1. Background
Taiwan WTO and RTA Center of CIER and the New Zealand’s counterpart Business and Economic Research Limited (BERL) jointly held the seminar on “The achievements and prospects of the 10th Anniversary of ANZTEC and beyond” on Wednesday, 13 September 2023.
Both institutes presented the findings of separate studies on the implementations of ANZTEC from Taiwan and New Zealand’s perspectives. In conclusion, both institutes believe that it is important to maintain discussions on maximizing the value of ANZTEC and to explore ways to enhance and deepen mutual benefit, in order to respond to emerging economic order and challenges.
2. The main observations
Since ANZTEC came into effect on December 1, 2013, New Zealand achieved 100% liberalization in 2017, and Taiwan will complete the tariff commitments by removing tariff quotas on velvet antler and liquid dairy products by 2025. Looking at the implementation of the liberalization of goods from both sides, the ANZTEC definitely has led to further growth in overall trade between Taiwan and New Zealand. Both parties have benefited from the liberalization in goods under the ANZTEC.
2.1 From New Zealand’s perspective, the ANZTEC has brought in the benefit as follows:
- TW is NZ’s 7th largest export market and 13th largest source of imported goods.
- Two-way goods and services trade exceeds NZ$3B annually.
- Value of NZ key primary sector exported goods is growing, including horticulture, dairy, and meat.
- Meat of sheep and goats is a growth market for NZ farmers to seize the trade opportunity.
- Growth of other food and beverages, forestry products, and machinery & chemicals are also expanding.
- Onions have moved up to the top ten exports of NZ, long period for removing tariff, and the value of exporting onions has increased by 567% as a result of the ANZTEC. New Zealand’s agricultural products and dairy products have also significantly increased their market share in Taiwan under the agreement, an increase of 651% in value in Apples and pears, ad 569% in wine.
- The ANZTEC has enabled more tourism and education-led travels.
- In contrast to the steady growth of TW’s direct investment in NZ, NZ’s direct investment in TW fluctuated drastically.
- The ANZTEC lays down the path for indigenous trade and promotes culture exchange through Ch 19 of the ANZTEC.
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2.2 From Taiwan’s perspective, the benefit of ANZTEC can be highlighted as follows:
- Despite TW’s trade deficit with NZ amounting to US$400M, the trade value of both sides is increasing.
- Both TW and NZ have achieved a high level of liberalization in tariffs under the ANZTEC.
- TW’s Tariff Quota Utilization rate for liquid milk reached 100% after 2016, but that for deer velvet fell to 55.33% in 2022. The deer velvet case signals that there are still room for TW to improve under the ANZTEC.
- While most of TW’s tariff-reduced products show growth in exports to NZ, some industries face decline in export value, most significantly textiles.
- TW’s screws & bolts and bicycles have enjoyed the benefits of the ANZTEC to become more competitive in the NZ’s market. An increase of 121% in screws and bolts, and a 38% growth in bicycle exports in value were recorded.
- Taiwanese company of fastener indicated that it becomes a leader exporting fastener in New Zealand benefited from the ANZTEC because of reasons like lower tariff, smoother customs clearance process, more frequent and longer cooperation with clients, and growing trade value of exported goods to NZ.
- On the other hand, TW’s textile industry faces a decrease in the export value to NZ possibly because there are more competitors in the market and the supply chain of textiles has shifted.
- Observations show that trade changes between TW and NZ exist, but evidence of the ANZTEC being the cause has not been concluded yet.
3. ANZTEC is beyond trade
Aside from the economic and trade accomplishments shared by both countries, New Zealand and Taiwan have collaborative educational program in sending NZ students to TW and attracting TW students to NZ.
Most importantly, the ANZTEC is not only about deepening trading collaboration but also building closer relationship, and the chapter on indigenous exchange suggests a way for both to deepen the relationship.
Under ANZTEC, Taiwan and New Zealand have conducted multiple indigenous exchange in fields of tourism, language, film & media, and justice in the past decade.
The indigenous feature has more to offer and could overlap with other fields like renewable energy and education programs. Taiwan and New Zealand can benefit from indigenous exchange with more future collaboration.
4. Areas for maximizing the value of the ANZTEC
4.1 Seeking for more collaborations to enhance bilateral investments
In terms of the overall trend of bilateral investment, it is difficult to see a direct relationship between ANZTEC for promoting bilateral investment, but ANZTEC does provide a basis for the development of positive investment cooperation between the two countries.
While New Zealand is renowned for rocket launching experiences, Taiwan is a technology leader for the manufacturing of space related products; there is a consensus that both sides can explore more aspects such as manufacturing-related AI and space industry, to create mutual benefits, in terms of bilateral investments.
4.2 Trade in service: bring back pre-pandemic momentum
In most of the years, New Zealand’s service exports to Taiwan and imports from Taiwan have grown faster than its service trade with the world. For exports before the pandemic, the annual growth rate of New Zealand to Taiwan is 13.56%, much higher than its growth rate(6.28%) of service exports to the global.
Similar trend for imports in 2015 to 2019. the annual growth rate of New Zealand’s service imports from Taiwan is 13.54%, which is higher than the global 8.19%. We should bring back pre-pandemic momentum.
4.3 More emerging issues deserved further discussions
Despite the impressive growth rate of the value of the services trade, the market share of bilateral services to both countries is marginal. Both sides may explore more areas other than tourism to enhance bilateral service trade for mutual benefit. Exploring more liberalizations in service sectors may also help. Both sides may consider to open up more areas for service trades.The inclusion of WTO “Joint Statement Initiative on Services Domestic Regulation” in ANZTEC could also help enhance the performance of service sectors from both sides under the ANZTEC.
In addition to service trade, provisions related to digital trade should also be emphasized by the ANZTEC. A roadmap for deepening digital collaboration between Taiwan and New Zealand is suggested. Paperless trade and E-invocing, digital inclusion, and digital governance stand as pivotal issue areas for prospective collaboration between Taiwan and New Zealand. Issues that are uniquely bilateral and/or are able to demonstrate the hallmarks of ANZTEC, e.g. digital trade for indigenous communities and for women empowerment, should be spotlighted.
As SMEs dominate both countries, inclusion of SME provisions in the ANZTEC would support both businesses as well as indigenous SMEs. Sharing information, being transparent, and easing administrative work could be the starting point for updating ANZTEC provisions regarding SMEs.
5. Policy recommendation
Both organizations agreed Taiwan and New Zealand could do better in improving the collaboration, and bilateral direct investment, and education exchanges, through addressing some institutional issues which may not be fully covered under the ANZTEC. There are also new emerging topics partially included in the agreement that are worth further discussions with the view of maximizing the benefits of ANTEC, including trade in services and domestic regulations, digital trade and digital inclusiveness, indigenous trade and cultural exchange, environmental protection, bilateral collaborations in high-tech and etc.
Trade in goods has demonstrated significant benefits from the ANZTEC for both parties, but the development in services sectors has been relatively limited, particularly after the Covid-19 pandemic. Most of bilateral cross-border trade in service are tourism-led and in education service, but there is a steady decline in student mobility from Taiwan to the New Zealand. It is recommended to elevate the level of liberalizations in service sectors and expand the types of temporary entry of natural persons to advance our bilateral interactions in service areas. Most specifically, it is recommended to revisit the reciprocal working holiday visa quota aim to facilitating mobility of young Taiwanese to New Zealand.
In addition, the inclusion of provisions to facilitate SME in trade is also highly encouraged since SMEs dominate both countries and this will also help further growth in indigenous SMEs.
In response to new challenges coming from climate change and forced labor issues, both sides are encouraged to revisit and to make broader and stronger commitments across these areas.
Finally for the technology collaborations, as Taiwan and New Zealand are complementary partners, we could upgrade the partnership in realms of smart agriculture, renewable energy, biotechnology, digital health, AI, space manufacture. Meanwhile, an updated legal framework of ANZTEC for the service sectors and digital environment are one of the key considerations to advance opportunities and partnerships in light of the changing global economic order and digital transformation.