope for exports to contribute to the recovery. After some short-term correction the current account deficit is expected to widen in the future.
"Annual CPI inflation is expected to remain below 2 percent until early 2011 and track within the target range over the medium term.
"The economy is being assisted by both monetary and fiscal policy support. As growth becomes self sustaining, fiscal consolidation would help reduce the work that monetary policy might otherwise need to do.
"If the economy continues to recover, conditions may support beginning to remove monetary stimulus around the middle of 2010. Recent tightening in financial conditions, driven by a higher exchange rate, increased long-term interest rates and a wider gap between the OCR and bank funding costs, reduces the need for more immediate action."
www.rbnz.govt.nz
November
New Zealand - Hong Kong, China Closer Economic Partnership Agreement a further step towards trade liberalisation
17 November - Bilateral trade relations between New Zealand and Hong Kong, China have taken a further significant step following conclusion of negotiations for a New Zealand - Hong Kong, China Closer Economic Partnership Agreement (CEP).
This is also a step contributing to the further development of Asia-Pacific regional economic integration.
New Zealand Prime Minister John Key and Hong Kong Chief Executive Donald Tsang made the announcement in Singapore in the margins of the APEC Economic Leaders Meeting.
The conclusion of the negotiations comes just seven months after the two leaders met in April at the Boao Forum in China, where a joint commitment was made to advancing momentum on the CEP.
The CEP represents a significant development in the relationship between the two economies. When looked at in the context of the economic downturn, it demonstrates a shared commitment to open markets and the role that this can play in economic recovery.
With both economies strongly committed to trade liberalisation, it is hoped that the CEP will act as a platform to help pave the way forward for shared economic growth and carry trade and investment linkages to a new level.
Both economies remain firm advocates for multilateral liberalisation through the WTO. At the same time, both recognise that bilateral and regional initiatives can complement the WTO system and help build support for multilateral liberalisation.
While merchandise trade between the two economies has grown by an annual average of 7.4 percent for the past five years and is in excess of NZ$1 billion, there is also considerable potential in the service sector, in particular in the areas of education, tourism, business and environmental services as well as in investment with Hong Kong, China seen as a hub for investment in the region.
Significantly the CEP also demonstrates a further move towards greater regional economic integration. New Zealand has concluded a number of trade agreements with economies in the Asia Pacific region. As for Hong Kong, China, the CEP is its first free trade agreement with a foreign economy.
It is envisaged that the CEP will be formally signed and the details of the Agreement released in the first half of 2010 following legal verification and the completion of domestic approval processes.
USTPP announcement significant for NZ and Asia Pacific trade
November 14 - The NZ US Council today welcomed confirmation that the US would engage with the Trans-Pacific Strategic Economic Partnership Agreement (TPP) with the aim of commencing negotiations to join TPP.
“This decision by the Obama Administration reflects the value that the United States sees as being fully part of moves toward freer and more open trade in the Asia Pacific region”, said NZUS Council Executive Director, Stephen Jacobi.
Today’s announcement in Tokyo by President Obama and in Singapore by US Trade Representative Ron Kirk will see existing TPP partners – Chile, Singapore, New Zealand and Brunei – negotiate with the United States, Australia and Peru for an expanded trade partnership. Viet Nam will observe the first three rounds of negotiations. The first round of negotiations between this expanded group was deferred in March at the request of the US to allow the new Obama Administration to undertake a review of US trade policy.
“This is very significant news for New Zealand and the wider Asia Pacific region”, said Mr Jacobi. “US involvement in the TPP paves the way for freer trade between New Zealand and the US and offers substantial benefits to both countries as a vehicle for further trade liberalization within APEC.”
The NZUS Council has worked for many years towards a free trade agreement with the United States which remains New Zealand’s second largest trading partner and a significant source of inward investment, technology and innovation.
“A trade agreement within the context of the TPP will help level the playing field with New Zealand’s competitors in the American market and lead to improved market access with higher returns.”
For the United States, the TPP offers an existing high-quality and comprehensive trade agreement on which to build towards wider trade liberalisation in the Asia Pacific region.
Mr Jacobi said the NZUS Council had focused considerable energy on the TPP since the US first signaled its interest in the negotiations last year with discussions around US involvement in TPP playing a key part in the third USNZ Partnership Forum held in Washington DC in October this year.
“This announcement is just the beginning. The Administration will have some processes to complete before actual negotiations can begin. The negotiation itself will be complex. The NZUS Council looks forward to working with partners in government and the business sector to ensure the best possible outcome for New Zealand from these negotiations”.
www.nzuscouncil.com
Groser welcomes US announcement on Trans-Pacific Partnership
16 November - Trade Minister Tim Groser has welcomed today's announcements by President Obama and US Trade Representative Ron Kirk that the United States intends to proceed with the Trans-Pacific Partnership (TPP).
"President Obama's positive comments on US commitment to the region and the regional trade agenda are welcomed by New Zealand.
"Today's announcements bring New Zealand's long-held goal of a free trade deal with the United States a step closer.
"This is very good news for New Zealand companies looking to expand future business links with the United States.
"But the Trans-Pacific negotiation is even more important as a potential pathfinder for a future regional trade deal such as a Free Trade Area of the Asia-Pacific.
"New Zealand negotiators will shortly meet counterparts from other Trans-Pacific Partnership countries to move ahead with plans for getting the negotiation under way," Mr Groser said.
Today's USTR press release is available at: www.ustr.gov
November 2009 Financial Stability Report released
11 November - The outlook for the New Zealand economy and financial system has improved in the past six months as international conditions have stabilised, but some risks and challenges remain, Reserve Bank Governor Alan Bollard said today when releasing the Bank's November 2009 Financial Stability Report.
"Financial market strains have eased, equity markets have mounted a recovery and confidence has improved. Economic forecasts are now tending to be revised upwards rather than downwards. However, global recovery has been fuelled by stimulatory fiscal and monetary policy settings which cannot be kept in place forever. Also, the global banking system remains vulnerable to further shocks."
Dr Bollard noted that while the improved global outlook was generally positive for New Zealand, the rise in the New Zealand dollar over recent months could hinder continued improvement in the external balance. "The New Zealand economy needs to live more within its means to reduce its vulnerability to adverse developments in offshore markets.
"While we see some progress to recover savings and reduce our current account deficit, there is still a considerable adjustment needed to reduce our vulnerability to external shocks. To assist this we need to ensure there is no return to a debt-fuelled housing cycle, which would likely bring with it further exchange rate pressure and erosion of competitiveness."
Commenting on the financial system, Deputy Governor Grant Spencer said that banks in New Zealand and Australia had withstood the crisis better than those in many other countries. However, the banks were overly dependent on offshore wholesale capital markets which broke down during the crisis. Also, the banks' asset quality has deteriorated during the recession, as reflected in recent provisioning and profit results. Further loan losses are likely as unemployment continues to rise through into 2010.
Mr Spencer noted that the improvement in global financial markets is now making it easier for the banks to raise funds in the international markets. "For this reason we are now starting to remove some of our special liquidity facilities that were brought in to support the banks during the crisis.
"The banks nevertheless remain very cautious in their credit and funding decisions. While generally supporting this approach, we have continued to emphasise that the banks should not overly restrict lending to the business sector.
"In support of the banks' more careful approach to liquidity, we have recently introduced a new prudential liquidity policy that is intended to reduce the banks' vulnerability to short-term wholesale funding markets. This policy comes into force in April 2010.
"We also expect that international policy reforms through the Basel Committee will see a tightening of bank capital adequacy standards over the next year or two. We will be watching these developments closely to assess which reforms are suitable for introduction in New Zealand."
Mr Spencer said many non-banks remain under pressure as they seek to repair the damage to balance sheets from the recession. "The non-bank sector is now also faced with the challenge, over the coming year, of meeting the requirements of the Reserve Bank's new non-bank prudential regime. In meeting these challenges, we fully expect to see further rationalisation and closures. The government has extended the deposit guarantee for a year to help the sector through this difficult period."
www.rbnz.govt.nz
Exports up as China becomes Australia's biggest trading partner
November 10 - Exports of Australian goods and services rose 5 per cent to be worth A$20.2 billion in September.
Figures released yesterday by the Australian Bureau of Statistics (ABS) showed the rise in exports was matched by a rise in imports delivering a trade deficit of A$1.85 billion for the month.
Accompanying data revealed China had replaced Japan as Australia’s largest two-way trading partner for 2008-09. Total trade with China increased by 30 per cent to A$83 billion in 2008-2009.
The rise in exports in September was offset by a 5 per cent rise in imports as Australia recorded its fifth consecutive trade deficit. The 5 per cent rise in exports is welcome at a time when both prices and the strengthening Australian dollar are working against Australian exporters.
The value of services exports rose 3 per cent in September to a new record of A$4.7 billion.
The value of resource exports also rose 3 per cent, rural sector exports fell 4 per cent and manufactured exports were unchanged.
www.cciwa.com
NZ is not Australia, but could be their lucky neighbour
5 November - Financial markets and businesses need to appreciate the different futures New Zealand and Australia are charting out of the global financial crisis, Reserve Bank Governor Alan Bollard said today.
Speaking to Trans-Tasman Business Circle in Auckland, Dr Bollard said both countries have survived the crisis well, due to a mix of strong institutions and stimulative policies.
“However, their immediate prospects are different. Australia has avoided negative growth, and its prospects are driven by strong terms of trade, vast mineral deposits, the Chinese market, and rapid population growth.
“New Zealand has had a recession, and the pick-up is slower and more vulnerable – a difference financial markets do not appear to appreciate.
“This is particularly evident in the relatively stable cross-rate on foreign exchange markets. If financial markets can’t see the differences, they will eventually lose money, and it will hurt the New Zealand economy.”
Dr Bollard said New Zealand could improve its prospects by taking advantage of Australia’s very strong future growth potential. “Australia is a lucky country, but we could be a lucky neighbour.”
Australia is entering a new minerals boom, investing heavily and encouraged by new finds, re-opening markets, bottlenecks and strong prices. Strong investment and export growth would mean big challenges for Australian policy. “This all means an economy that looks less like New Zealand.”
However, Australia’s potential raised the prospects for New Zealand’s manufacturers and services, which have a bigger share of exports than the same sectors in Australia.
“Australia will likely be a very strong growth market, and could help New Zealand to indirectly benefit from East Asian growth. Less inflation pressure here will help our competitiveness, assisted by relative exchange rate stability and the spreading Single Economic Market.
“New Zealand and Australia have very different resource endowments, financial markets treat us like Australia, but actually we are quite different. We talk about catching up with Australian incomes, but we have better chances of taking advantage of their growth.”
Gulf States trade negotiations open up new Middle East markets
4 November - Trade Minister Tim Groser today welcomed the news that negotiations on the New Zealand - Gulf Cooperation Council (GCC) Free Trade Agreement (FTA) have been successfully concluded following six rounds of negotiations.
Mr Groser says the FTA is a significant achievement for New Zealand and secures new and improved access into some of our most important Middle East markets.
"While there has been a real focus on the Asia Pacific region of late, this FTA will provide a strong platform for export growth into a region that is likely to emerge strongly from the global recession."
"Exports to GCC - made up of Bahrain, Oman, Kuwait, Saudi Arabia, the UAE and Qatar - totalled NZ$1.3 billion in the year to June 2009, an increase of 218% since 2000. The group now ranks as our seventh largest trading partner with bilateral trade worth $3.85 billion.
"The agreement with the GCC offers valuable commercial advantages to New Zealand businesses leading to a stronger and more diversified presence in both the GCC states and the wider Middle East," Mr Groser said.
While New Zealand's major exports to the region are dominated by primary sector products such as dairy, sheep meat, and wood there is increasingly a strong interest in critical services areas such as ICT, education, environmental and professional services.
Officials must now complete the legal verification process before details of the FTA are able to be made public and put before Ministers for signature. It is likely that the agreement will be signed in the first half of 2010.
www.beehive.govt.nz
October
The Official Cash Rate (OCR) remains unchanged at 2.5 percent.
29 October - Reserve Bank Governor Alan Bollard said: "There are welcome signs that economic activity is growing again.
"Activity in New Zealand's trading partners continued to rebound during the September quarter and financial market sentiment has improved further. However, there remain significant vulnerabilities and challenges to be worked through in many economies. This process could weigh on global growth going forward.
"In New Zealand, the housing market has reversed some of the decline in prices experienced over the past couple of years and a very gradual increase in household spending appears to be taking place. Government spending is also supporting activity. Business spending, however, remains weak and credit growth is very subdued.
"The high level of the New Zealand dollar has limited the scope for exports to contribute to the recovery, and reinforces a bias towards domestic expenditure. After some short-term correction it is also likely to see the current account deficit begin to widen in the medium term.
"The current composition of growth continues to raise questions about its sustainability. These concerns would intensify if credit growth began to propel stronger domestic demand.
"Annual CPI inflation is expected to continue to track comfortably within the target range over the medium term.
"The forecast recovery in economic activity is based on fiscal and monetary policy continuing to provide substantial support to the economy. We think such support remains appropriate. Further ahead, removing some of the current fiscal stimulus is likely to reduce the work that monetary policy will otherwise need to do.
"In contrast to current market pricing, we see no urgency to begin withdrawing monetary policy stimulus, and we expect to keep the OCR at the current level until the second half of 2010."
Reserve Bank of New Zealand
PM welcomes NZ-Malaysia FTA signing
Prime Minister John Key today welcomed the New Zealand - Malaysia Free Trade Agreement as another step forward in forging better trade and other links with our neighbours in South East Asia.
Mr Key witnessed the signing of the agreement by Trade Minister Tim Groser and the Malaysian Trade Minister in Kuala Lumpur (8pm local time 26 Oct - 1am NZ time 27 Oct).
"Comprehensive free trade agreements such as this are vital for an exporting nation like New Zealand, which is far from markets and reliant on overseas export earnings.
"The NZ-Malaysia FTA is a significant step forward in relations with Malaysia and further evidence of our economic integration with Asia. The agreement consolidates a relationship that is built on strong official, business and individual links.
"The agreement builds on the results we achieved with the 12-country ASEAN-Australia-New Zealand FTA signed earlier this year."
"Malaysia is New Zealand's 8th largest export market, with New Zealand exports to that country worth almost $1 billion last year.
"Between 2004 and 2008 New Zealand's goods exports to Malaysia grew by more than 80 per cent - double the rate for New Zealand's export growth to the world over the same period."
Mr Key is accompanied in Malaysia by a business delegation numbering more than 60. The delegation is in Kuala Lumpur to take part in a formal programme in support of the FTA signing.
"Having so many prominent New Zealand businesses here in Malaysia not only demonstrates the importance of this agreement, but it also highlights increasing diversification of New Zealand's export sector."
Mr Key pointed to the boost in two-way trade between China and New Zealand since the passing of the China-NZ FTA as showing that these agreements work.
It is expected that the agreement will come into force next year once both countries have completed their respective domestic approval procedures.
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Some temporary crisis liquidity facilities to be removed
15 October - The Reserve Bank announced today that it will be removing and consolidating some of the temporary emergency liquidity facilities put in place during the financial crisis in 2008.
The specific measures include:
* The removal of the Term Auction Facility (TAF) where banks have been able to borrow funds for 3, 6 and 12 months using eligible collateral (such as Residential Mortgage Backed Securities (RMBS), registered bank bills, NZ Government securities etc).
* A change to the regular Tuesday Open Market Operation (OMO) to allow all eligible securities (including corporate securities and RMBS) to be acceptable collateral for repurchase transactions of maturity up to three months. Currently, only approved Corporate and Asset-backed securities are acceptable as collateral in this OMO for terms of up to two months. The regular weekly OMO will continue until the end of March 2010 when it will be reviewed with a view to discontinuing it if market conditions allow.
* A shortening of the maximum term over which funds may be borrowed from the Bank in the Overnight/Term Reverse Repo Facility (ORRF/TRRF) from one month to an overnight basis only. All currently approved eligible collateral (including corporate securities and RMBS) will remain acceptable in the ORRF.
* The withdrawal of the regular weekly Reserve Bank bill tender. The Bank will continue to offer Reserve Bank bills as required in the daily OMO.
The changes announced above take effect from the beginning of November, with the final TAF and Reserve Bank bill tenders scheduled for the week beginning 26 October. For details on the Bank's liquidity facilities refer to www.rbnz.govt.nz/finmarkets/domesticmarkets/3329772.html.
Commenting on the measures Reserve Bank Deputy Governor Grant Spencer said: "Financial market conditions have improved significantly since 2008 when these facilities were introduced. New Zealand banks are now able to readily access funding from the markets, and the usage of these special facilities has been very low in the last six months. The Bank feels that the time has come to start removing and consolidating the temporary crisis facilities.
"The Reserve Bank will continue to monitor markets closely and is in a position to supply sufficient liquidity as required depending on market conditions via its regular Open Market Operations.
"This decision has no implications for the stance of monetary policy."
US NZ Partnership forum to be reconvened in 2011 in New Zealand
12 October - The third US NZ Partnership Forum which concluded in Washington today has made a further contribution to strengthening the US/NZ relationship and will be repeated in New Zealand in 2011, say the organizing Councils.
US NZ Council President John Mullen said the Forum was memorable for the quality of the discussion as well as the high level participants on both sides.
“At a time when the world is looking for new ideas about how to accelerate the economic recovery, open new markets and build sustainable business, the Forum showed there are people on both sides of the Pacific thinking about these things and looking for new ways to work together. The two days we have spent together have been highly productive and have served to enhance New Zealand’s credentials as a valuable Trans-Pacific partner for the United States.”
The Forum was held at the Omni Shoreham Hotel in Washington DC 6-8 October. The Forum was attended by around 120 delegates (67 Americans and 54 New Zealanders) and a large number of observers. The Forum was co-chaired by former Congressman Cal Dooley and Ambassador Susan Schwab for the United States and Rt Hon James Bolger and Rt Hon Mike Moore for New Zealand. Keynote addresses were delivered by Deputy Secretary of State, James Steinberg; Foreign Minister Hon Murray McCully; Secretary of Agriculture, Tom Vilsack; Deputy US Trade Representative, Demetrios Marantis; Trade Minister, Hon Tim Groser, and Leader of the Opposition Hon Phil Goff.
NZ US Council Chairman Rt Hon James Bolger said the Forum provided an important platform for both government and business to take the relationship forward.
“Our Forum covered the range of challenges that both countries face. The reality is we need each other if we are to meet these challenges and exploit new opportunities, particularly in the Asia Pacific region. We intend to meet therefore for a fourth time in New Zealand in early 2011 to continue the dialogue that we first began in Washington in April 2006”.
Held under Chatham House rules, the Forum’s theme was “Trans- Pacific Partnership: Deepening Engagement; Expanding Opportunities”. The Forum agenda included business sessions on the economic and political outlook for the Asia Pacific region, the prospects for trade liberalization, the interface between trade and climate change, business co-operation in the areas of healthcare, sustainable biofuels, film and digital content, food safety and the security challenges facing both countries.
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South Korea: An opportunity for New Zealand Business
6 October - The Asia New Zealand Foundation recently released a report on doing business in South Korea. This case-study based research report has the title, South Korea: An opportunity for New Zealand Business, and can be found at Asia New Zealand’s website by clicking here: http://www.asianz.org.nz/our-work/action-asia-business/business-research
New Zealand-China FTA: One-year on
5 October - Trade Minister Tim Groser today welcomed the first anniversary of the entry into force of the New Zealand-China Free Trade Agreement (FTA).
"This FTA is a major milestone in our relationship with China. Trade with China is critically important for New Zealand - China is now our third largest trading partner.
"NZ-China relations have continued to go from strength-to-strength. The FTA has led to increased cooperation between our two economies in a wide range of areas. This engagement brings significant gains to both countries through increased knowledge-sharing and people-to-people links.
"Despite a depressed global economy, two-way trade (imports plus exports) between New Zealand and China increased in the past year alone by 23 per cent to reach just over $10 billion.
"Our exports to China have increased by almost 60 per cent over the last year - worth $3.5 billion. Dairy exports have seen the biggest increase but there has been significant growth across a range of sectors including lamb, timber, kiwifruit, wool and wine exports.
"Some of this increase is due to market forces - it is clear that there is strong Chinese demand for quality New Zealand products. Nevertheless, the FTA provides a solid platform for strengthened commercial links with China, and we will see trade boosted as tariffs continue to fall in coming years.
"The FTA is an instrument in the battle against protectionism and sends a strong message on the importance of expanding trade in response to tough economic times.
"I am very pleased with the progress we have made in the first year of the FTA, and look forward to visiting China to mark this progress in the near future," Mr Groser said.
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Ministers attend US-NZ Partnership Forum in Washington
4 October - Foreign Affairs Minister Murray McCully and Trade Minister Tim Groser will join high profile business and government representatives at the third US-NZ Partnership Forum, in Washington DC.
"The United States is an important friend, ally and trading partner to New Zealand. It's important New Zealand Ministers attend the Partnership Forum along with senior business leaders," Mr McCully said.
"The Partnership Forum is organised jointly by the NZ/US Council and its US counterpart and will be held in Washington on 6-8 October.
"Discussions at the Forum will include the trade and business relationship, political and trade developments in the Asia-Pacific region, and US/NZ cooperation on security issues - including border control and trade security."
While in Washington, Mr McCully will meet with US Secretary of State Hillary Clinton to advance cooperation in the Asia Pacific region.
Trade Minister Tim Groser will meet his counterpart, US Trade Representative Ron Kirk, and will also discuss climate change issues in his capacity as Associate Minister for Climate Change Issues (International Negotiations).
"We have been heartened by the recent US leadership on climate change. They will have a crucial role in helping deliver a successful outcome at Copenhagen," Mr Groser said.
During the visit, Mr Groser will also continue discussions on New Zealand's proposal for a global research alliance on agriculture greenhouse gas mitigation.
Source: www.beehive.govt.nz
September
Welcome to New Zealand Central
29 September - New Zealand Central, Shanghai
Join a growing number of organisations discovering the benefits of using New Zealand Central (NZC) – New Zealand’s world class business centre for New Zealand companies, providing a physical presence for the New Zealand brand in Shanghai.
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Gross Domestic Product: June 2009 quarter - Media Release
September 23 - Economic activity, as measured by Gross Domestic Product (GDP), was up less than 0.1 percent in the June 2009 quarter, Statistics New Zealand said today. This growth in economic activity follows five quarters of contraction in the New Zealand economy.
Activity in the primary industries was up 1.5 percent in the June 2009 quarter, mainly driven by forestry and logging (up 8.0 percent). The increase in forestry and logging production was related to an increase in exports of logs to the People's Republic of China.
Activity in the goods-producing industries contracted 0.5 percent in the June 2009 quarter. The manufacturing (down 1.3 percent) and construction (down 1.9 percent) industries both declined. A 5.9 percent increase in electricity, gas and water partly offset these declines.
Activity in the services industries was flat this quarter. Service industries that increased were real estate and business services (up 1.5 percent) and communications (up 1.7 percent). Offsetting these increases were declines in wholesale trade (down 2.1 percent), transport and storage (down 3.3 percent), and government administration and defence (down 0.4 percent).
The expenditure measure of GDP, released concurrently with the production measure, was up 0.4 percent in the June 2009 quarter. Household consumption expenditure, which measures the volume of spending by New Zealand households, was up 0.4 percent. This increase in household spending was driven by non-durables (mainly motor fuel) and services. Household spending on durable items fell.
Export volumes were up 4.7 percent in the June 2009 quarter, with exports of dairy and wood products the main contributors. Import volumes decreased 3.8 percent in the same period, with the largest declines in intermediate goods, and machinery and plant equipment. The combination of higher exports, lower imports, and a decline in manufacturing led to a large, $1.1 billion run down in inventories.
Source: www.stats.govt.nz
Fonterra payout forecast for 2009/10 increases to $5.10 per kgMS
– 55 cent lift reflects improving international dairy prices –
22 September - Fonterra announced today a new forecast for its farmer-suppliers with the Milk Price increasing 60 cents to $4.60 and the Distributable Profit [Value Return] down 5 cents to 50 cents per kgMS.
The Co-operative’s total forecast Available For Payout for the 2009/10 season increases 55 cents to $5.10 per kilogram of milksolids (kgMS).
Fonterra Chairman, Sir Henry van der Heyden, says the revised forecast reflects a sustained improvement in commodity returns and a more positive outlook in international dairy markets. Sir Henry says farmers will begin to benefit from the higher Payout forecast from next month, with a lift in Fonterra’s Advance Rate schedule of payments to farmer-suppliers.
“We’ve had really tight cash flows on farms going into this season, and some serious belt tightening to get through. This will give our farmers a bit of relief and some extra flexibility to get the best out of their farms this year.”
Fonterra CEO, Andrew Ferrier, says the strong increases in prices for whole milk powder (WMP) at the globalDairyTrade events in the past two months echo a broad strengthening of demand and robust recovery in international dairy prices.
“What we’re seeing in the international market is the firming of a trend, with a more positive sentiment and stronger demand, producing better pricing across the board. Whole milk powder prices have been leading the way, with the prices for other dairy commodities now all moving in the right direction.
“While this is good news for our farmers in New Zealand, we remain in a period of extreme price volatility, which makes forecasting challenging, to say the least.”
Mr Ferrier says the 60 cent increase in the Milk Price from July’s forecast reflects higher whole milk powder prices which are included in the commodity milk powder streams within the Milk Price. The 5 cent fall in the forecast Distributable Profit is due to prices of cheese and casein product streams lagging the range of commodity milk powders [on which Fonterra’s Milk Price is based]. Higher or lower returns on cheese, casein and other streams versus the commodity milk powder streams, go to profit rather than into the Milk Price.
Mr Ferrier says the earnings and outlook for Fonterra’s international businesses and joint ventures, including its Australia-New Zealand consumer business, which contribute to the Distributable Profit (Value Return) component of Payout, remain unchanged from the July forecast.
Sir Henry says the level of the New Zealand Dollar, which has been trading around 70 cents US, remains a concern but this has been fully factored in to the revised 2009/10 forecast. Fonterra will announce its financial results for 2008/09 and confirm its Payout for the 2008/09 season tomorrow (September 23).
OCR unchanged at 2.5 percent
The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: "There is more evidence that the decline in economic activity is coming to an end, and that a patchy recovery is underway.
"This is partly due to recovery in our trading partner economies in the June quarter and these look likely to continue expanding in the short term. Domestically, retail spending appears to have stopped falling, following a rise in net immigration and a pick-up in the housing market over recent months.
"However, the medium-term growth outlook remains weak. We expect household spending to grow only modestly given weak income growth and a reduced appetite to take on debt. Business profits are under pressure because of the low level of activity and the elevated New Zealand dollar; this limits the scope for employment and investment to rebound quickly.
"For growth to be sustained in the medium term there is a need for improved competitiveness in the export sector and a continued recovery of household savings. This rebalancing is required to stabilise New Zealand's external payments position. If the exchange rate were to continue its recent appreciation and/or the recovery in house prices were to undermine the improvement in household savings, then the sustainability of the present recovery will be brought into question.
"Annual CPI inflation is currently well within the target band and is expected to track comfortably within the band over the medium term.
"As we have said previously, the forecast recovery in economic activity is based on monetary policy continuing to provide substantial support to the economy. We expect such support will be needed for some time. As a result, we continue to expect to keep the OCR at or below the current level through until the latter part of 2010."
Australia's economy remains resilient
8 September - National Accounts released by Treasurer Wayne Swan on 2 September show that the Australian economy has been the best performing advanced economy over the past year and the only advanced economy that has recorded positive growth over this period.
The data shows that Australia continues to avoid a technical recession - unlike all major advanced economies during this historic global downturn.
Australia's GDP rose by 0.6 per cent in the June quarter to be 0.6 per cent higher through the year. The solid performance of the Australian economy comes at a time of continuing weakness in many parts of the world. The G7 economies contracted by an average of 4.6 per cent in the year to the June quarter, with the US, UK and Japan recently experiencing their biggest yearly falls in output in 50 years.
Source: Chamber of Commerce and Industry of Western Australia
Public Submissions called for Thailand - NZ Closer Economic Partnership Agreement
7 September - Call for Public Submissions on Services and Government Procurement in the context of the Thailand - New Zealand Closer Economic Partnership Agreement
The Ministry of Foreign Affairs and Trade is inviting submissions on possible negotiations on services and government procurement under the Thailand - New Zealand Closer Economic Partnership Agreement.
The closing date for submissions is 30 September 2009.
For more information please click here
Call for Public Submissions on PACER Plus
7 September - The Ministry of Foreign Affairs and Trade is inviting submissions on PACER Plus, the free trade agreement between New Zealand and Australia and the Pacific Forum Island Countries provided for under the Pacific Agreement on Closer Economic Relations (PACER).
The closing date for submissions is Monday 16 November 2009.
For more information please click here
2009 APEC SME Summit
The APEC SME Summit is being held in Hangzhou, China on 11-12 September. The APEC SME Summit 2009 is the international premier business summit for senior executives and business owners of growing and mid-sized companies.
The APEC SME Summit 2009 will provide a high-level platform for business owners, top executives, senior business managers, thought leaders and entrepreneurs to convene, share best practices and experience, debate current business issues, discuss winning market strategies, network and strike new partnerships.
Held against the backdrop of the current unprecedented global economic crisis, the Summit program is crafted based on the theme – “Thriving in Turbulent Markets”; this is especially relevant and timely to the participants from the 21 APEC economies and beyond.
For information and to view the program please click here. For Registration details please click here.
August
Ministers welcome start of PACER Plus talks
26 August - Foreign Affairs Minister Murray McCully and Trade Minister Tim Groser today welcomed the recommendation from the Pacific Island Forum Leaders' meeting that talks on the Pacific Agreement on Closer Economic Relations (PACER Plus) formally commence.
"New Zealand's special relationship and significant people-to-people links with the Pacific means that PACER Plus will not be a traditional free trade negotiation in which commercial interests alone define our negotiating positions.
"Our objective for PACER Plus is to equip the Pacific to raise standards of living, increase employment opportunities and export capacity, and promote sustainable economic growth by assisting Pacific Island countries to capitalise on potential for trade," said Mr McCully.
"The talks are an important step in achieving the Forum's goal of developing increased economic opportunities.
"But trade access on its own is not enough. We must provide support to the public and private sector alike to ensure Pacific countries can take advantage of the opportunities PACER Plus will offer.
"The Pacific forms a significant part of New Zealand's national identity and a prosperous and sustainable Pacific is clearly in New Zealand's interests," said Mr Groser.
The Ministry of Foreign Affairs and Trade is calling for public submissions to help shape New Zealand's negotiating mandate for the trade talks.
The public consultation process is ongoing and will provide further opportunities for input and comment on the talks. For more information and to find out how to make a submission on PACER Plus negotiations go to www.mfat.govt.nz.
www.beehive.govt.nz
Australia New Zealand Leadership Forum
The 6th Australia New Zealand leadership forum will be held in Sydney on 21-22 August 2009.
Invitations to attend have been issued by the co-chairs of the forum Rod McGeoch and John Allen.
The forum will bring together leaders from the private and public sectors. It is expected that several Ministers will attend the Forum, as well as members of the opposition.
Contact: Grahame Morton, Australia Division +64 4 439 8257
Keeping ahead of tourism trends
19 August - A significant research investment will help tourism keep ahead of fast-changing consumer demands and grow its position as one of the country’s biggest export earners.
Research, Science and Technology Minister Wayne Mapp and Associate Minister of Tourism Jonathan Coleman today announced a $2 million package that will fund three major linked research streams.
“The requirements of today’s tourists have changed significantly,” said Dr Mapp. “They are concerned about climate change, carbon consumption and the impact of air travel. They want to know that New Zealand is meeting its ‘100% Pure’ image.”
The Ministry of Tourism will contribute $500,000 to the three-year programme, with the rest of the money coming from the Foundation for Research, Science and Technology.
“It is vital that New Zealand can compete effectively on the global tourism market. We also need solid research to help make the best possible decisions to shape the industry around future customer demands. Tourism has been a major success story for New Zealand and we want to keep it that way,” Dr Coleman said.
The new funding will go to projects investigating scenario planning, climate change and the factors around air travel.
- Developing long-term scenarios to help better understand the potential options for New Zealand tourism (Victoria University of Wellington, $792,000 over three years)
- Identifying how the physical effects of climate change will impact on tourism in New Zealand regions, to help the sector adapt to and take advantage of these effects (Lincoln University, $617,000 over three years)
- Developing a deeper understanding of the key economic and political variables affecting international and domestic air travel, in recognition of how critical airlinks are for international tourism to New Zealand (University of Otago, $704,000).
source; www.beehive.govt.nz
2009 CER Ministerial Forum: Communique
11 August - New Zealand and Australian Ministers responsible for the trans-Tasman trade and economic relationship met in Wellington on 9 August 2009 for the annual Closer Economic Relations (CER) Ministerial Forum.
Ministers welcomed the very good progress that had been made over the preceding year to strengthen and deepen the relationship, working towards the ultimate goal of an Australia-New Zealand ‘Single Economic Market'.
This progress built on 26 years of CER and the Joint Statement on Strengthened Trans-Tasman Cooperation issued by Prime Ministers Key and Rudd at their meeting in early March.
Ministers expressed their strong commitment to driving forward the trans-Tasman agenda in the face of the global economic crisis. It was more important than ever to foster open markets, keep capital and credit flowing and resist the rise of protectionism around the world.
"The CER economy remains open for business despite the current economic challenges," Ministers said.
CER is a model for the world, going beyond barriers at the border to deeper economic and regulatory integration. Two-way trade is currently worth over NZ$26 billion (A$21 billon). Merchandise trade has grown at an average of 6.2% per annum over the last two decades. Two-way investment between Australia and New Zealand stands at over NZ$122 (A$97 billion).
"This is testament to the success of the CER and SEM agenda for both countries," said Ministers. "We are becoming increasingly integrated - and this has direct benefits for business and the wider economy."
The progress made over the past year has been aimed at reducing barriers at and behind the border. Ministers noted that they would be reporting on progress to Prime Ministers ahead of their meeting in Canberra later in the month.
Areas of focus included industry policy, notably modernising ‘rules of origin', freeing up investment rules, an ambitious new work programme for the Single Economic Market looking particularly at enhancing the regulatory environment for business, seeking to streamline travel across the Tasman, collaboration on improvements in the rules around food trade, and exploring the scope to liberalise services trade even further. Ministers also discussed current biosecurity issues, the review of the Trans-Tasman Mutual Recognition Arrangement, and collaboration on science including climate change and areas of innovation and scientific research.
New Zealand participants were Minister of Trade Tim Groser, Minister of Commerce and Associate Finance Minister Hon Simon Power, and Minister of Agriculture, Forestry and Biosecurity Hon David Carter. Australian participants were Minister of Trade Simon Crean, Assistant Treasurer Senator Nick Sherry, and Minister for Agriculture, Fisheries and Forestry, Tony Burke.
Source: www.beehive.govt.nz
Market pricing signs positive in globalDairyTrade event
6 August - The August trading event this morning (NZT) for Fonterra’s internet-based sales platform, globalDairyTrade, saw average prices for Whole Milk Powder rise 25.8%.
The trading manager, CRA International, advised Fonterra that the average price achieved across all contracts and contract periods for Whole Milk Powder (WMP) was US$2,301 per tonne FAS. This was US$472 per tonne higher than the July event. Prices ranged from US$2,235 per tonne FAS to US$2,530 per tonne FAS.
The August trading event included for the first time 1,000 tonnes of WMP from Fonterra’s Australian operations.
Nigel Kuzemko, Director Commercial and Strategy, Fonterra Trade and Operations, said it was encouraging to see improved pricing which reflects a recent firming in market sentiment. The international dairy market remains volatile – with supply and demand going through a rebalancing phase.
“We are seeing signs of strengthening demand and prices, and that’s encouraging, but the market remains dynamic with trends difficult to forecast.”
The inclusion of Australian product in this month’s event was in line with Fonterra’s objective to expand the range of products sold on globalDairyTrade.
Mr Kuzemko said: “This will bring the same market price transparency for Australian product that globalDairyTrade trading events have established for New Zealand product. Ultimately this is about providing greater choice for our customers and, in today’s volatile market, ensuring the best returns for our farmers.”
The next globalDairyTrade trading event will be held on September 1, 2009. See www.globaldairytrade.info for more details.
Source: www.fonterra.com
July
OCR unchanged at 2.50 percent
30 July - The Official Cash Rate (OCR) will remain unchanged at 2.50 percent.
Reserve Bank Governor Alan Bollard said: "Despite signs of a leveling off in economic activity, the economy remains weak. We continue to expect to see a patchy recovery get underway toward the end of the year, but it will be some time before growth returns to healthy levels.
"The outlook remains highly uncertain. New Zealand's merchandise exports are heavily weighted to soft commodities. As a result, New Zealand has not benefited to any significant extent from the rebound that has occurred recently in global hard commodity prices.
"Overall economic growth is evolving broadly in line with our forecasts in the June Monetary Policy Statement as the low OCR and stimulatory fiscal policy take effect. However, looking forward the level of the New Zealand dollar and wholesale interest rates are higher than assumed in our forecasts. The level of the dollar in particular, is not helping the sustainability of future growth, and brings with it additional economic risks.
>"The forecast recovery is based on a further easing in financial conditions. If this easing does not occur, the forecast recovery could be put at risk. In these circumstances we would reassess policy settings.
"Annual CPI inflation is currently well within the target band and it is expected to track comfortably within it over the medium-term.
"We consider it appropriate to continue to provide substantial monetary policy stimulus to the economy. The OCR could still move modestly lower over the coming quarters. We continue to expect to keep the OCR at or below the current level through until the latter part of 2010."
Source: www.rbnz.govt.nz
Australia appoints new APEC Ambassador
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22 July - Mr Ric Wells has been appointed as Australia’s Ambassador for Asia-Pacific Economic Cooperation (APEC), succeeding Mr David Spencer in the position.
As Ambassador for APEC, Mr Wells will have responsibility for representing and guiding Australia's interests in APEC fora and with APEC member economies.
Established in 1989, APEC has evolved to become the leading economic forum in our region, bringing together the Leaders of 21 Asia-Pacific economies, including many of Australia’s most important trading partners. APEC is a major driving force in promoting open trade and investment, sustainable economic development and prosperity in our region.
APEC economies account for over 68 percent of Australia’s two-way trade in goods and services. Together APEC economies accounted for 56 per cent of global GDP, over 43 per cent of world trade and 40 percent of the world’s population. In 2009 APEC celebrates its 20th Anniversary.
Source: Chamber of Commerce and Industry of Western Australia
Fewer international travellers in June
21 July - Short-term overseas visitor arrivals (135,200), and short-term departures of New Zealand-resident travellers (176,300), were both lower in June 2009 compared with June 2008, Statistics New Zealand said today. Visitor arrivals were down 7,300 (5 percent) from 142,400 in June 2008. There were more visitor arrivals from Australia (up 6,000), but fewer visitor arrivals from Japan (down 4,700), Korea (down 2,900), and China (down 2,500).
The 2.411 million visitor arrivals recorded during the June 2009 year were down 68,400 (3 percent) from the June 2008 year.
New Zealand residents departing on short-term overseas trips in June 2009 were down 9,700 (5 percent) from the 186,000 departures in June 2008. There were fewer trips to Australia (down 5,400), the United Kingdom (down 1,900), and Fiji (down 1,100). For the June 2009 year, short-term departures of New Zealand residents numbered 1.920 million, down 57,500 (3 percent) from the June 2008 year.
Permanent and long-term (PLT) departures decreased by 1,900 in June 2009, including 1,600 fewer departures to Australia and 400 fewer to the United Kingdom. PLT arrivals decreased by 600 compared with June 2008.
On a seasonally adjusted basis, PLT arrivals exceeded PLT departures by 1,700 in June 2009, down from 2,600 in May 2009 and 2,100 in April 2009, and the same as in March 2009.
New Zealand's annual net PLT migration balance was a gain of 12,500 in the June 2009 year, up from 4,700 in the June 2008 year. The net PLT outflow to Australia was 28,700 in the June 2009 year, down from the record net outflows of 35,400 in both the December 2008 and January 2009 years. PLT arrivals of New Zealand citizens numbered 24,800 in the June 2009 year, just above the average of 23,400 for the 1979–2008 December years. Arrivals of New Zealand citizens tend to show little variation year-to-year.
Source: www.stats.govt.nz/
Savings, investment, funding markets are key to recovery
Household savings, investment in the tradable sector, and deeper funding markets are the key to New Zealand's economic recovery, Reserve Bank Governor Alan Bollard told a Hawke's Bay business audience today.
"Early signs of global recovery have now emerged. We have avoided a repeat of the Great Depression," he said. However, world growth will probably be subdued for the next one or two years, and the current low international interest rates, expansion of liquidity and central bank balance sheets, and fiscal stimuli will be necessary for some time.
"New Zealand looks likely to start recovering ahead of the pack. But this is an opportunity to rebalance. Getting the sort of sustainable recovery we want will be assisted by: first, greater savings by the household sector, to reduce the need for foreign funding of the economy; second, investment in the economy's productive base, particularly in the tradable sector; and third, greater durability and depth in funding markets, including a lengthened maturity structure for bank funding.
"A clear risk over the medium term is that households resume their 'borrow and spend' habits before they have paid down some of their existing debt. This could be triggered by renewed moderate house price inflation, and needs to be avoided."
With slower growth in household income expected, households would have to reduce spending growth to repay their debt. "Reliance on past experience of strong house price inflation and easy credit will be untenable."
Increased household saving would have the added advantage of providing a more stable source of funds for business investment and expansion, reducing reliance on foreign funding. This would contribute to more stable and lower interest rates, thus promoting a more sustainable growth path.
Stronger world demand and a weaker New Zealand dollar would provide the signal that investment needs to move to the tradable sector to help correct the current account gap. However, financial markets were currently focused on a US dollar correction. "We hope that, in the next phase of recovery in financial market sentiment and return of risk-seeking, the markets will be more discriminating about New Zealand," Dr Bollard said.
A priority over the coming year or so would be for New Zealand banks to diversify their funding sources more, and to increase the proportion of stable funding sources, including long-term wholesale borrowing and retail deposits. The Reserve Bank's recently released prudential liquidity policy for banks will reinforce this move.
The Reserve Bank appreciated that interest rates are a blunt instrument to curb excessive borrowing, Dr Bollard said. "We see prudential policy potentially playing a greater role in the future."
Attention is now focused internationally on the potential role of minimum capital and other prudential requirements on banks in dampening business cycles, the impact of smaller and peripheral financial institutions on financial system behaviour, and how cross-border financial activity should be monitored or regulated.
In the recovery, he said the Bank's focus will be on keeping inflation expectations anchored, the macro-economy stable, system liquidity available and the financial system stable, so that funds keep flowing and relative price signals work.
The Reserve Bank would be closely watching the international debate in these areas for insights into improving its own framework. "At this point we are reasonably well-positioned to adapt in light of the new thinking, with a conservative approach to bank capital adequacy, the new legislation bringing the regulation of non-bank deposit takers into our responsibilities, and long experience in managing macroeconomic stability, financial stability and prudential policy functions under one roof.
"The New Zealand economy has taken knocks in this crisis, but some form of recovery is now on the horizon. Our opportunity is to use this time to rebalance the economy for the medium term."
Core industries lift retail sales in May
13 July - In May 2009, seasonally adjusted total retail sales rose 0.8 percent ($41 million), Statistics New Zealand said today. This is the largest monthly increase since November 2007 and is due to a 1.6 percent ($65 million) rise in core retailing, more than offsetting a 1.8 percent ($25 million) drop in the vehicle-related industries.
The increase in core retailing was dominated by two industries: supermarket and grocery stores (up 2.2 percent or $27 million) and clothing and softgoods retailing (up 12.6 percent or $25 million). These rises contributed to the largest increase in core retailing since February 2007.
Thirteen of the 20 core industries had increased sales in May 2009, while seven had decreases. Only four of the 20 industries had sales movements up or down exceeding $5 million.
The core retail sales trend has been rising since September 1995. Between April 2007 and January 2009, the average rate of increase slowed to 0.1 percent per month, but latest figures suggest that since January 2009 there has been a slight pick-up – to 0.2 percent per month. The trend in total retail sales has been in general decline since January 2008 but has currently flattened. Initial trend estimates may be revised and should be used with caution until more data points are available.
Sales by region were mixed in May 2009, with half up and half down from April. In total, sales were slightly up in the South Island and slightly down in the North Island. Sales trends for the two islands indicate that sales are flat in the South (up just 0.7 percent since January 2008) and have flattened (after a year of declines) in the North Island.
Source: www.stats.govt.nz
Dunne: Cook Islands tax info agreement big step forward
13 July - The Tax Information Exchange Agreement signed by New Zealand and the Cook Islands today provides for full exchange of information on criminal and civil tax matters between the two countries, Revenue Minister Peter Dunne said.
Prime Minister John Key signed the agreement on behalf of New Zealand at a ceremony at Avarua, Rarotonga, this morning New Zealand time.
"We welcome the signing of this important agreement with the Cook Islands, with whom we have a close historical, economic and cultural relationship," Mr Dunne said.
"The agreement will enable the tax authorities of both countries to gain access to information about income and assets that would-be evaders try to hide in the other country," he said.
"Having access to that information is especially important at a time when countries everywhere are doing all they can to protect their tax bases."
Mr Dunne said the agreement will cover "not only information held by banks and other financial institutions but also information on who benefits in company ownership chains and on the settlors, trustees and beneficiaries of trusts".
"The global financial crisis has resulted in a new, worldwide focus on tax co-operation as increasing numbers of financial centres agree to adopt OECD standards for exchange of tax-related information," he said.
New Zealand already has a tax information exchange agreements with the Netherlands Antilles and Bermuda. Several others are expected to be signed over the next few weeks.
"We are very pleased that the Cook Islands are among the first countries to sign a tax information exchange agreement with New Zealand," he said.
The agreement will come into force once both countries have given legal effect to it.
The text of the agreement is available at www.taxpolicy.ird.govt.nz
ICC looks for rapid action on G8 pledge to conclude Doha trade negotiations in 2010
13 July - ICC welcomes the pledge by leaders of the G8 countries to conclude the Doha Round of trade negotiations in 2010. However, the G8 has set many deadlines for these negotiations in the past which have not been met. International business hopes that after so many years of failure governments may now be on the verge of rapid, concrete, and determined action to reach an ambitious agreement.
ICC welcomes the instruction given to trade ministers to meet before the G20 summit in Pittsburgh this September. We hope this will be more than a stock-taking exercise and will make a decisive contribution towards the conclusion of the negotiations.
Despite the difficulties in reaching agreement on Doha, considerable progress has been made on the negotiations, with many hard-won trade-enhancing offers already agreed to. These achievements must not be lost. A successfully concluded Doha Round is the strongest possible signal governments can give that they will not submit to economic nationalism, which will only result in a longer, deeper recession.
ICC welcomes the reaffirmation of the world’s most industrialized countries to resist protectionism, not to raise new trade barriers, and to support efforts by the World Trade Organization to monitor compliance with the anti-protectionist pledges.
NZIER Quarterly Survey of Business Opinion
Businesses less gloomy, but further contraction in store
7 July - The economy will contract in both the June and September quarters, according to key indicators in the latest NZIER Quarterly Survey of Business Opinion (QSBO).
To read more please click here
June
NZ’S Fonterra named world's No.1 milk processor
26 June - New Zealand’s Fonterra Co-operative Group has been ranked the No.1 milk processor in the world.
Global industry research group, International Farm Comparison Network (IFCN), benchmarked 600 milk processors in over 70 countries and placed Fonterra’s total annual volume of milk processed ahead of Dairy Farmers of America, Nestlé, Dean Foods and FrieslandCampina.
Fonterra CEO, Andrew Ferrier, said the ranking reflected the global reach and scale of the company’s business, with its New Zealand milk supply and manufacturing operations at the core.
“With 80 per cent of our milk supply coming from our 10,500 New Zealand farmer-shareholders and processed into over 2 million tonnes of export product every year, our local operations, which employ about 10,000 of our staff, are the cornerstone of our global business."
Mr Ferrier said around 20 per cent of Fonterra’s milk was sourced globally, with the volume growing as the company extended its dairy ingredients supply partnerships with customers around the world.
“Building strong global partnerships with our customers also relies on our ability to provide year-round security of supply. By broadening our milk supply base - complementing New Zealand supply with supply from other sources - we can meet customer demand and manage risk, while creating more opportunities to add greater value and grow earnings for our farmer-shareholders in New Zealand.”
Mr Ferrier said while the IFCN ranking showed the size and scale of its operations, the Company’s strength lay in its ability to partner with its customers to add value to their businesses.
“We may be processing more milk than anyone else, but at 2.7 per cent we still only account for a fraction of the total world milk market. The way we differentiate ourselves is through achieving the best quality, offering the most innovative dairy solutions and delivering product on time to meet our customers’ changing demands. This is our true strength.”
www.fonterra.com
NZ US Council rejects FTA scare-mongering
23 June - The NZ US Council rejects as “scare-mongering” unsubstantiated claims that New Zealand would be disadvantaged in a future free trade agreement with the United States.
“New Zealand needs increased trade and investment to get the economy growing again. A free trade agreement with the United States would reduce trade barriers, put us on a even footing with competitors who already have FTAs with the US and provide additional cover against protectionist reflexes in the United States”, said NZ US Council Executive Director Stephen Jacobi.
Mr Jacobi was reacting to media reports of an academic conference in Auckland which has (apparently) been discussing the Trans Pacific Partnership (TPP) to which it is hoped the United States, Australia, Peru and Viet Nam will become a party along with New Zealand, Brunei, Chile and Singapore.
Mr Jacobi particularly contested the notion that New Zealand would be disadvantaged in terms of provisions aimed at promoting increased investment between New Zealand and the United States.
“Inward foreign investment provides capital to help New Zealand companies grow and create jobs. Outward foreign investment by New Zealand companies provides for better distribution and more cost effective manufacturing closer to end consumers while retaining important product design functions in New Zealand. Any investment dispute settlement provisions once agreed would apply equally to both countries. They are aimed at ensuring governments do not change the rules without good reason and due process once investments have been made.
“New Zealand enjoys a good international reputation for the quality of its regulation. New Zealand Governments are most unlikely to get into disputes with foreign investors. That is not the same for other governments and New Zealand companies need cover when investing offshore”.
Mr Jacobi said that New Zealand negotiators tended to proceed cautiously when considering FTA provisions.
“FTAs should only be entered into when they meet New Zealand interests. New Zealand’s existing FTAs including with China and ASEAN absolutely preserve the right of governments to make regulations that apply equally to local and foreign investors in the areas of health, safety, and the environment”.
Mr Jacobi said reports from the Auckland conference suggested it had focused on dispute settlement provisions under the North American Free Trade Agreement (NAFTA).
“NAFTA’s provisions will not necessarily be applied uncritically to TPP. Even under NAFTA the impact of investment dispute settlement has been significantly less than claimed. Of 42 cases taken against Canadian, Mexican and US governments in the decade between 1995 and 2005 companies won only five. Awards under these cases represent less than 2% of the amounts claimed”.
Mr Jacobi said that informed public debate about FTAs was helpful but scaremongering needed to be rejected.
“The Council is disappointed not to have been invited to participate in the Auckland conference. Holding such discussions behind closed doors is not appropriate for academics seeking to understand complex trade negotiations”.
Source: NZUS Council
Groser seeks progress on trade, international climate change
23 June - Trade Minister and Associate Minister for Climate Change (International Negotiations) Tim Groser will join Ministers from over 40 countries at an annual OECD meeting as part of his travel to Paris, Copenhagen and Greenland from 21 June to 6 July.
"The OECD Ministerial Council Meeting is a vital opportunity to discuss trade and economic issues with Ministers from around the world," Mr Groser said.
The meeting will include Ministers from the OECD's 30 member countries, and other countries including China, Brazil, India, Indonesia, South Africa and Russia. Representatives from the IMF, World Bank and WTO will also attend.
"I will be talking to key Ministers about how we can build on the positive signals that emerged from the recent Cairns Group meeting in Indonesia to restart the WTO Doha negotiations and to get these concluded as soon as possible.
"A Doha deal is the very best way to stimulate international trade flows, and our best insurance policy against protectionist measures which can impact on New Zealand's exporters.
"I will also be reminding Ministers that political commitments must translate into practical restraint to resist protectionism. In particular, I will be urging the US and the EU to show leadership by removing export subsidies on dairy products as soon as possible," Mr Groser said.
Mr Groser will then travel to Copenhagen for a series of meetings with senior trade, agriculture and environment officials before attending a high level informal meeting on international climate change negotiations in Ilulissat, Greenland.
"New Zealand has been invited to attend these important talks because of our reputation as a respected and pragmatic voice in negotiations.
"The world needs an international agreement that is both environmentally effective and economically efficient. The Greenland Dialogue is an important and early opportunity to test the waters ahead of the UN Conference in Copenhagen in December," Mr Groser said.
Source: www.beehive.govt.nz
One million Aussies break tourism record
23 June - More than one million Australian tourists visited New Zealand in the past year and Prime Minister and Minister of Tourism, John Key says that proves the wisdom of recent Government investment into the Australian market.
Statistics New Zealand figures released today show that 1,001,880 visitors arrived from Australia in the year to May, the first time more than a million visitors arrived from Australia in a 12 month period.
“Our decision in March to boost marketing in Australia by $2.5 million was based on very sound principles. In tough economic times the New Zealand market is still very accessible to Australians wanting to holiday, and we recognised the need to take advantage of that.”
Since the 100% New Zealand Pure campaign started 10 years ago the number of Australian visitors has almost doubled.
“Tourism New Zealand has seen increased awareness of New Zealand in Australia in recent months and highly competitive airfares, good seat capacity, and a favourable exchange rate are all working in our favour."
Tourism New Zealand today launched a promotional campaign to celebrate the one millionth visitor. The ‘Thanks a Million’ campaign will see two people win a millionaire’s holiday to New Zealand.
“The one millionth Australian visitor is a major milestone for the New Zealand tourism industry and a great achievement given the challenges being faced at the moment.”
http://beehive.govt.nz
Cathay Pacific NZCTA Awards Winner Results
18 June - High end power tools tame the dragon
The Cathay Pacific NZCTA Trade Awards were held this week at the SkyCity Convention Centre. 300 guests attended the event which was a glittering evening of elegance, excitement and entertainment.
Congratulations go to Albany based power tool manufacturer, Teknatool International, who fended off strong competition to take out the Supreme Award.
Teknatool went head to head with BioVittoria, who had won the Supreme Award in 2007, Absolute Foods and Zespri who were also finalists for the Supreme Award.
“We had a record number of applications,“ said NZCTA Chairman, Stuart Ferguson, “which doubtless reflects the recognition by New Zealand businesses that China continues to grow in importance as a global player and influencer on the World stage.”
For details on the Award Finalists click here
For details on the Award Winners click here
Groser to attend Pacific Trade Ministers’ meeting
18 June - Trade Minister Tim Groser will attend the annual Pacific Islands Forum's Trade Ministers meeting in Apia, Samoa from 17-18 June.
"This meeting is an excellent opportunity to build on the momentum for pursuing the regional trade agreement known as PACER Plus," Mr Groser said.
Provided for under the Pacific Agreement on Closer Economic Relations (PACER), PACER Plus is important for the Pacific region. New Zealand sees the agreement as a means to promote sustainable economic growth in the region by improving Pacific Island countries' export capacity, increasing jobs and providing the tools to raise standards of living.
"At a recent informal meeting of Pacific Trade Ministers in Auckland a number of Pacific Island countries expressed a determination to move forward on Pacer Plus.
"Pacific leaders at last year's Pacific Islands Forum leaders' meeting also requested negotiations on PACER Plus begin at this year's leaders meeting in Cairns in August.
"It is important Trade Ministers come to Apia with sufficient political will to meet that request. Discussions and recommendations from this Forum Trade Ministers Meeting will feed directly into the meeting Forum leaders' meeting in Cairns," Mr Groser said.
Source: www.beehive.govt.nz
Downturn may be nearing end, but recovery not assured
17 June - Households, businesses, banks and policy-makers should be thinking how they can influence recovery and ensure it is sustainable, Reserve Bank Governor Alan Bollard said today.
Dr Bollard told a Wellington business audience that activity in New Zealand was near its low point, the global economy appeared more stable and trading-partner growth forecasts had stopped falling. New Zealand's large fiscal and monetary policy stimuli had bolstered domestic activity.
"We expect the economy to begin growing again toward the end of the year, but the recovery is likely to be slow and drawn out. It could also be erratic. To many households it may not feel like a recovery at all, with lower employment, house prices and wage increases into next year."
Households and firms were adjusting, cutting back on spending to match slower income growth, less available cheap credit, and falling asset prices. "This adjustment has further to go. It will take a long time to adjust balance sheets, especially for households. While they have largely stopped building up debt, most people have less wealth than before the recession started.
"This shock has been so big the nature of the recovery is hugely uncertain, here and overseas. Potential growth rates around the OECD are likely to be lower, but just how much is unclear."
For the New Zealand recovery and subsequent expansion to be strong and long-lasting further economic rebalancing was needed. "Growth needs to be export and investment led, rather than consumption led. Household and government consumption need to be more restrained. Saving needs to increase, and the current account deficit needs to reduce.
"However, some recent financial market developments, especially the recent upward pressure on the New Zealand dollar, are working against this rebalancing. If markets are buying the New Zealand dollar on the expectation of a strong recovery they may end up being disappointed."
Given the uncertainties surrounding the recovery, it is important fiscal and monetary policy can operate effectively. "In this context, we are disappointed that banks have not passed on the April reduction in the OCR to short-term lending rates: they have an opportunity to help New Zealand's recovery by doing so," he said.
"Overall, we think the broader tightening in financial conditions seen over recent months risks undermining the recovery before it becomes self-sustaining.
"A premature rebound in household spending could jeopardise the next expansion. There is a risk people see the current stabilising of the housing market as a sign of another house price boom and a reason to borrow and spend up large again. We do not believe that would be sustainable. Investors who rely on this could get hurt. And they could make it harder for businesses to invest in the export-led recovery we need.
"The world is now being swept by influenza A H1N1 09. It looks likely this will impact the economy by hitting staffing, through sickness, childcare and precautionary behaviour. If the incidence is severe, it would delay recovery."
Source: www.rbnz.govt.nz
Chinese stimulus includes 'Buy China' policy
17 June - BEIJING: The Chinese government has added a 'Buy China' policy to its RMB 4,000 billion ($US 585 billion) economic stimulus programme, according to a report in the Financial Times.
A statement released jointly by nine government departments states that government procurement must use only Chinese products and services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.
The Chinese government also announced that it will investigate complaints from domestic businesses that local governments were favouring foreign suppliers when using stimulus funds.
Dong Tao, chief China economist for Credit Suisse told the Financial Times:
"The whole world is dying to see China spread its orders around and save their economies. But what this policy reflects is heightened anxiety about those job pressures and the potential for serious social unrest."
In February, the Chinese government expressed its concern over the 'Buy American' clause in the US economic stimulus plan.
Source: Financial Times
Doing Business Overseas – Know your customer before you ship
16 June - Who doesn’t want to sell more – win market share – enter new markets? But the problem is often not making the sale but ensuring that you get paid. Why do things sometimes go wrong in the export chain, from quotation to payment or in the worst case, no payment?
The answer is that the exporter often underestimates, or simply does not fully understand the risks involved in the transaction. Basically it is a matter of learning how to cover the trade risks in a professional manner and the ability to manage a transaction in most parts of the world.
Know your customer before the contract is signed. It is always a good idea for both buyers and sellers to know who they are doing business with before committing to a transaction. Many business deals have turned sour when either the buyer or seller finds out that their counterpart is unable or unwilling to follow through on a transaction. Exporters may be at risk even if they are using a relatively safe payment method or purchase credit risk insurance. Some well-known companies have horrifying payment histories and policies. Knowing the potential customer’s reputation and ability and willingness to perform responsibilities under the terms of the contract is simply good business.
Please click here to read the full article
Korea and NZ - complementary economies; shared opportunities
16 June - Tim Groser - keynote address at the Korea-New Zealand Business Roundtable focusing on "complementary economies, shared opportunities". He spoke about History of New Zealand-Korea relationship, Complementary Economies, Launch of FTA negotiations and New Opportunities
Please click here to read this in full.
GlobalDairyTrade event reflects lower demand and increased uncertainty
16 June - The June trading event for Fonterra’s internet-based sales platform, globalDairyTrade saw prices down across all contract periods reflecting lower demand and increased market uncertainty.
The trading manager, CRA International, advised Fonterra that the average price achieved across all products and contract periods for Whole Milk Powder (WMP) was US$1,886 per tonne FAS New Zealand Port. This was 12.0 per cent lower than for the previous trading event in May. Prices ranged from US$1,795 per tonne FAS to US$2,065 per tonne FAS.
“Today’s result indicates lower demand for the longer-term contracts, and confirms our view that international dairy markets will remain weak until consumer demand improves,” said Kelvin Wickham, Managing Director of Fonterra GlobalTrade.
“We need a sustained pick-up in customer and consumer demand to see any meaningful recovery in prices and that is not occurring as fast as we would like. And there’s increased uncertainty in the market because of the recent announcement of US subsidies and talk of European retaliation.”
The next globalDairyTrade trading event will be held on 1 July 2009.
See www.globaldairytrade.info for more details.
Sri Lanka Economic Summit 2009
12 June - Dawning of a new Era...
Opportunities & Challenges
The Sri Lanka Economic Summit 2009 will explore in depth the
various strategies available to address current challenges in Sri Lanka and
to make effective use of the new opportunities that would
accelerate the economic and social development of the
country.
Learn more about the future
economic prospects from overseas experts who will join hands with senior Government
officials, public representatives and private sector leaders of
Sri Lanka to discuss
the
global economic environment and the
emerging prospects for the country.
Registration closes on Thursday, 25th June.
Please click here to read more and to download the registration form.
OCR unchanged at 2.5 percent
12 June - The Official Cash Rate (OCR) will remain unchanged at 2.50 percent.
Reserve Bank Governor Alan Bollard said: "The economic outlook remains weak both in New Zealand and in other countries. However, there are signs that international economic activity is stabilising, and international financial conditions are improving. We expect the New Zealand economy to begin growing again toward the end of this year but the recovery is likely to be slow and fragile. Many key economic indicators such as unemployment are projected to keep deteriorating well into 2010.
"There remain some material downside risks to activity and inflation, but for the first time in some months we can also identify some clear upside opportunities for activity. One such area is a potential rebound in household spending and residential investment as a result of the rise in net immigration and the pick-up in the housing market. Ultimately, however, we do not think such a rebound in spending would prove sustainable given the soft outlook for employment, wages and farm incomes and high levels of household debt.
"On balance, the risks to activity remain weighted to the downside.
"The recent rise in the New Zealand dollar creates an unhelpful tension with our projections. A stronger dollar at a time of weak global growth risks delaying or even reversing the projected increase in exports, putting the sustainability of recovery at risk.
"Overall, recent developments point to lower inflationary pressure than previously projected. Annual CPI inflation is likely to fall temporarily below the bottom of the target band later this year, but we expect it to return to inside the band by early 2010 and remain comfortably there over the remainder of the projection.
"We have cut the OCR by a large amount over the year. We expect the effects to pass through to more borrowers over coming quarters as existing fixed-rate mortgages come up for re-pricing. Although rising longer-term interest rates overseas are placing upward pressure on longer-term lending rates here, there is room for further reductions in shorter-term lending rates.
"The low OCR and stimulatory fiscal policy are the main sources of support to the New Zealand economy at present. It is likely to be some time before the recovery becomes self-sustaining and monetary policy support can be withdrawn.
"We therefore consider it appropriate to continue to provide substantial monetary policy stimulus to the economy. The OCR could still move modestly lower over the coming quarters. As we said at the time of the April OCR decision, we expect to keep the OCR at or below the current level through until the latter part of 2010."
Trade and Economic Reform delivers $3900 a year for Australian families
2 June - A new comprehensive study has measured the sweeping benefits of broad trade liberalisation for Australian households.
The study found that trade liberalisation over the past 20 years benefited the average working family by up to $3900 a year.
The study shows Australia’s GDP has been boosted by between 2.5 per cent and 3.5 per cent over the past two decades as a result of trade liberalisation.
This translates to an extra $2700 to $3900 in real income each year for the average Australian family.
Launching the publication “Benefits of Trade and Trade Liberalisation”, Trade Minister Simon Crean said the report sent a strong message in the midst of the recession.
“This study shows trade liberalisation and has boosted real household income by up to $3900 a year.
“That’s extra spending money for every family and shows how trade improves living standards and welfare of our community.
“This study confirms that more than one in five Australian jobs - or almost 2.5 million positions - are trade-related.
“This study shows the concrete benefit of trade liberalisation and is a strong reminder that Australia needs to remain engaged with the world - not retreat from it - in the face of the global recession.
“That’s why the Government is committed to an active program of trade liberalisation to open up markets for the benefit of Australian companies, workers and families.
“There are opportunities for Australian companies to grab market share as well as position themselves for the global economic recovery,” he said.
Mr Crean said the study was further evidence that resorting to protectionism was the wrong way to go.
“Protectionism would hurt Australian households and Australian jobs.
“That is why the Australian Government has protested so strongly against the United States’ Buy American campaign and the reintroduction of dairy export subsidies by the European Union which led to the retaliatory action by the United States.
“Engaging in this downward spiral of tit-for-tat protectionism will reduce Australian living standards and cost jobs.
“We are determined to fight protectionism at home and abroad,” Mr Crean said.
The study by the Centre for International Economics (CIE) showed Australians were, on average, wealthier and had higher skilled jobs thanks to trade liberalisation and economic reforms undertaken between 1988 and 2008.
It showed the increase in Australia’s GDP and real income relative to where it would have been if there had no trade liberalisation.
The study analysed Australia’s manufacturing sector and found average real wages in manufacturing were $3000 higher due to a shift to more highly skilled jobs. Overall, it concluded that lower levels of industry assistance have produced “a more dynamic manufacturing sector”.
www.trademinister.gov.au
Groser welcomes success in NZ – Malaysia trade talks
2 June - Trade Minister Tim Groser today welcomed news from Kuala Lumpur, Malaysia that negotiations for the New Zealand - Malaysia Free Trade Agreement (FTA) have been successfully concluded.
"This FTA is great news for New Zealand. Our negotiators have secured a high quality, comprehensive FTA that provides commercially meaningful benefits to New Zealand businesses.
"Malaysia is our seventh largest trading partner - last year we exported nearly a billion dollars worth of goods to Malaysia with two-way trade worth nearly three billion. Goods exports alone have grown 34 per cent a year since 2005.
"Improved market access and greater certainty for New Zealand goods and services exporters and investors are just some of the benefits achieved. These benefits are over and above those already secured under the recently signed ASEAN - Australia - New Zealand Free Trade Area (AANZFTA) Agreement.
"It is an important signal that in the midst of the global financial crisis and the creeping tendency towards protectionism internationally, Malaysia and New Zealand have reaffirmed our commitment to trade liberalisation. This will help boost exports, and increase job opportunities and growth in both our countries.
"But our interests are much broader than trade. New Zealand and Malaysia have strong links, particularly in education and defence. We work closely together in the region and in the Commonwealth. The FTA will be a new and exciting development," said Mr Groser.
As with the China FTA and, more recently, AANZFTA which was concluded in August last year, both Malaysia and New Zealand will now be undertaking legal and technical verification of the texts and the associated schedules.
Once this has been completed, domestic approval processes also need to take place before a finalised document can be put forward for signature. Upon signature, full details of the FTA will be made publicly available.
Both sides remain confident that these processes are on track for the signing of this comprehensive, high-quality, and balanced agreement this year.
Source: www.beehive.govt.nz
The APEC CEO Summit Singapore 2009
2 June - The APEC CEO Summit Singapore 2009
is the premier business event
for the Asia Pacific The theme of the APEC CEO Summit is “Rebuilding the Global
Economy: Crisis and Opportunity”. Outstanding and influential APEC
Leaders, business figures and thought leaders will discuss and
debate some of the most pertinent socio-economic and business
issues facing the Asia-Pacific region today.Rebuilding the Global Economy: Crisis and Opportunity.
Please click here to download the pdf brochure explaining more about the summit and timing of events.
May
Media Release - Fonterra sets opening forecast for 2009/10 season
27 May - Fonterra sets opening forecast for 2009/10 season at $4.55 per kgms fair value share price set at $4.52
Fonterra Co-operative Group announced today an opening forecast payout for the 2009/10 season of $4.55
per kilogram of milksolids (kgMS) – reflecting low international dairy commodity prices and an assumed
exchange rate of around US59 cents to the New Zealand dollar.
Download the full release
Romanian Business Bulletin May 2009
27 May - To view the May 2009 edition of the Romanian Business Bulletin please click here
The International Trade Centre calls on Asian nations to work more closely together
27 May - The dramatic contraction in regional trade caused by the global financial crisis has made regional collaboration and integration on trade more important than ever, the International Trade Centre (ITC) head said today.
Please click here to view the full release
Trade Minister disappointed with US export subsidies
25 May - Trade Minister Tim Groser today expressed his disappointment at the US Administration's decision on 22 May, to reintroduce export subsidies on dairy products.
"Dairy farmers the world over are under pressure, but this is a short-sighted response when the international dairy market has recently been showing signs of stabilising. The decision is a setback, and will be damaging to world markets.
"Export subsidy assistance will have a relatively small effect on income for US dairy farmers, and may even prove counterproductive by creating uncertainty and depressing international dairy market prices. Unsubsidised producers, like those from New Zealand, will bear the cost of these trade-distorting measures.
"I am disappointed that the United States should have followed the poor example set by the European Union when it reintroduced export subsidies in January.
"While the US and the EU may consider they are both acting within their current WTO commitments, this sends a very negative signal to other WTO members.
"Whether these measures are legal or not, misses the point. As the world trading system struggles to counter its greatest downturn in decades, there is enormous scope for increased protectionist measures, even ones which may be WTO consistent.
"In the current international economic environment the EU and the United States, are hardly setting a good example.
"The long term solution is clear: we need to complete the WTO Doha Round in order to secure the elimination of agricultural export subsidies. In the meantime, restraint is needed, not a resumption of retaliatory subsidisation.
"The United States and the EU could still fix this. I hope to meet with US Trade Representative, Ron Kirk, and US Secretary of Agriculture, Tom Vilsack, at the Cairns Group Ministerial meeting in Bali in early June to discuss this, and wider trade issues," said Mr Groser.
Tourism Workshop
20 May - The Embassy of Argentina in New Zealand and the National Institute of Tourism Promotion (INPROTUR) are hosting a tourism workshop in Auckland on Friday June 5th. For more information click here
Lower dollar drives up capital goods prices
19 May - The Capital Goods Price Index (CGPI) rose 1.2 percent in the March 2009 quarter, Statistics New Zealand said today. The most significant upward contribution came from the plant, machinery and equipment index (up 2.7 percent). This rise was mainly due to the depreciation of the New Zealand dollar. In the year to the March 2009 quarter, the plant, machinery and equipment index rose 9.0 percent.
The second largest upward contribution to the CGPI this quarter was from the transport equipment index, which rose 3.8 percent. This rise was also mainly driven by the depreciation of the New Zealand dollar.
In the March 2009 quarter, falls were recorded in the non-residential buildings index (down 0.4 percent) and the residential buildings index (down 0.1 percent). The fall in the non-residential buildings index, which was the main offsetting contribution to the CGPI this quarter, follows a 0.2 percent fall in the December 2008 quarter. This quarter's downward movement was driven by a decrease in labour costs for the construction of shops and offices; and warehouses and factories.
On an annual basis, the CGPI rose 4.9 percent in the year to the March 2009 quarter. This rise is the largest annual movement since the series began in the December 1989 quarter, following rises of 2.5 percent and 3.6 percent in the years to the March 2008 and the March 2007 quarters, respectively.
Source: www.stats.govt.nz
Statement by European Commissioner Louis Michel
on Fiji
18 May - The European Commission has taken the decision to cancel the 2009 sugar allocation for Fiji in the absence of any indications that a legitimate government will be in place in 2009.
Fiji's allocation for sugar reform accompanying measures for 2009 totalled EUR 24 million. The Commission would have made this financing available to Fiji subject to a legitimate government being in place in accordance with EU Council decision of 1 October 2007.
European Commissioner for Development and Humanitarian Aid, Louis Michel said: "I encourage the Government of Fiji to fulfil its commitments to the EU so that we are able to reinstate sugar reform payments in the future."
Groser to meet US Trade Representative in Washington
14 May - Minister of Trade and Associate Minister for Climate Change Issues, Tim Groser, will meet with members of the new US Administration including US Trade Representative, Ron Kirk, and the US Special Envoy for Climate Change, Todd Stern, when he travels to Washington from May 12-15.
"US leadership is critical to moving the WTO Doha trade negotiations forward. I was delighted by USTR Kirk's recent statement of commitment to concluding the round and look forward to discussing specifics when we meet," Mr Groser said.
"I will also be engaging senior US figures on their approach to the Trans-Pacific Partnership (TPP) - an innovative FTA proposal involving eight countries, including the United States and New Zealand. The TPP would be a platform for a wider trade agreement in the Asia-Pacific region. New Zealand is a strong proponent.
"I'm also looking forward to engaging with my counterparts on climate change issues. The US has a fundamentally important role to play as the international community grapples with how best to address climate change.
"New Zealand welcomes the strong leadership the new Administration has shown. We look forward to working with the US in this endeavour, as we do on so many international issues."
Graeme Harrison, Chairman of the International Business Forum is accompanying Mr Groser on his programme in Washington.
Source: www.beehive.govt.nz
Global financial crisis still affecting NZ, says RBNZ
13 May - "Despite the recent pick-up in world equity markets, New Zealand continues to be impacted by the global financial crisis," Deputy Governor, Grant Spencer, said today when releasing the Reserve Bank's May 2009 Financial Stability Report.
"Major government interventions have eased stresses in the international credit markets, but the adverse second-round effects of the financial crisis on global economic activity and commodity prices will take some time to play out," he said.
"These global pressures are encouraging a recovery in household savings which should contribute to an improvement in New Zealand's external balance over the next few years. Recent monetary and fiscal policy measures will help to ensure that the adjustment to more sustainable debt levels is an orderly one.
"The banking system has continued to lend to households and businesses over the past year, but credit growth has slowed in recent months, lending criteria have tightened and some businesses are reporting difficulties in obtaining credit. While current conditions warrant caution, it is important that the banks continue to lend to creditworthy borrowers."
Mr Spencer said New Zealand has been fortunate that its banking system has not experienced the distress seen in some countries. However, while the overall asset quality of the banks remains strong, impaired assets have increased sharply since late last year.
"Provisioning is expected to rise further over the year ahead as business profits weaken and unemployment rises. Banks must ensure that they make adequate provisions and maintain capital levels sufficient to absorb further unexpected losses."
As discussed in earlier Financial Stability Reports, New Zealand banks remain vulnerable to external financial shocks as a result of their dependence on offshore borrowing. Conditions in the funding markets had improved since late 2008 and one bank had issued offshore term debt using the Government's wholesale guarantee. Mr Spencer said banks need to lengthen the maturity structure of their funding to reduce their vulnerability to offshore market disruptions. The Reserve Bank's new prudential liquidity policy, to be released around the end of May, will help to reinforce this objective.
Lending by the non-bank sector is continuing to contract, despite the easing of liquidity pressures as a result of the Government's Deposit Guarantee Scheme. Asset quality has continued to deteriorate as a result of the economic downturn and the weak property market in particular. In the medium term, higher standards across the non-bank sector are likely to be reinforced by the new prudential regime, which the Reserve Bank is currently implementing.
Assessing and countering potential threats to financial stability in New Zealand will remain a high priority for the Reserve Bank while the effects of the global crisis persist, Mr Spencer said.
Source: www.rbnz.govt.nz
ABAC role a natural fit for International Business Forum
8 May - The New Zealand International Business Forum (NZIBF) is delighted to have been invited by the Government to assume responsibility for providing policy advice to the three New Zealand members of the APEC Business Advisory Council (ABAC).
NZIBF Chairman Graeme Harrison said the ABAC role was a natural fit for NZIBF.
“ABAC is an influential grouping of business leaders and plays an important role in improving the environment for trade and investment in the Asia Pacific region. NZIBF brings together New Zealand’s major export sectors and leading business organisations. With its existing projects and extensive policy expertise and networks is well placed to assist New Zealand’s ABAC members make a strong contribution to ABAC’s trade and business agenda.”
Mr Harrison said that NZIBF strongly supported APEC’s vision of free trade in the region.
“The Asia Pacific region contains most of New Zealand’s largest trading partners. Keeping markets open, increasing trade and investment and reducing the costs of doing business will help the regional economy emerge more quickly from current economic crisis. New Zealand has a big stake in the success of APEC”.
Mr Harrison said the NZIBF’s Executive Director Stephen Jacobi would fulfil the role of Senior Policy Adviser to ABAC concurrently with his other responsibilities. He takes over from Brian Lynch who is retiring, having worked with ABAC for the past five years.
The second ABAC meeting for 2009 takes place next week in Brunei (12-15 May).
For further information
Graeme Harrison, Chairman, cell 0275 737 521
Stephen Jacobi, Executive Director, cell 0294 725 502
Trade talks with Hong Kong resume
7 May - Trade Minister Tim Groser today welcomed the resumption of trade talks with Hong Kong which are taking place in Wellington this week, saying he was hopeful negotiators would be able to take positive steps forward.
"Resumption of negotiations towards a Closer Economic Partnership (CEP) with Hong Kong enables us to look at taking relations to a new level and will provide a valuable platform to stimulate growth in our trading relationship.
"Prime Minister John Key's recent meeting at the Boao Forum with Hong Kong Chief Executive Donald Tsang, has highlighted the strength of the relationship. Prime Minister Key reinforced our commitment to raising the profile of New Zealand business in Hong Kong and capitalising on new opportunities," Mr Groser said.
New Zealand and Hong Kong originally commenced CEP negotiations in 2001 but, after five rounds of talks, the negotiations were suspended in 2002. With the conclusion of the New Zealand - China Free Trade Agreement, the way has been cleared to resume discussions.
"Hong Kong is a very important partner for New Zealand - both commercially and strategically as a key services and investment hub for the North Asia region. Hong Kong is the world's 12th largest trading economy. It is also the second largest source of Foreign Direct Investment (FDI) in Asia.
"More secure and open access to the Hong Kong market will place New Zealand in a good strategic position to capitalise on new trade and investment opportunities in this region, including into China.
"At this critical phase in world financial events, re-engaging with Hong Kong in these trade talks sends out a very positive signal to the region and underlines the value that both parties attach to genuine liberalisation. Our message to the global economy is that New Zealand remains open for business," Mr Groser said.
Source: www.beehive.govt.nz
New Zealand Cabinet approves entry into negotiations on FTA with India
5 May - The New Zealand Cabinet has approved entry into negotiations on a Free Trade Agreement with India. Launch of negotiations is still subject to the approval of the Indian government, which will be sought after Indian elections are complete.
In anticipation of proceeding to FTA negotiations, the Ministry of Foreign Affairs and Trade is currently preparing by inviting submissions and public comment on a proposed FTA.
The call for submissions and the on-line submission form can be accessed at www.mfat.govt.nz/Media-and-publications/Features/900-India-NZ-Free-Trade-Agreement.php where you can also access the report of the NZ-India Joint Study Group, which provides useful background information.
If possible, we would appreciate receiving submissions by Friday 29 May.
For any questions or further information, please do not hesitate to contact Joanne Dow, Business Policy Coordinator, Trade Policy Liaison Unit, and India FTA Coordinator, Free Trade Unit, at DDI: 04 439 8625 or by e-mail: Joanne.Dow@mfat.govt.nz
April
OCR reduced to 2.5 percent
30 April - The Reserve Bank today reduced the Official Cash Rate (OCR) by 50 basis points to 2.5 percent.
Reserve Bank Governor Alan Bollard said: "Overall, developments since March point to lower medium-term inflation than previously projected. The main factors behind this are weaker global growth, and an unwarranted tightening in financial conditions via both higher long-term interest rates and a stronger exchange rate than expected.
"Global financial markets have showed some tentative signs of stabilisation since the March Monetary Policy Statement and governments in the major economies are continuing to make progress in resolving their banking system difficulties. However, a large amount still needs to be done and sentiment remains fragile. Negative feedback from the global recession could also still adversely affect financial institutions.
"The world economy deteriorated further than expected in the first quarter of 2009. While monetary and fiscal policy responses in many countries have been substantial and there are some signs of stabilisation in some countries, we still expect the adverse economic forces generated by the crisis to remain dominant throughout 2009. The timing and extent of global recovery remain highly uncertain.
"While the New Zealand economy has not experienced the same extreme falls in economic activity as seen in a number of our trading partners, it remains weak. Business sentiment is low, investment has been curtailed and employment reduced.
"We expect the large decline in the OCR over the past year to pass through to more borrowers over coming quarters as existing fixed-rate mortgages come up for re-pricing. This, together with the stimulus from fiscal policy, will act to support the New Zealand economy and eventually see activity trough and pick up thereafter. However, the scale of the global financial crisis and domestic adjustments underway are such that it is likely to be some time before economic activity returns to robust and healthy levels.
"We consider it appropriate to provide further policy stimulus to the economy. We expect to keep the OCR at or below the current level through until the latter part of 2010. The OCR could still move modestly lower over the coming quarters."
Fonterra increases payout forecast for 2008/09 season by 10 cents to $5.20
29 April - Fonterra Co-operative Group has announced a revised forecast payout for the 2008/09 season of $5.20 per kilogram of milksolids (kgMS). This is a 10 cent increase from the previous forecast in January.
The $5.20 per kgMS forecast comprises a Milk Price of $4.75 per kgMS, up 10 cents, and an unchanged Value Return forecast of 45 cents per kgMS. The advance rate to farmers will be increased by 10c from the June payment.
Fonterra Chairman, Henry van der Heyden, said the move reflected the Board’s desire to do what it could to assist farmer-shareholders during a very difficult year of sharply lower commodity prices. Normally, Fonterra only announces a revision when the forecast payout moves by at least 30 cents from the previous forecast, but the Board wanted to share the news of the higher payout forecast with farmers as soon as possible.
“Although international dairy markets remain uncertain and volatile, some encouraging signs of more stability have been emerging in recent months. Powder prices on our globalDairyTrade platform have increased and our global sales team has made good progress in selling product at these improved prices. As a result, we now have the cautious optimism necessary to signal a modest but welcome increase in payout.”
Fonterra management was working hard to extract further returns from the business in an effort to increase the payout further, but Mr van der Heyden said farmers should expect some level of retentions if the amount available for payout exceeds $5.20.
“We need to tread a fine line between maximising payout to our farmers and strengthening the Co-op’s balance sheet in these uncertain and challenging financial times. We have decided to put an extra 10 cents per kgMS in the pockets of farmers as soon as we can, while at the same time noting that retentions will be considered if the eventual payout is higher.”
Source: www.fonterra.com
Thirty-five countries agree to co-ordinate export credit support
27 April - Thirty-five countries have agreed to co-ordinate export credit support to help boost international trade and investment during the economic crisis. The OECD will host regular meetings to exchange information and monitor progress.
In a statement issued following a meeting of the OECD’s Working Party on Export Credits on 23 April 2009, these governments welcomed the commitment by the G20 nations to provide at least $250 billion over the next two years to support trade finance through export credit and investment agencies. The governments of Brazil, China, Estonia, Indonesia, Israel, Romania and Slovenia which are not members of the OECD also signed the statement. Other countries may join the agreement at a later stage.
The Secretary-General, Mr. Angel Gurría, celebrated the fact that the Council of the OECD unanimously welcomed the agreement and expressed his satisfaction that the OECD is supporting the G20 effort in this area. The OECD will provide a forum to exchange information among the participating governments and institutions on implementing the G20 trade finance initiative as well as on developments in official export credits for capital goods and large infrastructure projects.
The statement was also signed by a number of international organisations - the WTO, IMF, World Bank, Multilateral Investment Guarantee Agency and IFC.
Trade finance and export credits have dried up in some markets due to the global financial crisis. The absence or excessive cost of export financing has become one of the identified obstacles to the recovery of trade flows.
For further information about OECD work on export credits read the statement or visit www.oecd.org/trade/xcred
Experts from around the world meet to finalise model contracts for trade deals
24 April - Business lawyers from around the world and experts at the International Trade Centre (ITC) met last week to finalize model contracts for trade deals that can be used free of charge by small firms in developing countries.
Please click here to view the full release
Taiwan's venture capitalists learn about New Zealand
22 April - TAIPEI: On 31 March 2009, New Zealand Trade & Enterprise organised a New Zealand investment briefing for selected biotech venture capital companies in Taiwan.
The briefing gave the companies a general overview of the New Zealand investment environment and the biotechnology industry, and was supported by Investment New Zealand in Hong Kong and Auckland.
The participating Taiwanese companies were Taiwan Global Biofund/YFY Biotech, Boston Life Science/IBT Management and TSC BioVenture
The Greater China Investment Manager, Heidi Chan, flew in from Hong Kong to delivery an overview of the investment environment and biotech industry in New Zealand.
A number of case studies were used to attract the interest of the Taiwanese audiences.
The Investment Manager Biotechnology, Michelle Sullivan, and Business Development Consultant, Angela Traill, dialled in from Auckland through video conferencing to take questions from the Taiwanese companies.
This briefing follows on from the New Zealand Taiwan Clinical Trial & Research Videoconference in December 2008.
The focus of this event was on clinical trial and research opportunities in Taiwan for New Zealand biotechnology companies. Three biotechnology companies took the opportunity offered by New Zealand Trade and Enterprise to make presentations on their product research and development.
Their audiences in Taipei, Taiwan included key venture capital companies and clinical trial research service providers.
www.nzte.govt.nz
Draft Insurance Bill released for consultation
21 April - The Reserve Bank today announced the release of a draft Insurance (Prudential Supervision) Bill for stakeholder consultation.
The draft Bill reflects policy approvals provided by Cabinet in December
2007 and August 2008, and is being released for consultation with an
expectation that respondents will focus on legal, drafting and
operational issues.
Responses on matters of policy, other than those detailed in the
explanatory note on the Bank's website, are not sought in this
consultation.
The draft Bill can be accessed on the Reserve Bank's website
(www.rbnz.govt.nz).
Stakeholder comments in response to this draft Bill and the additional explanatory note are sought from stakeholders by no later than 22 June 2009.
Following receipt of submissions to this consultation, the Reserve Bank will finalise the Insurance (Prudential Supervision) Bill for introduction to Parliament later in 2009.
You can view the explanatory note and the draft Bill by following this link.
Source: www.rbnz.govt.nz
New Zealand Tourism Strategy 2015 Implementation Plan
21 April - To read the ‘New Zealand Tourism Strategy 2015 Implementation Plan’ please click here.
ICT industry continues to grow
21 April - Total sales of goods and services from New Zealand's information and communication technology (ICT) industry increased 3 percent to $19.3 billion in the 2008 financial year, Statistics New Zealand said today. This was similar to the growth rate in sales of ICT goods and services reported the previous year.
The top two commodities for ICT sales were telecommunication and program distribution services with $5,875 million and computer and related equipment with $3,465 million.
Domestic sales of ICT goods and services increased 4 percent to $17.9 billion in 2008. Export sales of ICT goods and services decreased 8 percent to $1.4 billion. The ICT commodity with the largest export sales was electronic components with $281 million.
The survey asked businesses in the ICT industry about barriers to their business growth. The most commonly reported barrier was strength of competition, reported by 29 percent of businesses in 2008. Strength of competition was also the most commonly reported barrier in 2007.
Source: www.stats.govt.nz
Statement by Commissioner Louis Michel on situation in Fiji
17 April - Louis Michel, the European Commissioner for Development Cooperation and Humanitarian Aid, expressed deep regret and disappointment regarding recent regressive developments in Fiji; in particular the abrogation of the Constitution, the sacking of all judges, the delay of general elections until 2014 and the curtailment of freedom of speech.
The Commissioner was particularly disappointed, since the interim Government had agreed with the European Union on a plan which would have restored political order and democracy to Fiji and at the same time would have allowed the EU to provide substantial financial support to rescue the sugar sector and help restore the economy.
Commissioner Michel called on the interim Government to reconsider these decisions and to honour its commitments to the international community and ultimately the people of Fiji.
Commissioner Michel said: "These developments are unacceptable for the international community. Commitments must be respected. An early and inclusive domestic political process leading to a return to constitutional order and democracy in Fiji will allow us to provide assistance to Fiji, at a time when global economic prospects are becoming increasingly difficult."
Group of 20 vow to get trade moving again
14 April - Last week in London, the Group of 20 vowed to get trade moving again. This week in Lusaka, Africans have the opportunity to put this into practice, and help small businesses become regional and global players in trade.
Three of Africa's main regional economic communities, backed by donors, are launching an initiative to reduce bottlenecks and improve the main trading routes across eight African countries. The High-Level North-South Corridor Aid for Trade Meeting brings together leaders of African countries, international agencies, regional development banks and donor countries today and tomorrow in Lusaka.
Please click here for more information
ITC and The Netherlands' Centre for the Promotion of Imports sign Partnership Agreement
14 April - The International Trade Centre (ITC) and The Netherlands' Centre for the Promotion of Imports from developing countries (CBI) have signed a four-year Partnership Agreement to work together in a range of developing countries to help local companies establish a strong foothold in global markets building on effective Trade Support Institutions.
Click here for further information
Australia records second highest trade surplus on record
14 April - Australia recorded a trade surplus of A$2.1 billion in February, the second highest on record and the seventh consecutive trade surplus.
The trade surplus increased by A$1.2 billion in February, largely as a result of a A$1 billion increase in exports.
Cereals exports rose 12 per cent and meat exports rose 10 per cent.
The resources sector showed mixed results, with total resources exports up by less than one per cent in seasonally adjusted terms. Exports of metal ores and minerals rose by 3 per cent, while coal exports were flat. Exports of gold were up A$784 million in original terms.
Imports fell A$134 million (1 per cent) in February, with strong rises in capital goods imports (up 7 per cent) and other goods (largely gold) more than offset by a 13 per cent fall in imports of consumption goods and a 5 per cent fall in imports of intermediate goods.
Source: Chamber of Commerce and Industry of Western Australia
Guest nights down in February
9 April - Total guest nights in short-term commercial accommodation in February 2009 were 8 percent lower than in February 2008, Statistics New Zealand said today. The 2008 calendar year was a leap year, with the extra day in February 2008 falling on a Friday.
All 12 regions had fewer guest nights, with Otago, Auckland, and Bay of Plenty showing the largest decreases. Eleven regions had fewer international guest nights, and nine regions had fewer domestic guest nights.
Guest nights decreased in all five accommodation types in February 2009 compared with February 2008. Motels and hotels had the largest decreases.
International guest nights were down 13 percent and domestic guest nights were down 2 percent.
The February 2009 occupancy rate of 62 percent, excluding caravan parks/camping grounds, was the lowest for a February month since February 1999.
Source: stats.govt.nz
WTO praises EU's stance on multilateral trade and support for developing countries
9 April - Press release from the European Commission - In its 9th review of the European Union's trade policy, the World Trade Organisation has praised the EU for its instrumental role in strengthening the multilateral trading system and its leadership in the Doha Round of world trade talks. The WTO report highlights the EU's efforts to help integrate developing countries into the international trading system. The report recognises the progress made over the last two years in consolidating EU's Internal Market, and notes the benefits of EU's reformed Common Agricultural Policy. The WTO meeting takes place in Geneva on 6 and 8 April 2009.
EU Trade Commissioner Catherine Ashton said: "The European Union will continue to show leadership on global trade and stand firm against protectionism. We need this commitment more than ever to promote trade and overcome the economic downturn. We are committed to multilateralism, to transparency, and to open markets based on rules that benefit developed and developing countries alike. "
The WTO acknowledged some key features of the EU's trade policy over the past two years:
- The EU has been a major driving force in the Doha negotiations and in the process of integrating developing countries into the multilateral trading system. These efforts include for example, negotiations for Economic Partnership Agreements with the ACP countries, the implementation of the reformed EU's Generalised System of Preferences (GSP) for developing countries, and the fact that the EU is the major sponsor of trade-related technical assistance within the Aid for Trade framework.
- The EU has consistently argued that a swift, ambitious and balanced Doha Round outcome is the best way to prevent trade protectionism and boost the economy in the current economic downturn.
- The EU is committed to keeping markets open and to fighting protectionism. The EU strongly supports the WTO initiative to report on trade related developments during the economic and financial crisis. It has actively contributed to this report, which aims at strengthening transparency in the WTO.
- Progress has been made in the liberalisation of the EU's internal market for services. Reforms of telecommunications and postal services stand out as significant achievements.
- The EU has made significant progress in implementing the reforms of the EU's Common Agriculture Policy. The WTO recommends pursuing this path further. The comprehensive agricultural offer made by the EU in the Doha Development Agenda negotiations would slash trade-distorting farm subsidies, eliminate all export subsidies and significantly cut its agricultural tariffs.
- The EU's preferential trade agreements are designed to complement the WTO system as they substantially liberalize trade in goods and services between the countries party to the agreement.
APEC Business Advisory Council ‘Logistics Issues in ABAC Economies’ survey
8 April - ABAC is currently gathering some feedback on regulatory-related matters related to logistics in the different ABAC economies.
The results from the survey will be placed alongside work by other organisations on logistics and will be used to assist the development of a 'best practice' model which we see as one element in addressing safety and operational excellence within supply chain logistics.
The survey is being conducted by GA Research, which is an independent research company and a member of the Association of Market and Social Research Organisations (AMSRO).
To complete the short survey, please click here.
New Zealand China News Agency - discussion meeting on trade with China
7 April - The New Zealand China News Agency is organizing a discussion meeting on trade with China on 14th April 2009, at 155 Meeting Room, Queen Street, Auckland CBD.
Please click here for details
Official communiqué issued at the close of the G20 London Summit
7 April - To read the official communiqué issued at the close of the G20 London Summit titled ‘Global plan for recovery and reform’, please click here
Source: www.wto.org
Ministry of Foreign Affairs and Trade - Business Link April/May edition
3 April - To view the Ministry of Foreign Affairs and Trade’s April/May edition of Business Link please click here
ICC welcomes G20 boost to trade finance and pledge to conclude Doha Round
3 April - To read a post G-20 media release by the International Chambers of Commerce titled ‘ICC welcomes G20 boost to trade finance and pledge to conclude Doha Round’ please click here
Government delivers April 1 tax cuts, SME changes
2 April - New Zealand households will get a billion-dollar-a-year boost from tax cuts which take effect this week, Finance Minister Bill English and Revenue Minister Peter Dunne said today.
The personal tax cuts, which take effect from Wednesday, will boost the income of a worker on the average wage of $48,500 by $18 a week. A range of initiatives making it simpler and less expensive for small and medium sized businesses to pay tax also take effect from this date.
"These changes form a central part of the Government's Jobs and Growth plan and will provide a shot in the arm for our economy at a vital time," Mr English said.
About 1.5 million workers will receive a personal tax cut, injecting an extra $1 billion into the economy in the coming year. The business initiatives are worth $484 million over four years.
"The tax cuts we have delivered will stimulate the economy in the short term by putting cash in people's pockets, and in the longer term by encouraging people to invest in their own skills to earn and keep more money. They are an important step towards the government's medium-term goal of delivering a tax system that rewards effort and provides better incentives to get ahead."
Mr Dunne said the personal tax cuts took New Zealand one step closer to a 30/30/30 percent alignment of the top personal, company and trustee tax rates.
"That is something I have long advocated and I'm pleased it is now a medium term government priority. In regard to small and medium-sized businesses, the tax assistance initiatives will make it easier for them to manage their cash flows and meet their tax obligations during tough economic times," Mr Dunne said.
For earners the changes mean tax rate cuts and threshold changes, as well as a new Independent Earner Tax Credit, which will give an extra $10 a week to those earning between $24,000 and $44,000 a year who do not receive a benefit, Working for Families tax credits or New Zealand Superannuation.
"This provides tax relief to a group of hard-working low and middle-income earners who received very little from the previous government," Mr English said.
The Ministers said nearly every business would benefit in some way from the tax assistance initiatives, which allow companies to keep their money longer, reduce the interest they pay on underpaid tax and cut compliance costs.
From April 1 members of KiwiSaver will also get cash relief, with the minimum level of contributions dropping from 4 percent of their pay to 2 percent. The employer tax credit and $40-a-year member fee subsidy will also cease.
The attached table shows how much the tax cuts deliver from April 1. These savings are in addition to the 1 October 2008 tax cuts. A factsheet outlining the specific changes is also attached.
April 1 personal tax changes
- The threshold where the 33c in the dollar personal tax rate begins rises from annual income of $40,000 to $48,000.
- A new Independent Earner Tax Credit will return $10 a week to people earning between $24,000 and $44,000 who do not receive a benefit, Working for Families tax credits, or New Zealand
- Superannuation.The IETC will be abated at 13c for every dollar earned over $44,000.
- The rate of tax paid in the top personal income bracket, which starts at $70,000, reduces from 39c in the dollar to 38c.
April 1 SME initiatives include
- Removing the 5 percent “uplift” rate that businesses pay in advance on provisional tax instalments throughout the year.
- The GST payments threshold will increase to $2 million in annual revenue from $1.3 million.
- The GST registration threshold will increase to $60,000 in annual revenue from $40,000.
- The GST six-monthly return filing threshold will be raised from $250,000 to $500,000.
- Businesses with $10,000 or less of annual business-related legal expenditure can fully deduct the expense in the year it is incurred, regardless of whether or not it is a capital expense.
- The PAYE once-a-month filing and payment threshold will be raised to $500,000 in employer PAYE deductions from $100,000.
- The Fringe Benefit Tax annual filing threshold will be raised to $500,000 in employer PAYE deductions from $100,000.
- The value of minor fringe benefits (such as chocolates and flowers) that can be provided to employees without attracting FBT will increase to $300 a quarter per employee up from $200, and $22,500 a year per employer from $15,000.
- The provisional tax "use of money" safe harbour threshold will be raised from $35,000 to $50,000.
- Another part of the package - reducing the “use of money” interest rates on underpaid and overpaid tax from 14.24% to 9.73% and 6.66% to 4.23% respectively took effect on March 1.
KiwiSaver changes
- The minimum level of employee contributions will drop from 4 percent of pay to 2 percent.
- The member fee subsidy of $40 a year will cease.
- The minimum level of employer contributions will stay at 2 percent. The tax-free threshold will also stay at this level.
- The employer tax credit will cease.
Source: www.beehive.govt.nz
Agreement Between Chile and United States Allows Resumption of Beef Shipments to Chile
2 April - U.S. Beef Exports had Doubled in 2008 Prior to September 2008 Shipment Cut Off
WASHINGTON, D.C. – Today United States Trade Representative Ron Kirk announced an agreement between the United States and Chile that will allow the resumption of American beef shipments to Chile. American shipments of beef had been halted since September 2008 pending clarification of a provision of the U.S.–Chile FTA regarding the certification of beef grade labeling.
Today USTR and Chilean officials concluded the agreement with an exchange of letters clarifying the applicable FTA provision. As a result of this clarification the shipment of American beef will resume immediately.
“During these difficult economic times, it is crucial that we unlock every opportunity for robust trade,” said Ambassador Ron Kirk. “This agreement will allow our country to resume a healthy export relationship that has nearly doubled in the past year. That is a victory for America’s ranchers, the U.S. beef industry, and small businessmen and women who help to prepare this product for export.”
In the past year, American beef exports to Chile have grown significantly. The United States shipped approximately $1 million of frozen and fresh beef to Chile between January and September 2008 – twice the amount shipped during the same period in 2007.
March
WTO sees 9% global trade decline in 2009 as recession strikes
24 March - The collapse in global demand brought on by the biggest economic downturn in decades will drive exports down by roughly 9% in volume terms in 2009, the biggest such contraction since the Second World War, WTO economists forecast today (25 March 2009). “Trade can be a potent tool in lifting the world from these economic doldrums. In London G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure which will render global recovery efforts less effective,” said Director-General Pascal Lamy.
To read more please click here.
Advanced Economies to Contract Sharply in 09, Upturn Next Year--IMF
24 March - Despite major stimulus packages announced by advanced economies and several emerging markets, trade volumes have shrunk rapidly, while production and employment data suggest that global activity continues to contract in the first quarter of 2009, the IMF said in a new assessment of the global economy.
Global activity is now projected to contract by ½ to 1 percent in 2009 on an annual average basis—the first such fall in 60 years, the IMF said in an analysis provided to the Group of Twenty (G-20) industrialized and emerging market economies. Global growth is still forecast to stage a modest recovery next year, conditional on comprehensive policy steps to stabilize financial conditions, sizeable fiscal support, a gradual improvement in credit conditions, a bottoming of the U.S. housing market, and the cushioning effect from sharply lower oil and other major commodity prices. Read the full story here.
Statement of U.S. Trade Representative Ron Kirk and EU Trade Commissioner Catherine Ashton
24 March - To read the statement please click here.
Free Trade with the United States
20 March - To read the ‘Time is now for free trade with the United States’ release by Stephen Jacobi, Executive Director of the NZ US Council, please click here
WTO Special Ambassador returns to New Zealand
19 March - New Zealand Special Ambassador and Chair of the WTO Doha Round Agriculture Negotiations, Crawford Falconer, will return to New Zealand in April to take up the role of Deputy Secretary at the Ministry of Foreign Affairs and Trade (MFAT), Trade Minister Tim Groser said today.
"I would like to acknowledge Mr Falconer's contribution as Chair, which has been widely recognised as being of crucial importance to the agriculture negotiations.
"Originally scheduled to end in December, Mr Falconer's term in Geneva was temporarily extended to continue negotiations that culminated in a further revised agriculture modalities text.
"This text provides a strong basis for completion of the agriculture negotiations in the near future," said Mr Groser.
Mr Falconer has been succeeded as New Zealand's Permanent Representative in Geneva by Dr David Walker, one of New Zealand's most experienced trade negotiators.
A decision on a new Chair of the Agriculture Negotiations will be made by the WTO membership.
"New Zealand would be willing to allow Dr Walker to succeed Mr Falconer in the Chair's role if desired by the WTO membership.
"In whatever capacity he ends up serving in Geneva, Dr Walker will make a significant contribution in taking forward New Zealand's strong commitment to a successful conclusion to the Doha Round of trade talks as soon as possible," Mr Groser said.
NZ US Council website
19 March - To visit the NZ US Council’s new website please visit www.nzuscouncil.com. The website is regularly updated with information about the NZ/US relationship, including developments with the TPP negotiations
USTR Announces Delay of Trade Action in Beef Hormones Dispute
March 19 - The Office of the U.S. Trade Representative announced today that it is delaying by one month the imposition of additional duties on a modified list of EU products in connection with World Trade Organization (WTO) dispute settlement rulings in the EU – Beef Hormones dispute. Under a determination announced on January 15, 2009, the additional duties were to go into effect on March 23, 2009. Under the delay announced today, the additional duties are scheduled to go into effect on April 23, 2009.
Read the full story here.
New Zealand's safeguard regime to be strengthened
13 March - A bill that significantly overhauls New Zealand's regime for imposing 'safeguard measures' on imported goods received its first reading in Parliament last night, Commerce Minister Simon Power said.
"The Trade (Safeguard Measures) Bill is designed to ensure New Zealand's 'safeguard' regime is consistent with World Trade Organisation rules, and promotes efficient, transparent, and objective investigative and decision-making processes", Mr Power said.
'Safeguard measures' are emergency measures applied at the border, usually in the form of a duty, to temporarily protect a domestic industry from a surge in imported goods.
"Access to a safeguards regime is important at a time of increasing globalisation and competition from imported products, and will provide industry with the time and opportunity to adjust to increased import competition," Mr Power said.
The bill repeals and replaces the present safeguard regime in the Temporary Safeguard Authorities Act 1987. The main changes proposed in the bill are:
- Authorising the Commerce Minister to impose a separate provisional and final safeguard duty to allow safeguard action to be taken quickly and efficiently.
- The inclusion of criteria that must be considered when determining whether the imposition of a safeguard measure is in the public interest.
- Safeguard investigations carried out by the Ministry of Economic Development rather than by temporary safeguard authorities. This will bring the conduct of investigations into line with other trade remedy investigations into the impact of New Zealand industries being harmed by rapid increases in imports.
- Extending the timeframe for completing a safeguard investigation from 30 working days to 75 working days (or 85 working days if provisional measures are requested).
"The changes proposed in the bill will strengthen New Zealand's safeguards regime and allow domestic industry to have access to an efficient and transparent safeguards regime."
OCR reduced to 3 percent
12 March - The Reserve Bank today reduced the Official Cash Rate (OCR) by 50 basis
points to 3 percent.
Reserve Bank Governor Alan Bollard said: "The world economy
deteriorated very rapidly late last year, amid ongoing losses and
extreme volatility in international financial markets. While monetary
and fiscal policy responses in many countries have been substantial we
still expect the adverse economic forces generated by the crisis to
remain dominant throughout 2009. The timing and extent of global
recovery remain highly uncertain.
"In New Zealand, the impact of difficult trading conditions is showing
through clearly in reduced export revenues, weak business sentiment, and
sharply curtailed investment and employment. Further house price falls
and increased precautionary saving by households are driving a weakness
in spending. Inflation pressure is abating rapidly as a result.
"The OCR has now been reduced 525 basis points in little more than six
months, taking interest rates to very stimulatory levels. Further falls
in the lending rates faced by households and businesses are in the
pipeline. While credit growth is easing in line with the weak economy,
we expect financial institutions to continue lending on sound business
propositions, to support the recovery.
"In addition to the substantial change in monetary policy settings,
there has been a large amount of stimulus from fiscal policy. These
policy changes, together with the sizeable exchange rate depreciation,
will act to support the New Zealand economy: therefore, we expect to see
activity troughing in the middle of this year and then gradually picking
up thereafter. However, the scale of the global financial crisis is
such that there is great uncertainty about future economic developments
and there is a risk that the recovery may occur later and be more
protracted than we anticipate.
"As economic activity troughs, we expect the rapid easing of monetary
policy to slow. Any future cuts will be much smaller than observed
recently. We do not expect to see in New Zealand the near-zero policy
rates of some countries. New Zealand needs to retain competitiveness in
the international capital markets. We will assess the need for further
cuts in the OCR against emerging developments in the global and domestic
economies and the responses to policy changes already in place."
You can read the Monetary Policy Statement at the following link www.rbnz.govt.nz
US-NZ Council President on the Trans-Pacific Partnership Free Trade Agreement
11 March - On March 4th, the US-NZ Council President, John Mullen, testified before the Office of the United States Trade Representative at a public hearing regarding the Trans-Pacific Partnership Free Trade Agreement. A transcript of Mr. Mullen's testimony can be found here.
Key & Rudd - Joint Statement On Strengthened Trans-Tasman Cooperation
5 March - Prime Ministers Rudd and Key held their annual talks in Sydney on 1-2 March 2009.
Mr Rudd expressed deep appreciation for the strong support provided by New Zealand in the face of Australia's worst bushfires, including assistance from 100 New Zealand fire-fighters. Prime Minister Key presented a cheque from the New Zealand Red Cross for NZ$2m for the Australian Red Cross Victorian bushfires appeal.
The major focus of discussions between the two Prime Ministers was the global economic crisis, the worst since the Second World War. The most recent IMF forecast is for global growth to slow to ½ per cent in 2009.
Both agreed on the imperative for continued strong and coordinated international action to restore confidence and global economic growth and to protect jobs. They agreed to cooperate closely in the lead up to the meeting of G20 Leaders in London on 1 and 2 April.
They underlined the importance of collective action to normalise global private credit flows as soon as possible, supported by strong stimulus measures and reforms to the global financial system.
In the face of the global economic downturn they pledged renewed ambition to achieve new levels of trans-Tasman economic integration. These efforts will be built on:
- the strong trade results delivered by 26 years of Closer Economic Relations, which have set a global benchmark for free trade.
- the vital role of the Single Economic Market initiative in aligning and strengthening the two economies, stimulating business activity, competitiveness and job creation.
- high quality, responsive domestic financial regulatory systems and institutions.
- a determination to foster open markets, flows of capital and credit and to resist protectionism in order to uphold confidence in the international economy; and
- the dynamism and strength of Australian and New Zealand companies, and the ideas and energy of bodies such as the Australia New Zealand Leadership Forum.
The two Prime Ministers committed to:
- accelerate regulatory harmonisation and alignment in order to stimulate business and create jobs
- finalise in 2009 an Investment Protocol to promote investment between the two economies through a reduction in regulatory barriers and compliance costs for business.
- complete a new comprehensive Tax Treaty between Australia and New Zealand to reduce tax barriers to trade and investment, further protect the tax base in each jurisdiction and simplify and improve certainty for those with Trans-Tasman business interests.
- conclude a scheme for the mobility of trans-Tasman retirement savings which will enable pension funds to be moved between Australia and New Zealand.
- undertake a review of CER Rules of Origin, and an updating of the Australia-New Zealand Joint Food Standards Treaty.
- reduce remaining barriers at the borders to ensure that people and goods can move more easily between the two countries, including through effective air links.
- further strengthen cooperation to promote open markets and trade opportunities for exporters, including through the ASEAN Australia New Zealand Free Trade Agreement signed on the weekend and a successful conclusion of the WTO Doha Development Round.
- expand joint trade promotion activities to increase global market shares for the Trans-Tasman economy
- undertake further work on therapeutic product standards between the two countries.
The Prime Ministers agreed on the need for substantial progress in all these areas in 2009. The CER Ministerial meeting in July will provide a report on progress to the Prime Ministers at a further meeting between them in Australia in August.
Prime Minister Key indicated that New Zealand would collaborate closely with Australia in its bid to host the Square Kilometre Array Radio Telescope Project (SKA). This project will be the world's premier radio telescope and will be constructed over the period 2012-2020. Extending the configuration of the SKA to include New Zealand will significantly add to the reach of the project, increasing scientific innovation and economic benefits for both countries. Over its fifty year life the SKA will generate significant spinoffs in supercomputing, fibre optics, renewable energy, construction and manufacturing.
Both Prime Ministers emphasised the importance of a successful Copenhagen Climate Change conference in December to decide on a post-Kyoto international climate change framework beyond 2012. Both countries will work closely together in the lead up to the Copenhagen conference. The Prime Ministers agreed on the desirability of harmonising to the greatest extent possible the emissions reduction regimes in both countries. Prime Minister Key expressed support for Australia's initiative to establish a Global Carbon Capture and Storage Institute.
The two Prime Ministers agreed on the need for continued close cooperation on developments in the Pacific, especially helping Pacific island countries achieve the Millennium Development Goals. It will be essential to sustain support for developing Pacific island nations in the face of the effects of the global economic crisis on the region. They announced a joint Australia-New Zealand study on the regional implications of the global economic downturn to be completed before the 2009 Pacific Islands Forum meeting to be hosted by Australia in August. The crisis will be a major focus of the Forum discussions.
The Prime Ministers also discussed a range of common international interests, including Afghanistan and regional and global security challenges.
Source: www.beehive.govt.nz
February 2009
New Zealand signs 12 country free trade agreement
26 February - Trade Minister Tim Groser has signed the Agreement
Establishing the ASEAN – Australia – New Zealand Free Trade Area (AANZFTA) at an
official signing ceremony in Hua Hin, Thailand.
“This agreement is of considerable economic and strategic importance for New
Zealand,” Mr Groser said.
“Significant benefits for New Zealand exporters have been achieved, including
the phased elimination of trade barriers, greater certainty and transparency,
and reductions in associated transaction costs.
Please
click hereto read more.
Showcasing Australia's clean energy credentials
24 February - The Minister for Trade Simon Crean today announced the first joint Australia-New Zealand business mission to the United States and Chile to showcase the clean energy industries of both nations.
Mr Crean said there were major opportunities for the renewable energy sector after US President Barack Obama promised to invest $US150 billion in clean energy over the next 10 years.
"The Australian Government is helping to provide not only cleaner energy options for Australians but also positioning Australia as a supplier of world-class clean energy solutions to other nations," he said.
Mr Crean said the Australian renewable energy sector was highly diverse and included electricity generation from wind, biomass and hydro power, as well as technologies and expertise in photo-voltaics, geothermal and solar hot water.
Austrade's 2009 Joint Clean Energy Business Mission to the United States and Chile commences with participation in the Cleantech Forum in San Francisco from 23-24 February.
The mission will then participate in the ReTech Trade Show and Conference in Las Vegas from 25-27 February.
The focus then shifts to Santiago, Chile, from 1-3 March for a comprehensive program of networking and introductions to key industry executives.
"The Government is committed to expanding Australia's renewable energy sector domestically and helping the sector attract international investment and to take up international opportunities," Mr Crean said.
In December last year, draft legislation was released for a Renewable Energy Target which will mean 20 per cent of Australia's electricity will be generated from renewable energy sources by 2020.
The Renewable Energy Target builds on the Rudd Government's Carbon Pollution Reduction Scheme, which will start reducing Australia's carbon pollution from next year.
Mr Crean said the joint mission was possible because of the close links between Australia and New Zealand.
www.trademinister.gov.au
South Korea President to visit New Zealand
24 February - The President of the Republic of Korea Lee Myung-bak will visit New Zealand on 3 and 4 March, Prime Minister John Key announced today.
"South Korea is an important bilateral and regional partner for New Zealand. Our longstanding relationship is built on strong political, economic and social links," Mr Key said.
"South Korea is New Zealand's sixth biggest export market and two-way trade was valued at about $2.42 billion in the year to June 2008.
"The visit provides an opportunity to discuss and sharpen the economic links between our two countries."
During the visit President Lee will meet with Governor-General Anand Satyanand and hold a summit meeting with the Prime Minister in Auckland.
He will also lay a wreath at the Auckland War Memorial and speak at a New Zealand-Korea Economic Forum.
The forum will discuss the growing synergies between the business communities in both countries.
www.mfat.govt.nz
New Zealand and India agree to commence FTA negotiations
23 February - Trade Minister Tim Groser and his Indian counterpart, Kamal Nath, today agreed that New Zealand and India will launch bilateral Free Trade Agreement negotiations.
Mr Groser's discussions with Minister Nath focused on a Joint Study recently concluded by officials into whether the two countries should negotiate a Free Trade Agreement.
"Minister Nath and I agreed that the Joint Study confirms the considerable potential that exists to substantially develop the bilateral trade and economic relationship further, and that this would be enhanced significantly by a bilateral FTA.
"We agreed that, subject to the approval processes of both governments, the two countries will look to commence FTA negotiations as soon as possible.
"I expect the negotiations will get underway later this year," Mr Groser said.
"This is a very important step forward for New Zealand. We have the opportunity, with this FTA negotiation, to redefine our economic partnership with one of the world's emerging economic superpowers.
"We have enjoyed strong ties with India for many years, through cricket, Sir Edmund Hillary and our Commonwealth connections. But these are not going to be enough as a basis for taking the relationship into the 21st century," Mr Groser said.
"We have not been paying as much attention to India as we should have. As a consequence, we are yet to realise the full potential in the trade and economic relationship.
"We export coal, timber, wool, hides and skins to India, but relatively few of New Zealand's traditional food exporters have been able to access the Indian market.
"As well as working to improve the terms of access for our traditional agricultural sector, it is critical that we focus on emerging niche sectors in which New Zealand and Indian companies can collaborate.
"India is a growing market for a range of New Zealand services and technology. Over 23,000 Indian tourists and 5,000 students came to New Zealand last year. India is also a major potential source of investment capital.
"It is also important that we continue to work as "NZ Inc" to continue raising awareness of what New Zealand has to offer India.
"We have a great deal to offer India, including our world class expertise in agri-tech, agriculture, forestry, education and other sectors that India is keen to access.
"Our FTA negotiation will provide the impetus to take the New Zealand - India trade and economic relationship to a new level, including by providing an important focal point for an expansion of both traditional and non-traditional business collaboration," Mr Groser said
Mr Groser will travel to the cities of Pune and Mumbai for further business-focused meetings before leaving India for Thailand next Wednesday.
www.beehive.govt.nz
Global Event - China Import and Export Fair (the Canton Fair)
19 February - The Assistant Minister with Ministry of Commerce of P. R. China, Mr Lu Jianhua, will visit New Zealand between 15th and 17th March 2009.
During his visit, China Foreign Trade Center and the Chinese Consulate General in Auckland will host a promotion seminar for China Import and Export Fair (the Canton Fair) at Sky City Convention Centre, Auckland on the 17th March from 07:30 to 09:30am. The Assistant Minister will make a key-note speech on how China deals with the current financial crisis and will invite New Zealand business people to the Canton Fair.
Govt supports Helen Clark for United Nations role
John Key
8 February - The New Zealand Government is providing strong support for the candidacy of Helen Clark for the position of Administrator of the United Nations Development Programme (UNDP), Prime Minister John Key confirmed today.
"Helen Clark's application for this senior position in the United Nations system has the full and formal endorsement of the New Zealand Government," Mr Key says.
"Helen Clark has shown the leadership qualities needed for a complex organisation such as UNDP in these difficult times. The Government believes she would do an excellent job of running UNDP and leading the United Nations' development efforts.
"I am delighted that New Zealand has a candidate of the calibre of Helen Clark for this position. Her time as New Zealand Prime Minister established her credibility internationally, engaging with leaders from the developed and developing world alike.
"UNDP needs someone who can front for them, mobilise resources and represent the organisation effectively. Helen Clark is a very strong candidate," Mr Key says.
Mr Key has written to the UN Secretary General Ban Ki-moon directly to convey this message.
Leaders of the Pacific Islands Forum have also given their support to Helen Clark. Reaction from other United Nations member countries has been to universally welcome Helen Clark's interest, showing that she is considered a very serious contender.
There is a formal process ahead of shortlisting and interviews, driven by the United Nations Secretary General, and so some time to go before any final decisions. It is still too early to predict whether she would be successful.
Background note
- The head of the United Nations Development Programme, Kemal Dervis, announced recently that he will leave the position on 1 March 2009. UN member states have been asked to nominate candidates by 31 January. The UNDP Administrator has the rank of Under Secretary-General of the UN. The Secretary-General has indicated that he will make the appointment on the basis of a short-list of candidates, an interview process, and consultation with the Executive Board of UNDP.
- Established in 1965 the UNDP is the most broadly focussed development agency in the UN system. By its mandate, UNDP has programmes in all developing countries, including those in the Pacific and is the largest provider of development assistance in the UN system. UNDP's work focuses on democratic governance, poverty reduction, crisis prevention and recovery, energy and environment, and HIV/AIDS.
- UNDP is also the lead coordinator of development (and often humanitarian) activities of the UN system including, at the field level, through oversight of the UN Resident Coordinator system. It also leads on coordination of UN development reform and has been appointed lead agency for the Millennium Development Goals (MDGs).
- UNDP is funded by voluntary contributions from UN members. Income in 2008 was around US$5 billion.
Japanese PM announces $17bn in development aid
2 February - Taro Aso, Prime minister of Japan, has said that his government is willing to provide an additional $17bn for development measures in Asia. Speaking at the World Economic Forum in Davos, Switzerland, Mr Aso said this would help promote regional growth during the global financial downturn.
Finishing the Doha Round of multilateral trade talks a valuable step
2 February - Finishing the long-stalled Doha Round of multilateral trade talks is the single most valuable step global leaders can take to keep the current economic crisis from triggering a destructive protectionist backlash, according to trade officials and academic experts gathered at this year’s World Economic Forum Annual Meeting.
However, as governments struggle to contain the economic aftershocks of the financial meltdown in developed world credit markets, there is a real risk that steps taken to reflate domestic economies – such as support for troubled automakers or public lending programmes that favour local borrowers – could contribute, intentionally or unintentionally, to the alarming contraction in world trade volumes, participants warned.
A case in point: the fiscal stimulus bill recently passed by the US House of Representatives, which requires that steel used in any infrastructure funded by the package be manufactured in the United States. Although the measure still must be approved by the US Senate and signed into law by President Obama, it represents an alarming indication of the political stresses that threaten the multilateral trade order, participants said.
“We see more and more signs that these protectionist measures in developed countries … fall within some sort of ideology of economic nationalism,” commented Celso Amorim, Minister of Foreign Relations of Brazil. “This could bring us back to the 1930s again.” Many economists blame a round of tariff increases triggered by the US Smoot-Hawley Act, for greatly worsening the Great Depression.
By closing out the Doha negotiations and committing to shepherd an agreement through their respective national parliaments, the G20 countries could provide a concrete demonstration that their commitment to cooperation and coordination to fight the crisis is more than just an empty promise, participants said. “It would send the right signal of confidence that people have realized that this is something they need to do together as part of their reaction to the crisis,” said Pascal Lamy, Director-General, World Trade Organization (WTO), Geneva.
Lamy added that all indications he has received suggest that the G20 leaders are serious about their commitment to the Doha Round. Doris Leuthard, Vice-President of the Swiss Confederation and Federal Councillor of Economic Affairs, echoed this assessment, but also cited the extreme political difficulty of seeking further trade liberalization at a time of rising unemployment in the developed world – particularly since the Doha Round will not address issues such as labour standards and environmental protection that enjoy broad popular support. “We will be having some very tough discussions in my country about how to support free trade when other countries don’t have social protections,” she said.
Lamy, meanwhile, rejected suggestions that the WTO Secretariat should consider enforcement action in response to industrial subsidies or national content measures that appear to violate the WTO treaty. “Those who suggest such things should go back and look at the books,” Lamy said, noting that the WTO process requires that member countries initiate trade actions by seeking consultation followed by enforcement action. The Secretariat’s role, he said, is to monitor possible violations and report its findings to member states. “I will continue to play the not very gratifying role of watchdog,” he said. Regarding the controversial US steel provision, Lamy commented that he “hopes that Senators will be wise enough to make sure that whatever is enacted complies with international law.”
As for the status of the Doha negotiations, Lamy expressed optimism that talks could be concluded quickly if the political will to do so exists. He estimated that 80% of the terms of an agreement have been settled, although highly contentious issues such as agricultural subsidies in the developed world, anti-dumping rules and industrial subsidies still need to be resolved.
The economic crisis, however, may change the calculation of some developing countries regarding the costs and benefits of any proposed deal, warned Mari Pangestu, Minister of Trade of Indonesia. While the proposed reforms in agriculture subsidies and peak tariffs are attractive to the developing countries, “other things have to be on the table for there to be sufficient benefits for us.”
Pangestu also expressed fears that the credit crisis will lead to an increase in financial protectionism, as governments in the developed world encourage their financial institutions to place priority on restarting domestic lending. This could aggravate the sharp decline in capital flows to the developing countries brought about by the crisis, reversing gains in economic and social development seen in recent years. She called for an expansion of existing aid-for-trade initiatives and suggested these could be targeted at helping developing countries cope with the crisis.
Participants refrained from taking sides in the recent debate between the US and China over whether China’s efforts to manage the foreign exchange value of the renminbi constitutes unfair currency manipulation, although Amorim did remark that he believes such complaints are less valid now than perhaps they were in the past. Kim Jong-Hoon, Minister for Trade of the Republic of Korea, argued that currency manipulation is difficult to define under WTO rules. “Let us wait and see how the dialogue [between the US and China] develops,” he said. Pangestu, meanwhile, noted that China’s exchange rate policies have played a constructive role in the past, as when the country resisted competitive pressure to devalue its currency during the 1997-1998 Asian financial crisis.
Kim and Pangestu both agreed that a worsening of trade tensions between the US and China would be a highly unwelcome development for other Asian economies, positioned as they are between the two giants. In the circumstances of the current crisis, participants agreed, economic cooperation between the two countries on trade and other matters is essential.
January 2009
NZ needs to be ready for recovery |
Call for Public Submissions for NZ – Republic of Korea FTA |
OCR reduced to 3.5 percent |
Annual Meeting 2009 - "Shaping the Post-Crisis World" |
Business ethics and OECD principles |
Re-thinking Europe's gas supplies |
Goods and Services - Statistics |
PM announces appointment to ABAC |
EU dairy export subsidies disappointing |
ABAC Trading Across Borders Seminar |
ABAC Meeting
NZ needs to be ready for recovery
30 January - New Zealand will be better prepared for economic recovery if households, firms and banks do not "pull down the shutters", Reserve Bank Governor Alan Bollard said today.
Dr Bollard told the Canterbury Employers' Chamber of Commerce the economy is in the middle of a major international shock that is developing from financial turbulence into economic recession.
"Households, firms and banks will naturally be very cautious during this process. However, we should also be watchful for the opportunities, and mindful of the risks of defeatism. Within the Western world, New Zealand's economy and financial system are relatively well-placed to weather the adjustment."
Dr Bollard said that past recoveries have occurred suddenly and strongly, and New Zealand needs to remain well-positioned for such a recovery. "This has been New Zealand's experience in the past.
Households and firms should not pull down the shutters, and banks should continue to lend on sound business propositions."
Dr Bollard said large underlying structural adjustments are underway internationally. The process of readjustment could be very rocky for exposed players, with real economic costs. The debt build-up will take years to prune back to sustainable and prudent levels.
"We have not escaped the impact of the massive international credit crunch. In our case, the tightening has exposed vulnerabilities associated with household and external indebtedness, and how this debt is funded. The global recession is also now affecting us through trade channels and a slump in world commodity prices."
New Zealand's policy responses have probably been about as successful as might be expected, he said.
"We have eased monetary policy substantially and very rapidly.
Inflation remains under control, following the largest international commodity and asset price surge for decades. We greatly expanded our liquidity facilities. Cash continues to circulate, despite enormous pressure to hoard it.
"Our banking system remains well-capitalised and has avoided the problematic credit exposures that have brought some major overseas financial institutions to their knees."
You can read the speech here.
Source: Reserve Bank of New Zealand
Call for Public Submissions on the potential for a New Zealand – Republic of Korea Free Trade Agreement
29 January - The Ministry of Foreign Affairs and Trade is inviting submissions on a possible free trade agreement (FTA) between New Zealand and the Republic of Korea.
The closing date for submissions is Friday 27 February.
Please read the attached paper for background information to the possible negotiations. Information on how to make a submission is provided at the end of the paper.
OCR reduced to 3.5 percent
29 January - The Reserve Bank today reduced the Official Cash Rate (OCR) from 5.0 percent to 3.5 percent.
Reserve Bank Governor Alan Bollard commented that “the news coming from our trading partners is very negative. The global economy is now in recession and the outlook for international growth has been marked down considerably since our December Monetary Policy Statement.
“Globally, there has been considerable policy stimulus put in place and we expect this to help bring about a recovery in growth over time. However, there remains huge uncertainty about the timing and strength of a recovery.
“The extent of the decline in global growth prospects and the ongoing uncertainty has played a large part in today’s decision. We now expect the impact on New Zealand of these developments to be greater than we did in December, as a result of a more negative outlook for the terms of trade and exports, and tighter credit conditions.
“Inflation pressures are abating. We have confidence that annual inflation will be comfortably inside the target band of 1 to 3 percent over the medium term.
“Given this backdrop it is appropriate to take the OCR to a more stimulatory position and to deliver this reduction quickly.
“Today’s decision brings the cumulative reduction in the OCR since July 2008 to 4.75 percentage points. Lower interest rates will have a positive impact on growth, alongside a lower exchange rate and fiscal stimulus, provided firms and households do not unnecessarily contract their spending.
“To ensure the response we are seeking, we expect financial institutions to play their part in the economic adjustment process by passing on lower wholesale interest rates to their customers. This will help New Zealand respond flexibly.
“Further movements in the OCR will be assessed against emerging developments in the global and domestic economies and the response to policy changes already in place. We would expect any further reductions to be smaller than those seen recently.”
Reserve Bank of New Zealand
Annual Meeting 2009 - "Shaping the Post-Crisis World"
Geneva, Switzerland, 28 January 2009 – The World Economic Forum today began the programme for its 39th Annual Meeting in Davos-Klosters. The overarching theme of the meeting, which will take place from 28 January to 1 February, is “Shaping the Post-Crisis World”. Over the course of the five-day meeting, more than 2,500 participants from 96 countries will convene in Davos-Klosters, Switzerland, including a record 41 heads of state or government. Key finance, foreign affairs, trade and energy ministers will join heads of non-governmental organizations, social entrepreneurs and religious leaders at the Meeting. Around 60% of the participants are business leaders drawn principally from the Forum's members – 1,000 of the foremost companies from around the world and across all economic sectors.
As well as looking at the immediate crisis and ways to stabilize and relaunch the global economy, the Annual Meeting programme also pinpoints a number of interrelated global risks including climate change, food and water security. The Meeting will also consider the institutions that the world needs to cooperate and confront global challenges and will look to improve the ethical value base for business as a constructive social actor.
Speaking at a press conference at the World Economic Forum’s headquarters in Geneva, Founder and Executive Chairman Professor Klaus Schwab said: “The Annual Meeting 2009 is one of the most crucial in the near 40 year history of the World Economic Forum. The extraordinary participation in terms of political and business leaders and other stakeholders demonstrates that our Annual Meeting will be the place where key actors can address both a crisis of unprecedented scope and, at the same time, the sort of world we collectively want to see emerging once the crisis is over. What we are experiencing is the birth of a new era, a wake-up call to overhaul our institutions, our systems and, above all, our way of thinking.”
The Meeting’s programme will follow six programmatic tracks that are high on the global agenda in 2009. These include Promoting Stability in the Financial System and Reviving Global Economic Growth; Ensuring Effective Global, Regional and National Governance for the Long Term; Addressing the Challenges of Sustainability and Development; Shaping the Values and Leadership Principles for a Post-Crisis World; Catalysing the Next Wave of Growth through Innovation, Science and Technology; and Understanding the Implications on Industry Business Models.
The Co-Chairs are:
Kofi Annan, Secretary-General, United Nations (1997-2006); Member of the Foundation Board of the World Economic Forum
Stephen Green, Group Chairman, HSBC Holdings, United Kingdom
Anand Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra, India
Rupert Murdoch, Chairman and Chief Executive Officer, News Corporation, USA
Maria Ramos, Group Chief Executive, Transnet, South Africa
Jeroen van der Veer, Chief Executive, Royal Dutch Shell Plc
Werner Wenning, Chairman of the Board of Management, Bayer, Germany
Among the record number of world leaders taking part in the Annual Meeting, Chinese Premier Wen Jiabao and Russian Prime Minister Vladimir Putin will address participants on the opening day. Angela Merkel, Federal Chancellor of Germany, Germany; Gordon Brown, Prime Minister of the United Kingdom; and Premier Taro Aso of Japan will also address sessions of the Meeting. Public figures include 41 heads of state and government, 17 ministers of finance, 19 central bankers, 22 trade ministers, 16 ministers of foreign affairs, 15 ministers of environment and energy, 9 EU commissioners and the heads of 30 international organizations.
Business leaders from all sectors and from all regions will be well represented among the participants in this year’s Annual Meeting. Other participants include heads of NGOs and labour leaders, Social Entrepreneurs and Young Global Leaders.
In addition, representatives of the world’s media will participate in the World Economic Forum Annual Meeting, with 10% of participants drawn from media organizations around the world.
Business ethics and OECD principles: What can be done to avoid another crisis?
Remarks by Angel Gurría, OECD Secretary-General, delivered at the European Business Ethics Forum (EBEF)
Paris, France, 22 January 2009
Ladies and Gentlemen:
It is a great pleasure to be here with you to open this year’s European Business Ethics Forum. I am very happy to be part of these discussions. Thank you very much for this invitation.
The current global economic crisis is costing the world trillions of dollars, a protracted recession, millions of lost jobs, a huge loss of confidence in financial markets and a reversal in our efforts to curve global poverty. It is the result of the combination of several failures. A failure of business ethics is one of them; one that lies at the epicenter of this financial and economic earthquake. Read the full article...
Re-thinking Europe's gas supplies after the Russia/Ukraine crisis
27 January - An independent energy strategy has become number one priority for Europe's leaders ©BELGA_EPA_SERGEY DOLZHENKO
Cold homes and closed business due to gas shortages across much of Central and Eastern Europe in January thanks to the Russia-Ukraine gas dispute has prompted a re-think of supplies. The crisis has pushed energy security up the political agenda. A workshop on 19 January brought together academics and MEPs on the Foreign Affairs Committee to discuss Europe's options.
Earlier this month the full European Parliament discussed the crisis. Members from all sides agreed that Russia and Ukraine had lost their status of being reliable gas suppliers.
The importance of the issues at stake was underlined by Romanian Socialist MEP Ioan Mircea Pascu. He told the workshop last week: "This is the key geostrategic game of the next 50 years. Russia wants to rewrite the rules and to redraw the lines. We must react collectively, not by defending egoistic national goals".
The Polish MEP who chairs the Foreign Affairs Committee, Jacek Saryusz-Wolski of the EPP-ED group, called for greater diversification of supply saying it was "no longer a problem of energy but of foreign policy".
Charles Tannock, a British Conservative Member said that "reliability of trading partners and solidarity between EU members" was crucial for future security of gas supplies.
Gas pipelines - what are Europe's options?
The options facing Europe were discussed by those present.
One option is the "Southstream" project which is a Russian owned Gazprom proposal which would bring gas into the European Union from the Caspian sea and beyond via Turkey. However, Professor Alan Riley of City University in London said it would be too expensive: "All it is doing for the European consumer is increasing the price of gas."
Polish Liberal MEP Janusz Onyszkiewicz underlined the need for a European pipeline through Russia which is not controlled by state-owned Gazprom. At the moment, all pipelines through Russia but one is controlled by state organisations.
Another route under consideration is the Nabucco project which would bypass Russia using a new and existing pipelines going either from the Caspian via Georgia then across Turkey and turning north into the EU to an eventual distribution hub in Austria. This route could help Europe access Central Asian gas.
The "Nabucco light" option would be a cheaper route entering Europe via Turkey and Greece and then on to Italy for distribution. It is cheaper as it would use existing pipelines.
However, Professor Riley raised the issue of the legal uncertainty that surrounds the resources of the Caspian Sea as well as political instability in places like Azerbaijan and Turkmenistan. It would also not resolve where to get the gas from.
Another option - estimated at costlier than Nabucco - would be to build a Liquid Natural gas liquefaction plant in Ceyhan in Turkey where gas could then be shipped to Europe.
Diversification from Russia should be thought through
Danish MEP Christian Rovsing of the EPP-ED group underlined the potential of gas reserves below the Arctic ice caps: "The exploitation of gas and oil in the Arctic should be considered as a complementary source".
Dr. Andrew Monaghan, a researcher at the NATO Defence College in Rome, warned that the implications of a change in policy must be weighed: "We shouldn’t just move away from Russia without knowing where we are going. If we just exchange Ukraine by Turkey, we will still have all our eggs in one basket."
On 21 January, Parliament's industry Committee adopted a report by French MEP Anne on the "Second Strategic Energy Review", which will be on the agenda for the European Council on 19-20 March.
The report calls for emergency action plans, more grid interconnections among EU members and new climate targets to be achieved by 2050, including raising the share of renewable energy to 60% of total consumption.
The full European Parliament will be discussing the report on 2 February when they assemble in Strasbourg.
MEPs on the Committee also support diversification projects such as Nabucco, Turkey-Greece-Italy (TGI), and South Stream pipelines. They also acknowledge need of sufficient liquefied natural gas (LNG) capacity.
U.S International trade in goods and services -
Statistics for November 2008
Goods and Services
22 January - The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the
Department of Commerce, announced today that total November exports of $142.8
billion and imports of $183.2 billion resulted in a goods and services deficit
of $40.4 billion, down from $56.7 billion in October, revised. November exports
were $8.7 billion less than October exports of $151.5 billion. November imports
were $25.0 billion less than October imports of $208.2 billion.
In November, the goods deficit decreased $16.6 billion from October to $52.4 billion,
and the services surplus decreased $0.4 billion to $12.0 billion. Exports of goods
decreased $7.6 billion to $97.2 billion, and imports of goods decreased $24.2 billion
to $149.7 billion. Exports of services decreased $1.2 billion to $45.6 billion, and
imports of services decreased $0.8 billion to $33.6 billion.
In November 2008, the goods and services deficit decreased $19.4 billion from
November 2007. Exports were down $2.4 billion, or 1.7 percent, and imports were
down $21.8 billion, or 10.6 percent.
Goods
The October to November change in exports of goods reflected decreases in industrial
supplies and materials ($4.2 billion); capital goods ($1.5 billion); automotive
vehicles, parts, and engines ($1.1 billion); foods, feeds, and beverages ($0.5 billion);
and consumer goods ($0.2 billion). An increase occurred in other goods ($0.2 billion).
The October to November change in imports of goods reflected decreases in industrial
supplies and materials ($16.5 billion); consumer goods ($3.8 billion); capital goods
($2.2 billion); automotive vehicles, parts, and engines ($1.2 billion); and foods,
feeds, and beverages ($0.4 billion). Other goods were virtually unchanged.
The November 2007 to November 2008 change in exports of goods reflected decreases in
capital goods ($2.3 billion); automotive vehicles, parts, and engines ($1.8 billion);
industrial supplies and materials ($0.7 billion); and foods, feeds, and beverages
($0.3 billion). Increases occurred in consumer goods ($0.7 billion) and other goods
($0.1 billion).
The November 2007 to November 2008 change in imports of goods reflected decreases in
industrial supplies and materials ($11.0 billion); automotive vehicles, parts, and
engines ($5.7 billion); consumer goods ($3.8 billion); capital goods ($2.7 billion);
and other goods ($0.1 billion). An increase occurred in foods, feeds, and beverages
($0.2 billion).
Services
Services exports decreased $1.2 billion from October to November. Most categories of
services exports decreased. The largest decreases were in other private services
(which includes items such as business, professional, and technical services, insurance
services, and financial services), travel, and other transportation (which includes
freight and port services).
Services imports decreased $0.8 billion from October to November. All categories of
services imports decreased. The largest decreases were in other transportation,
travel, and other private services.
The November 2007 to November 2008 increase in exports of services was $1.3 billion.
The largest increases were in royalties and license fees ($0.6 billion) and other
private services ($0.5 billion). Within other private services, the largest increase
was in business, professional, and technical services, which was partly offset by a
decrease in financial services.
The November 2007 to November 2008 increase in imports of services was $1.2 billion.
The largest increases were in other private services ($0.7 billion), royalties and
license fees ($0.3 billion), and passenger fares ($0.2 billion). Within other private
services, the largest increase was in business, professional, and technical services,
which was partly offset by a decrease in financial services.
Goods and Services Moving Average
For the three months ending in November, exports of goods and services averaged
$149.8 billion, while imports of goods and services averaged $201.0 billion, resulting
in an average trade deficit of $51.2 billion. For the three months ending in October,
the average trade deficit was $57.4 billion, reflecting average exports of $157.4
billion and average imports of $214.8 billion.
Selected Not Seasonally Adjusted Goods Details
The November figures showed surpluses, in billions of dollars, with Australia $1.0
($1.1 for October), Hong Kong $1.0 ($1.1), Singapore $0.7 ($1.0), and Egypt $0.1
($0.2). Deficits were recorded, in billions of dollars, with China $23.1 ($28.0),
OPEC $5.6 ($14.0), the European Union $5.6 ($9.6), Japan $5.0 ($6.0), Mexico $3.5
($4.8), Canada $3.3 ($5.9), Taiwan $1.4 ($1.5), Venezuela $1.3 ($2.7), and Nigeria
$1.3 ($2.6).
Advanced technology products (ATP) exports were $20.1 billion in November and imports
were $24.7 billion, resulting in a deficit of $4.6 billion. November exports were
$1.9 billion less than the $22.1 billion in October, while imports were $5.2 billion
less than the $29.9 billion in October.
Revisions
Goods carry-over in November was $0.2 billion (0.2 percent) for exports and $0.6
billion (0.4 percent) for imports. For October, revised export carry-over was less
than $0.1 billion. For October, revised import carry-over was $0.4 billion
(0.2 percent), revised down from $1.8 billion (1.0 percent).
Services exports for October were revised down $0.2 billion to $46.7 billion. The
revision was more than accounted for by downward revisions in travel and passenger
fares. Services imports for October were revised up $0.1 billion to $34.4 billion.
The revision was mostly accounted for by small upward revisions in passenger fares,
other transportation, and travel.
www.bea.gov
PM announces appointment to ABAC
21 January - The Prime Minister has appointed Gary Judd QC to the APEC Business Advisory Council of New Zealand.
Mr Judd is a senior lawyer, Chairman of ASB Group (ASB Bank and Sovereign Assurance), and Chairman of Ports of Auckland Ltd.
"Mr Judd's valuable experience as a businessman and his extensive legal background will make him an active and effective contributor to ABAC's work."
The APEC Business Advisory Council is a network of business representatives in each of the 21 APEC economies that meet four times each year to develop business perspectives on the issues being discussed among APEC economies.
ABAC provides a separate process for raising policy issues and offering private sector advice on trade and economic liberalisation efforts within the Asia Pacific region.
"When I was at the APEC Leaders' Summit in Lima, Peru in November I took part in the APEC Leaders' Dialogue with ABAC and addressed the CEO Summit hosted by ABAC. New Zealand will host ABAC's first meeting of 2009 next month in Wellington."
Mr Judd joins existing New Zealand ABAC representatives Tony Nowell, Company Director, and John Blackham, CEO of software company XSol.
His appointment is for three years.
www.national.org.nz
EU dairy export subsidies disappointing
21 January - The Government today expressed disappointment that the European Union has decided to reintroduce export refunds for butter, cheese, and milk powders, which were suspended two years ago.
While the full details of the subsidies are not yet known, it is understood they will take effect from next week.
Trade Minister Tim Groser and Agriculture Minister David Carter expressed concern that the move would send a negative signal at this critical time for the multilateral trade negotiations and the global economy, when all efforts are being made to reject protectionism and to convince countries to remove distortions in agricultural markets.
"In recent years we have seen the Europeans take some very positive steps forward in reforming their Common Agricultural Policy, which we have welcomed, but this announcement represents a major step backward," says Mr Groser.
"The European move means it's now even more urgent that we complete the Doha Development Round in the World Trade Organisation.
"The agreement by WTO members to eliminate export subsidies in agriculture is one of the most important potential gains from the round.
"It is clear that unless we move forward soon, unsubsidised producers like those from New Zealand will continue to bear the cost of the trade-distorting measures of others."
New Zealand Government
Event - ABAC Trading Across Borders Seminar
Wellington
February 9 2009
As part of the World Bank’s Doing Business Project it has been found that excessive trade costs – including delays, documentation requirements and administrative fees – can act as an impediment and deterrent to trade across borders, increasing domestic prices and restricting businesses from exporting abroad.
This seminar will focus on what APEC economies have done, and are doing, to improve their performance in the way they regulate the movement of goods across borders.
This seminar will be the fourth in a series of ten capability-building seminars. Each seminar provides a forum for participants to exchange experiences and discuss their economy’s future aspirations to improve a particular area of business regulation.
For information about the ABAC APEC Business Advisory Council ‘Trading Across Borders’ Seminar in Wellington on the 9th of February please click here
ABAC Meeting
12 January - ABAC New Zealand, in conjunction with the Asia New Zealand Foundation, will be hosting the first ABAC meeting of the year in Wellington on 9-12 February 2009.
The last ABAC meeting held in New Zealand was in August 2004 in Auckland. The meeting in Wellington is expected to attract 125-140 delegates, staff, ABAC secretariat and partners.
The agenda
ABAC meets four times a year to develop its report and recommendations on trade and investment liberalisation. The first meeting is expected to have a strong focus on the global financial crisis and ways in which economies could mitigate its effects.
In keeping with the APEC goals of free and open trade and investment, the Wellington agenda will also cover regional economic integration, business sustainability, climate change, doing business behind borders, energy security, trade facilitation, food security, the role of small and medium enterprises, and measures to further liberalise the flow of goods and services within the region. All of these are items of close interest to the New Zealand business community and relevant to the growth of our economy.
Source: www.asianz.org
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