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Before the agreement (RCEP) came into play, how was bilateral trade and investment between New Zealand and Vietnam taking shape?
|Tredene Dobson, New Zealand Ambassador to Vietnam|
In 2021, our foreign ministers officially launched the Strategic Partnership Action Plan, which was a significant milestone in our bilateral relationship. By September last year, Vietnam was New Zealand’s 16th-largest trading partner. Two-way merchandise trade in 2021 topped $1.44 billion, and now both sides are striving to increase the level of two-way trade to $2 billion by 2024.
New Zealand’s exports to Vietnam have seen good growth in a number of sectors, particularly meat and edible offal, with over 90 per cent growth last year alone. This shows the confidence that Vietnamese consumers have in New Zealand’s high-quality products. And in a sign of just how complementary our two-way trade is, Vietnam’s exports to New Zealand have grown in almost all categories: rubber by 84 per cent, toys and games by 46 per cent, footwear by 24 per cent, and furniture by 20 per cent. The next step is for the two countries to start expanding the sectors we trade in and utilise our respective competitive advantages.
How exactly does the official implementation of the RCEP elevate New Zealand-Vietnam ties to a new level, and how can New Zealanders in particular take advantage?
Once fully implemented, the RCEP will be the largest trade agreement in the world. New Zealand’s annual GDP will be between 0.3 per cent and 0.6 per cent larger than if the RCEP had not existed at all, equal to about $2 billion.
Although the RCEP does not offer the same level of tariff liberalisation as some other free trade agreements, it will bring the broader region into a single rulebook covering all 15 markets that will significantly reduce complexity, and therefore compliance costs, for exporters. This is a substantial achievement.
Exporters will also benefit from the fact that the deal improves on existing rules that address non-tariff barriers. For example, it requires customs authorities to release perishable goods such as seafood within six hours of arrival, including release of such goods outside normal business hours, which should reduce spoilage and save exporters money. As major seafood exporters, you can see how this will be good for both of us.
The RCEP will serve as a platform to support the integration of New Zealand business into regional value chains and provide greater consistency and certainty to traders and investors across markets. It will make it easier for firms to use inputs from the RCEP region and still access preferential tariffs. For example, a table manufactured in Vietnam with New Zealand wood, Japanese bolts, and steel legs from China can be sold in Thailand or Indonesia under the same rules of origin, reducing compliance costs for businesses and incorporating New Zealand and Vietnam exporters into these supply chains.
Added value and supply change enhancements sit at the heart of the Vietnam-New Zealand trade story because our high-quality products, combined with Vietnam’s exceptional manufacturing and processing sector, are an unbeatable combination. So, as RCEP’s membership expands, New Zealand and Vietnam’s businesses will benefit from a greater number of markets to export to and contribute to these broader value chains.
Within the framework of the agreement, what are some high-potential partnership areas between New Zealand and Vietnam to facilitate economic recovery?
Our exports have proved remarkably resilient, but agreements like the RCEP are critical as we accelerate a trade-led recovery from the pandemic. Making it easier for businesses to trade in the region, cutting red tape, and reducing complexity and business costs are all important for a trade-led recovery.
A significant percentage of jobs in New Zealand and Vietnam come from the trade sector – so we want that to be highly productive. Through this, exports grow and more people can be employed. This is important because businesses in trade pay higher wages compared to firms in the non-tradeable sector.
The pandemic has highlighted how critical the digital economy is to a rapid recovery. The RCEP acknowledges the value of that by agreeing on rules in e-commerce between its members. There is also increased demand for digital services and products, and we’ve seen good growth in this area. Many businesses are already operating digitally or providing digital services, and our goods will be able to access RCEP markets in the confidence that there are clear rules to enable e-commerce.