The New Zealand-ASEAN trade partnership: 40 years of development and prospects: Nguyen Duc Thanh outlines the process by which New Zealand and Vietnam changed from neigbours to strategic partners.

• Author: Thanh, Nguyen Duc

With two-thirds of New Zealand's trade and investment now occurring in the Asia-Pacific region, New Zealand can be expected to look for increasing opportunities in the ASEAN area in future. Its longstanding relationship with ASEAN, dating back to 1975, will stand it in good stead. The ASEAN-Australia-New Zealand Free Trade Agreement, which came into force in 2010, gives New Zealand exporters many possible advantages, especially as tariffs are progressively eliminated to priority markets. One of those markets is Vietnam, with which New Zealand's trade has increased four-fold in the last five years. A collaborative approach will bring many benefits.

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New Zealand and ASEAN have a long history of co-operation on various fronts. Formal relations can be traced back to 1975, when New Zealand was among the first countries to become an ASEAN dialogue partner. Tire relationship reached a landmark with the adoption of the Joint Declaration on Comprehensive Partnership for 2010-15 and the Plan of Action to Implement the Joint Declaration, designed to broaden and deepen the partnership in political and security, economic and socio-cultural cooperation. ASEAN is now considering New Zealand for strategic partnership.

Nowadays, more than two-thirds of New Zealand's trade and investment is occurring in the Asia-Pacific region. Expected to emerge as the next destination after China for investment by leading economic powers, ASEAN presents an increasingly significant opportunity for New Zealand.

New Zealand and nine out of ten of the official members of ASEAN are members of the World Trade Organisation. New Zealand was also one of twelve founding members (of which seven are ASEAN members) of APEC in 1989. Additionally, New Zealand and the ASEAN countries are all involved in the East Asia Summit, within which the Regional Comprehensive Economic Partnership is proposed. However, one of the most important agreements co-signed by New Zealand and ASEAN is the AANZFTA which affects a combined population of 600 million people in the twelve countries involved with an aggregated GDP exceeding US$2.7 trillion.

The elimination of tariffs and other barriers to trade under the agreement opens up further opportunities for New Zealand exporters throughout the ASEAN markets. Indeed, as a result of the ASEAN member countries' commitments under the free trade agreement, tariffs will be eliminated on all key products of trade interest in major markets within twelve years. Significant commercial benefits will be provided to exporters through the elimination of tariffs on about 99 per cent of New Zealand's exports to priority markets (namely, Indonesia, Malaysia, the Philippines and Vietnam). Indonesia, the Philippines and Vietnam markets were deemed priority markets in the negotiations because New Zealand already has high quality and comprehensive free trade agreements with Singapore, Brunei, Thailand and Malaysia.

Trade performance

There are two major characterics in the development of New Zealand's international trade. First, New Zealand imports and exports grew four-fold during the period 2001-14. Initially, there was a faster pace of import increase during 2002 and 2008, resulting in a widening trade deficit. The net import figure peaked at nearly US$4 billion in 2007. Tie recession that commenced in early 2008 may have contributed to a large fall in both exports and imports in 2009. Exports have been rebounding at a faster rate than imports since 2010, resulting in the first trade surplus in ten years. This improved further in 2011 to $1.5 billion. Afterwards, the trade balance switched to deficit again, albeit only marginally.

The second...