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New Zealand's Economic Reforms Cited in Independent Review

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New Zealand's Economic Reforms Cited in Independent Review
« on: November 21, 2020, 09:02:13 PM »
An independent review of New Zealand's progress to achieve its APEC free trade and investment goals has noted New Zealand's regulatory environment as being amongst the best in the world.

The Study Report on New Zealand's Individual Action Plan (IAP) was reviewed by representatives of APEC Member Economies in Cairns this week.

IAPs are developed by each APEC Member Economy to guide them in efforts to achieve APEC's Bogor Goals of free trade and investment in the Asia-Pacific region by 2010 for industrialized economies and 2020 for developing economies.

The IAP review program provides each APEC Member with the opportunity to have their progress towards APEC's goals assessed by Independent Experts. A peer review session is then conducted in which officials from other economies pose questions to the economy under review to better understand where progress is being made and where additional efforts may be required.

Wide-ranging reforms in New Zealand's economy over recent decades were singled out for particular mention. The report said that these reforms have led to the economy becoming "one of the most open and flexible economies in the OECD area."

"Overall, New Zealand's product markets work well, especially given the constraints faced by a small and geographically isolated economy. Minimising barriers to entry has been especially important for promoting competition by constraining potentially anti-competitive behaviour."

The report did sound a note of caution: "A large external deficit, very low household savings and still-strong inflation pressures offer signs of an unbalanced growth pattern, though there are some indications that such imbalances may be starting to unwind."

In broad terms, however, it was acknowledged that these ongoing challenges do not mask an overall picture of a fundamentally reformed economy now enjoying sustained economic growth.

The report noted New Zealand's ongoing commitment to enhancing the multilateral trading environment through forums such as the WTO. "The multilateral process remains the top trade priority for New Zealand because it offers the largest potential gains. New Zealand considers it important to ensure that the country is part of the ongoing dynamic towards preferential trade agreements so as to strengthen economic links and obtain improved access to key markets in the region and beyond."

The major market-oriented reforms that were initiated in New Zealand in the mid 1980s and have continued over the past two decades were noted for their contribution to reducing protectionist barriers to trade, including the period since the last IAP review in 2003. "In particular, tariffs were cut considerably and the period since the last IAP review has seen continued unilateral tariff liberalization. Ninety-five percent of the country's imports are today free of duty, and of the remaining 5% of goods by value that are dutiable, most goods attract rates of duty between 5% and 7.5%. In addition, non-tariff barriers in the form of quantitative restrictions and export assistance measures have long been removed, a policy course that has also been applied to import licensing.

The report stated that these tariff and non-tariff measures are areas where New Zealand can credibly claim to have already met, or will soon meet, its Bogor Goals.

New Zealand's progress to reach the Bogor Goals in the services sector also appears on track with the report noting that "the growth of New Zealand's services exports surpassed the OECD average since 2000, with tourism and education services leading the way."

New Zealand's open approach to finding skills beyond its borders to facilitate employers' access to global talent was highlighted as being particularly useful. "New Zealand has active temporary work programs to enable people to come to New Zealand and work while they are in the country. The Department of Labour regularly surveys the labour market and industries to identify occupations in national or regional shortage."

As part of this approach to facilitating the mobility of people, the report noted that New Zealand also generally exceeds the APEC best practice standard of 30 days to process intra-company transferee applications.

The report was researched and written by Professor Pierre Sauvé from the World Trade Institute in Switzerland, and Professor Bambang P.S. Brodjonegoro from the Faculty of Economics at the University of Indonesia.

Three APEC Member Economies, China, Korea and New Zealand, are having their IAPs' reviewed at the current round of APEC meetings taking place in Cairns.


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