KEY POINTS:
New Zealand can improve its export performance if it pins its hopes less on the World Trade Organisation and focuses more on the Asia-Pacific region, the New Zealand Institute says in its latest report.
Competing to win: An external strategy for a changed world suggests the country's trade
strategy is no longer appropriate.
"New Zealand's heavy focus on multilateral trade liberalisation, supplemented with some [free trade agreement] negotiations and some export promotion activity in a wide range of markets, was appropriate for a world where New Zealand was focused on selling commodity products into as many markets as possible, but it is less well-suited to the current environment," the report says.
This is because the challenges for exporters go beyond just getting their goods across an international border without attracting a tariff.
"Given the significant change in the global economy and New Zealand's relatively low level of economic activity, serious questions need to be asked in terms of whether this approach remains fully appropriate."
The report - the fifth by the New Zealand Institute - finds the key is "strengthening the ability of New Zealand firms to access foreign markets".
Written by David Skilling and Danielle Boven, the report suggests a three-part strategy.
First, New Zealand needs a much more deliberate regional focus.
"This reflects the need for New Zealand, as a small country, to focus the economic and political investments it is making to secure market access in a few key priority markets rather than investing small amounts across many markets," it says.
"It is also a response to the increasingly regional flavour of the global economic environment, and the need for New Zealand to be on the inside of the emerging regional architecture."
The report suggests a much greater focus on the Asia-Pacific region.
"The Asia Pacific is a very large and growing market and is physically close to New Zealand. In particular, it is recommended that New Zealand make disproportionate investments in developing its economic relationships with Australia, the US, and China."
Secondly, New Zealand must "substantially" boost its investments in foreign market activities to achieve its export outcomes.
"The type of activities that are important in this regard include providing in-market services to New Zealand firms as they seek to enter and expand into international markets: for example, providing access to shared infrastructure, to world-class market research, and to local networks," the report says.
"These direct services to New Zealand firms should be supplemented by deliberate campaigns to showcase New Zealand, with particular emphasis on the three target markets, through national branding, cultural diplomacy, physical points of presence, and New Zealand business and government delegations."
Third, the country needs to better define its export objectives.
Currently progress is measured "on process dimensions like the number of meetings between senior officials or progress towards securing an FTA".
"Ultimately, however, what matters is achieving a substantial and sustained increase in the level of New Zealand's international economic engagement."
