New Zealand (NZ) is a pivotal global trade player renowned for its robust export-driven economy. And with trade relationships spanning across the globe, the importance of export partnerships, agreements, and innovative approaches that fuel its economic prosperity is made more apparent.
For example, New Zealand has carved out a distinctive niche in global trade through commendable accolades such as the first-place ranking in the Hinrich Foundation-IMD Sustainable Trade Index for two consecutive years. This underscores its commitment to environmentally responsible and sustainable trading methods. Also reflecting its forward-thinking approach is its trailblazing efforts through the early acceptance of the Agreement on Fisheries Subsidies, highlighting its leadership in promoting sustainable fishing practices within the Oceania region.
Beyond steps taken to advance sustainable global trade and being accepted into the growing list of World Trade Organisation (WTO) members, it is a widely known fact that New Zealand's economy thrives on its openness and reliance on international trade. Recognised as one of the most open market economies globally, it plays a crucial role in driving economic growth.
According to Trading Economics data from 2023, New Zealand's exports reached a remarkable NZ$5.9 billion in December alone, emphasising the critical role of international trade in its economic framework. Plus, the nation's export portfolio is diverse, with significant export contributions from its highly efficient agricultural sector, including dairy products, meats, wood, fruits and nuts, and beverages.
Collectively shaping the contours of its trade landscape are New Zealand's principal export destinations, including China, Australia, the United States of America (USA), Japan, the United Kingdom (UK), and South Korea. These partnerships not only fuel New Zealand's economic engine but also reflect the country's strategic positioning in global trade networks, poised for continued growth in 2024 and beyond.
Who are New Zealand’s major export partners?
Wondering which countries stand at the forefront of New Zealand's trade horizon as we step into 2024?
Let's delve into the dynamics of New Zealand's top trading partnerships that fuel its economy and highlight its strategic role in global trade.
1. China
Topping the list of the top 11 exporting nations, China's exports amounted to US$3.6 trillion in 2022, according to the Visual Capitalist, representing 14% of the world's total exports, a dominance it has maintained since 2009. With its export figures leading the global chart, China's stature as the "World's Factory" is undisputed.
Narrowing in on the trading relations between New Zealand and China, despite a slight decrease in the proportion of New Zealand's exports to China according to reports by Reuters—from 31% in 2022 to 29% in the subsequent year—China continues to hold the position of New Zealand's most significant trading partner. The bilateral trade between the two nations, after all, amounts to billions, signifying a robust economic linkage, as highlighted by New Zealand's Ministry of Foreign Affairs and Trade.
New Zealand's main exports to China
New Zealand's export spectrum to China is diverse, with primary goods exports including dairy products like milk powder, butter, and cheese, alongside meat and wood products and preparations of cereals, flour, and starch. When it comes to service exports, New Zealand excels in attracting Chinese tourists and students and offering transportation and financial services, indicating a multifaceted trade relationship.
The import scene is equally vibrant, with New Zealand bringing in NZ$16.26 billion worth of goods and services from China. This includes a range of goods such as electronics, machinery, clothing, and furniture.
Despite global disruptions like the COVID-19 pandemic, the trade between New Zealand and China has shown remarkable resilience, with both exports and imports experiencing growth amidst challenges like supply chain interruptions and rising costs. This dynamic trade relationship between New Zealand and China is expected to remain strong and integral to New Zealand's economic landscape.
Moreover, regardless of geopolitical tensions affecting trade dynamics in the region, New Zealand's commitment to its trade partnership with China remains unwavering. As noted by Pete Chrisp, CEO of New Zealand Trade and Enterprise, China's role as a fundamental trading partner for New Zealand is set to continue deep into the future, underlining the importance of this bilateral relationship in fostering economic growth and stability for New Zealand.
2. Australia
The bond between New Zealand and Australia transcends mere geographical proximity, flourishing into the most profound and significant relationship New Zealand holds on the global stage.
This partnership is fortified by a shared heritage, common values, and closely linked institutions. The essence of this unique relationship is encapsulated within the Australia and New Zealand Closer Economic Relations (CER) agreement, hailed as the epitome of free trade agreements (FTA) globally for its depth, efficiency, and mutual benefits.
New Zealand's main exports to Australia
Economically, Australia is the primary destination for New Zealand's exports, marking it as the fourth largest market for goods and the top destination for services exports from New Zealand. In December 2023 alone, New Zealand's exports to Australia rose to NZ$764.70 million, up from NZ$744.20 million recorded in November of the same year, according to export data by Trading Economics.
The trade dynamics between the two nations are exemplified by the substantial exchange of goods, including dairy products, eggs, honey, and other edible items, which alone accounted for US$637.42 million in exports back in 2022. This is complemented by significant trade in beverages, spirits, vinegar, and high-value goods like pearls, precious stones, and metals, highlighting the diverse and vibrant trade relationship.
3. The United States
The United States emerges as a pivotal arena for New Zealand's export ambitions, standing as the third-largest individual trading partner according to New Zealand’s Ministry of Foreign Affairs and Trade. Its multifaceted relationship, encompassing agricultural exports, investments, technological advancements, and tourism, contributes to a dynamic economic exchange between the two nations.
New Zealand's main exports to the USA
According to the Observatory of Economic Complexity (OEC), in the latter part of 2023, the array of New Zealand's exports to the USA showcased its diverse economic strengths, with wine, frozen bovine meat, specialised commodities, sheep and goat meat, and casein leading the export charts. These goods underscore New Zealand's prowess in producing high-quality agricultural and food products that cater to the American market's demands.
With two-way goods trade reaching US$9.54 billion in 2022, according to the U.S. Department of State, the economic ties between the two countries are not only strong but also on an upward trajectory. This growth is a testament to the solid commercial connections and shared commitment to fostering economic development and innovation, setting the stage for an even more prosperous partnership in the future.
4. Japan
Japan occupies a strategic position in New Zealand's export economy, underscored by mutual political respect and a common vision for the prosperity and stability of the Asia-Pacific region. As New Zealand's fourth-largest trading partner, the bond with Japan is significant, with bilateral trade in goods and services reaching approximately NZ$8.8 billion in the year leading up to June 2019, according to New Zealand's Ministry of Foreign Affairs and Trade.
New Zealand's main exports to Japan
In recent trade statistics by the OEC, Japan's imports from New Zealand have showcased a variety of sectors, including raw aluminium, cheese, coal briquettes, wood fiberboard, and frozen bovine meat. These products highlight New Zealand's diverse export capabilities and Japan's demand for high-quality goods.
Furthering this trading relationship is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This marks a significant milestone in the Japan-New Zealand relationship as the first trade agreement between the two nations.
The CPTPP has notably benefited New Zealand's agricultural sector, addressing high tariff rates and levelling the playing field with competitors like Australia and Chile, who previously enjoyed preferential access. With the gradual elimination of tariffs – except for beef and some dairy products – New Zealand anticipates a substantial decrease in tariffs, estimated at NZ$94 million, with expectations, as stated by New Zealand’s Ministry of Foreign Affairs and Trade, to rise to NZ$207 million annually upon full implementation.
This agreement is a testament to the growing economic integration and mutual benefits accruing from the Japan-New Zealand trade relationship.
5. The United Kingdom
Ranking as New Zealand's seventh largest trading partner according to New Zealand's Ministry of Foreign Affairs and Trade, the United Kingdom holds a distinguished place as one of New Zealand's most vital and enduring trading partners.
With a relationship built on a foundation of shared history and values, the total trade in goods and services between the two nations reached £3.1 billion in the year leading up to the end of the third quarter of 2023, based on reports by the Department for Business and Trade.
New Zealand's main exports to the UK
The trade landscape between New Zealand and the UK is characterised by a diverse array of exports. Leading the charge, beverages and tobacco, meat and meat preparations, mechanical power generators, vegetables and fruit, and scientific instruments stand out as prominent categories, showcasing New Zealand's varied export capabilities.
Also, according to the Department for Business and Trade, the total value of goods imported by the UK from New Zealand stood at £979 million over the same period, underlining the significance of this bilateral trade relationship.
Moreover, while the advent of Brexit has ushered in new dynamics for New Zealand-UK trade, notably through the UK's adoption of a new Global Tariff schedule, the free trade agreement between New Zealand and the United Kingdom, which came into effect on 31 May 2023, marks a new chapter in trade relations.
This trade deal promises the elimination of all tariffs on New Zealand exports to the UK, with an immediate effect of making 99.5% of current goods trade duty-free. This arrangement not only signifies a substantial financial boon for New Zealand exporters – saving approximately NZ$37 million annually in tariffs – but also reinforces the deep-seated partnership and mutual commitment to fostering trade and economic growth between the two nations.
6. South Korea
South Korea has emerged as a pivotal player in New Zealand's international trade portfolio. Based on reports by New Zealand's Ministry of Foreign Affairs and Trade, South Korea has even secured its position as the sixth largest trading partner, with a commendable total trade value of NZ$8.92 billion as of June 2023. This burgeoning relationship underscores the growing significance of South Korea in New Zealand's economic landscape, reflecting a dynamic partnership that continues to evolve and expand.
New Zealand's main exports to South Korea
The trade exchange between New Zealand and South Korea is highlighted by dairy products leading the export list, a testament to New Zealand's reputation for high-quality agricultural goods. As a matter of fact, dairy exports, which have now surpassed timber and aluminium, stand at the forefront of this trade relationship, with these products alone contributing NZ$476.9 million.
Following dairy, aluminium and wood exports also play a significant role, showcasing the diverse range of goods that New Zealand offers to the South Korean market.
On the import side, New Zealand's primary imports from South Korea include mineral fuels and oil, vehicles, and mechanical machinery, indicating a well-rounded trade relationship.
The foundation of this thriving trade relationship is the FTA between New Zealand and the Republic of Korea. The agreement enhances the trade landscape by offering preferential duty rates for originating goods, thereby facilitating smoother trade flows and removing barriers.
Moreover, the Korea-New Zealand Free Trade Agreement (KNZFTA) serves as a strategic platform for both nations to bolster cooperation across various sectors, including agriculture, education, science and technology, and the creative industries.
By levelling the playing field, the FTA addresses competitive imbalances, enabling New Zealand exporters to stand toe-to-toe with their international counterparts in the South Korean market. This partnership not only exemplifies the mutual benefits derived from diplomatic and trade agreements but also highlights the potential for continued growth and collaboration between New Zealand and South Korea.
