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Progressing a bespoke digital trade agreement is a realistic prospect that would meet Prime Minister Jacinda Ardern’s commitment to pursue an enhanced trade relationship with the US during this term. 

Jordan Small
Executive Director, NZUS Council

When Trade and Export Growth Minister Damian O’Connor met with the United States’ top trade official Ambassador Katherine Tai last week, on the agenda was a topic that holds significant opportunity for New Zealand – digital trade.

Undoubtedly securing a high-quality, comprehensive free trade agreement (FTA) with the US would be the most effective way to deepen and strengthen our economic relationship and advance our strategic trade interests.

While a full FTA should stay squarely on the long-term agenda, progressing a bespoke digital trade agreement is a realistic prospect that would meet Prime Minister Ardern’s commitment to pursuing an enhanced trade relationship with the US during this term.

It often surprises many that despite not having an FTA, the US is our third largest trade relationship with two-way trade valued at over NZ$17B, which is characterised increasingly by high value goods and services delivering high-paying jobs.

This includes digital exports to the US which were worth more than half a billion dollars over the last 12-months. Computer software and software licences are among our fastest growing exports in this market, rising more than 50% over the last five years.

This week the NZUS Council launched our new report Barriers to NZ-US Digital Trade: are there any? (FINAL – NZUS DIGITAL EXPORTERS web (1)) Based on interviews with digital exporters the drive of the report was to understand the range of barriers and challenges that might be acting as a drag on growth in the NZ-US digital trade context. It also considers the case for a digital trade agreement – a special kind of trade agreement focused on digital exports and policy issues.

The key takeaway is that for our digital exporters, generally, the US is an incredibly positive place to do business and they experience very few, if any, trade barriers. Their biggest obstacles were often commercial challenges, like setting up in the US, navigating the federal and state tax systems, and visas.

These are not the kinds of issues typically addressed in a digital trade agreement, but if we can get around these challenges with practical solutions – whether advice and support or technological – a meaningful difference could be made to the experiences of these exporters.

While there currently may be few digital trade barriers causing our exporters significant issues, there are still compelling reasons for pursuing a gold-standard digital trade agreement. Ultimately, this comes down to creating a more enabling environment for both nations’ digital exporters – right now, and into the future.

Further certainty, innovation

A digital trade agreement would lock in current export-friendly settings, providing further certainty for investment and innovation over time. There is still scope for improvement on electronic signatures, e-invoicing and digital identities, which are typically included in digital trade provisions.

Paperless trading is another area with massive potential to reduce border processing times for shipments, lessen the risks of fraud, and reduce inefficiencies and disruptions in supply chains. The current system is administration heavy involving a lot of hard copy paper checks. Research indicates that paperless trading in global markets could reduce physical transportation costs by up to 20 percent. Quite relevant in the current context.

Just as important is that an agreement would create the platform for two-like minded and innovative nations to work together on the big policy and regulatory issues of our times – data governance and sovereignty, cybersecurity, privacy, and on the regulation of emerging technology like artificial intelligence. An agreement that sets strong trade rules around digital trade can potentially act as a global template.

As both a pathway to securing a full and comprehensive FTA and on its own merits, there are strong reasons to put a digital trade deal firmly on the NZ-US agenda to reflect the modern and exciting nature of this relationship.

It is something that is achievable in the current climate and would certainly count as an enhancement in the trade relationship with the US.


This article was published on the National Business Review website.  No changes have been made to the written content of the article.

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