Market Access Plan 2015-2017
|Wellington||4.5 million||263,310 km²||New Zealand dollar (NZD)|
Why New Zealand Matters
New Zealand is:
- a priority established market under Canada’s Global Markets Action Plan;
- a reliable and complementary trade partner with a developed and strong economy;
- a small but diversified market offering potential opportunities across a range of sectors; and
- a gateway to emerging and established economies of the Asia-Pacific region.
New Zealand boasted 3.1 percent economic growth in 2014 – one of the strongest gross domestic product (GDP) growth rates among Organisation for Economic Co-operation and Development countries. The forecast is for continued significant growth of 2.9 percent in 2015 and of 5 percent on average over the next four years, in spite of low commodity prices and productivity challenges.Footnote 1
For a small country like New Zealand, trade is essential to economic growth. The country’s government is a strong proponent of trade liberalization through an ongoing commitment to work across the full World Trade Organization agenda to support a rules-based global trading system, as well as through regional cooperation and bilateral/multilateral trade arrangements. New Zealand now has ten regional trade agreements, and the New Zealand Government continues to pursue trade integration in Asia – the world’s fastest growing region.
Canada and New Zealand enjoy a strong bilateral relationship based on shared values, similar political structures, Commonwealth ties, historical defence and security cooperation, and the priority that both countries place on multilateral mechanisms and approaches. Areas of cooperation include intelligence and defence issues, trade and public administration reform. Canada and New Zealand cooperate closely in the United Nations, APEC, as well as in regional fora such as the Association of Southeast Asian Nations.
Domestic Economic Environment
Despite prudent fiscal policy and sound macroeconomic policies, the New Zealand Government fell short of balancing the budget in the 2014/15 financial year. However, a budget surplus of $1.1 billion is anticipated for fiscal year 2015/16 and is expected to rise over subsequent years. Net debt is expected to peak at 26.2 percent of gross domestic product (GDP) in 2015/16 and fall thereafter as the government seeks to achieve a debt to GDP ratio of 20 percent or lower by 2020.
Monetary policy aims to maintain price stability and limit inflation to the 1-3 percent range. To that end, the Reserve Bank of New Zealand cut interest rates from 3.5 percent to 3.25 percent in June 2015, due to weakening dairy prices and low inflation. This central bank cut was the first in four years, and further easing is a possibility.
In March 2015, Moody’s Investors Service reaffirmed New Zealand’s AAA credit rating with a stable outlook, one of only 14 countries to receive such a rating. New Zealand's economy has demonstrated a track record of faster and more stable growth than other AAA-rated sovereigns, which counterbalances its economic weaknesses (small size and relatively low income levels).
The New Zealand government’s Business Growth Agenda is delivering innovative initiatives and policy reforms to help create a more productive and competitive economy. It focuses on six core pillars, namely: capital markets, innovation, skilled and safe workplaces; infrastructure, natural resources and export markets.
|GDP per capita||$48,380|
|Canada’s merchandise exports||$413.8 million|
|Canada’s merchandise imports||$614.0 million|
|Canada’s service exports||$244 million (2013)|
|Canada’s service imports||$196 million (2013)|
|Foreign direct investment from New Zealand into Canada||confidential|
|Canadian direct investment in New Zealand||$773 million|
|Potential long-term annual export growth||2.7%|
Canadian Commercial Interests in New Zealand
In 2014, Canada’s bilateral merchandise trade reached just over $1 billion, a 13 percent increase year-on-year and an increase of 34 percent over the last five years.
Key Canadian exports to New Zealand include machinery, fertilizers (potash), aerospace products and wood. Imports from New Zealand reflect the importance of agricultural products in New Zealand’s economy, notably meat (lamb and beef), wine, dairy products, and fruit, but also include products such as machinery and iron and steel.
Two-way investment is a key and growing component of the bilateral relationship. New Zealand is an important destination for Canadian foreign direct investment (FDI) due to the fact that the country welcomes FDI, its regulatory systems are reliable and transparent and intellectual property is enforced. Canada’s FDI footprint in New Zealand is particularly noticeable in the oil and gas and transportation (service) sectors, with other investments in the areas of health, information and communications technology, and retail. Similarly, New Zealand investments in Canada cut across a variety of areas that include oil and gas, mining, information and communications technology, and retail.
Key Elements for Exporters to Consider
Similar cultures and business practices render business development between Canada and New Zealand relatively straightforward. New Zealand’s high standard of living and propensity to import make the New Zealand market a good target for Canadian manufacturers and exporters.
Due to the small size and distance of the market, Canadian exporters may want to adopt an ‘Oceania’ strategy that focuses on both Australia and New Zealand. Although those two markets can be quite different, standards are often similar and many companies are actively taking this approach.
New Zealand prides itself in having one of the most open and deregulated economies in the world; the country is consistently ranked in the top three in the world for transparency and ease of doing business.
New Zealand is committed to reducing trade barriers. Tariffs have been systematically reduced and quantitative controls on imported goods have been eliminated. Around 90 percent of goods come into New Zealand tariff free. Canadian goods on which tariffs apply benefit from preferential rates below five percent.
New Zealand has a strong biosecurity regime in place. All exporters of agricultural products (animal or plant-based) need to comply with strict regulations set by the Ministry of Primary Industries.
Sector-specific Opportunities and Challenges
Defence and Security
Canada’s Department of National Defence enjoys a modest but growing defence materiel cooperative relationship with the New Zealand Ministry of Defence and New Zealand Defence Force. Since 2001, Canada-New Zealand defence materiel cooperation has been pursued under the auspices of a Defence Materiel Cooperation Memorandum of Arrangement, which includes, supporting the identification of joint activities serving the principles of standardisation and interoperability, the provision of mutual support through the exchange of defence materiel-related information and personnel, and the provision of mutual assistance in technical evaluations, tests and trials. Additional bilateral mechanisms facilitate a range of other defence materiel cooperative activities between Canada and New Zealand.
Given a solid foundation of government-to-government defence engagement and several notable past Canadian industry successes in New Zealand, there is considerable potential for further opportunities for Canadian companies to supply the New Zealand Ministry of Defence and New Zealand Defence Force in the future.
Information and Communications Technology (ICT)
According to the New Zealand Office of International Data Corporation (IDC), the New Zealand ICT market, including both consumer and business spending, is valued at NZ$11.5 billion – the largest component being telecommunications, followed by information technology services, hardware, and software.
Fibre networks are slowly being rolled out throughout the country, but asymmetric digital subscriber line (ADSL) remains the most common internet connection. A huge increase in movie streaming has led to congestion on Internet networks with limited capacity.
New Zealand sees ICT as a key tool to transforming public services. The New Zealand government has adopted a ‘whole-of-government’ approach to ICT procurement. Canadian suppliers can benefit from Canada’s reputation for a strong ICT industry.
The life sciences sector is varied but generally focused on the agricultural sector (dairy, meat, fish production). The sector has difficulties raising capital past the NZ$1 million mark, and seeks engagement with U.S.-based sources of funding.
The pharmaceutical subsector is very small. New Zealand was an early adopter of ICT in the health sector and has strong capability with companies such as Orion Health. There are opportunities for Canadian solution providers as more and more organizations, from retirement villages to social services and mental health providers, deploy ICT solutions to ensure better information management.
The nutraceutical subsector offers opportunities for companies with new, thoroughly tested products.
Oil and gas
New Zealand is quickly emerging as an oil and gas producer. With an abundance of natural resources, large unexplored areas, and a range of proven and frontier basins, New Zealand has over the last few years become an investment destination offering significant oil and gas development potential. The sector is a $2.5 billion industry, and New Zealand’s fourth-largest source of export revenues. While the significant drop in oil prices and a curtailment of exploration/production activities are currently impacting this sector, investment opportunities remain.
Oil and gas activities in New Zealand have grown strongly in recent years. In 2013 and 2014, the New Zealand government’s annual Block Offers process to allocate petroleum exploration permits led to the issuance of 25 exploration permits. With only one production basin and 17 others relatively unexplored, New Zealand offers a range of investment opportunities both onshore and offshore in shallow or deep water.
The Block Offers of the past several years have contributed to the New Zealand market gaining increased traction among exploration/production companies, including Canadian firms. As the New Zealand oil patch continues to expand, industry interest in having access to a broader range of procurement options for equipment, services and technologies is also anticipated to grow.
Water quality, water use/storage, and water management are issues of high priority from a long-term sustainability perspective for New Zealand. Demand for environmental solutions remains. There is a potential for projects and initiatives around water treatment and irrigation due to increased demand from the agricultural sector and a higher incidence of droughts in several parts of the country. Canada’s strong capabilities in the areas of water management, leak detection, water treatment, and waste-to-energy technologies, are suited to the New Zealand market. However local councils are increasingly facing fiscal restraints which could impact the nature and roll-out of infrastructure development plans.
The renewable subsectors also hold market development potential. Over the last two years, there has been a sharp increase in solar photovoltaic (PV) installations in New Zealand, with Canadian PV panels currently found in the local market. New Zealand also has 19 wind farms, and this subsector is of interest to most New Zealand energy companies.
Major Negotiations and Agreements
Trans-Pacific Partnership (TPP)
The TPP agreement is the most comprehensive and ambitious regional trade agreement in the Asia Pacific and will deepen Canada’s trade ties in this dynamic and fast growing region. The TPP currently comprises 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam), representing a combined market of nearly 800 million people and a GDP of $28.5 trillion.
Selected Trade Initiatives – Seize the Opportunity!
- NZ Defence Industry Association Forum, November 17-18, 2015, Wellington, New Zealand.
- Sustainable Technologies
- Water New Zealand Annual Conference & Expo, Hamilton, New Zealand
- Life Sciences
- Health Informatics New Zealand Conference, October 19-22, 2015, Christchurch, New Zealand
- Oil and Gas
- New Zealand Advantage and Petroleum Summit, March 2016, Auckland, New Zealand
- The Trade Commissioner Service in New Zealand: The Trade Commissioner Service offers foreign market intelligence, introductions in key networks, cost- and risk-reduction advice, business problem troubleshooting, and on-the-ground support.
- The Canadian High Commission of Canada in New Zealand: Canadian government offices abroad provide a variety of services, including consular services.
- Canadian Commercial Corporation (CCC): Provides assistance with government-to-government contracting
- Export Development Canada (EDC): With representatives at Canada’s High Commission in Singapore, EDC services an include market knowledge, credit insurance, bank guarantees, foreign buyer financing, political risk insurance, foreign investments and foreign affiliate support.
- Department of National Defence (DND): DND has a Canadian Defence Attaché in Sydney who also covers New Zealand.
Where not otherwise indicated, the information is provided by the High Commission of Canada in New Zealand. This document is not intended to provide specific advice and should not be relied on as such. It is intended as an overview only. No action or decision should be taken without detailed independent research and professional advice concerning the specific subject matter of such action or decision. While Foreign Affairs, Trade and Development Canada (DFATD) has made reasonable efforts to ensure that the information contained in this document is accurate, DFATD does not represent or warrant the accurateness, timeliness or completeness of the information contained herein. This document or any part of it may become obsolete at any time. It is the user’s responsibility to verify any information contained herein before relying on such information. DFATD is not liable in any manner whatsoever for any loss or damage caused by or resulting from any inaccuracies, errors or omissions in the information contained in this document. This document is not intended to and does not constitute investment, legal or tax advice. For investment, legal or tax advice, please consult a qualified professional.
- Footnote 1
IMF, April 2015
- Date Modified: