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New Zealand Economic and Financial Overview 2010

New Zealand (continued)

Foreign Relations and External Trade

New Zealand foreign policy seeks to influence the international environment to promote New Zealand's interests and values, and to contribute to a stable, peaceful and prosperous world. In seeking to make its voice heard abroad, New Zealand aims to advance and protect both its security and prosperity interests.

Trade is essential to New Zealand's economic prosperity. Exports of goods and services make up over 30% of GDP. Trade interests are well diversified: Australia, North America, the European Union, and East Asia each take between 15% and 30% of exports. While New Zealand exports a broad range of products, it remains reliant on exports of commodity-based products as a main source of export receipts and relies on imports of raw materials and capital equipment for industry.

New Zealand is committed to a multi-track trade policy which includes the following measures:

  • multilateral trade liberalisation through the World Trade Organisation (WTO);
  • regional co-operation and liberalisation through active membership of such fora as the Asia Pacific Economic Cooperation (APEC) and the East Asian Summit;
  • a focus on building regional relationships through various policy initiatives; and
  • plurilateral trade arrangements such as:
    • the Closer Economic Relations (CER) agreement with Australia (signed in 1984);
    • bilateral agreements with Singapore, Thailand, China and Malaysia;
    • the Trans-Pacific Strategic Economic Partnership Agreement (previously known as P4) with Singapore, Chile and Brunei;
    • the ASEAN-Australia-New Zealand Free Trade Agreement;
    • recently concluded negotiations with the Gulf Cooperation Council and Hong Kong;
    • current negotiations underway with Korea;
    • the recently announced Trans-Pacific Partnership negotiations which include the United States, Australia, Peru, Vietnam (as an observer) and the original P4 countries;
    • the PACER (Pacific Agreement on Closer Economic Relations) Plus negotiations, with a focus on economic development within the Pacific; and
    • proposed FTA negotiations with India.

New Zealand remains committed to a reduction of world-wide trade barriers. Tariffs have been systematically reduced and quantitative controls on imported goods eliminated. Currently around 95% of goods come into New Zealand tariff free, including all goods from Least Developed Countries.

New Zealand was active in laying the foundations for the Doha round of WTO negotiations. New Zealand will continue working with other like-minded countries to reduce barriers to trade in goods and services and provide improved market access for New Zealand exporters.

New Zealand, as a member of APEC, is committed to achieving APEC's goals of free trade and investment in the region. Asia-Pacific regional linkages remain at the core of New Zealand's political and economic interests. APEC countries take more than 70% of New Zealand's exports, provide over 65% of tourist visitors and some 70% of inward investment.

New Zealand is a long-standing member of the Organisation for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF), the World Bank, the Asian Development Bank (ADB) and the WTO.

Environmental Policy

The New Zealand government recognises that sustainable development principles should underpin its economic, social and environmental policies both domestically and internationally. “Sustainable development” integrates concern for social, economic and environmental issues, taking into account the long-term as well as short-term effects of policy decisions.

New Zealand's low population and limited industrial base means that environmental issues are generally less severe than in many other industrialised countries. Many of the big environmental issues for New Zealand are also economic and public health issues. More sustainable use of water, managing marine resources, reducing waste and improving energy efficiency are all essential for creating wealth and quality of life as well as for environmental sustainability. The decline of the country's unique plants, animals and ecosystems is New Zealand's most pervasive environmental issue. Programmes are in place or under development in these areas.

The Resource Management Act provides a national framework for addressing environmental issues, with local government having the major responsibility at a local level. During 2009, the government amended the Act to streamline and simplify processes and reduce costly delays for developers and investors while still maintaining necessary environmental protections.

A particular challenge for New Zealand relates to determining the most appropriate way forward in relation to climate change. This has both an international and a domestic perspective. New Zealand is a small country with a unique emissions profile as a result of the prominent place that land-use industries hold in the New Zealand economy. Particular challenges relate to abating agricultural emissions, which make up nearly 50% of New Zealand's greenhouse gas emissions. New Zealand could be affected by significant climatic change and the government is committed to assisting in the international climate change dialogue.

In 2008, the previous government introduced an emissions trading scheme for greenhouse gas emissions. In November 2009, the new government passed legislation making a number of changes to the New Zealand Emissions Trading Scheme to better balance the economic impacts with environmental objectives and more closely align the approach with that of New Zealand's major trading partners, most notably Australia.

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