Trade and Export Growth Minister Damien O’Connor joined ministerial representatives at a meeting in Detroit, USA to announce the substantial conclusion of negotiations of a new regional supply chains agreement among 14 Indo-Pacific countries.
The Supply Chains agreement is one of four pillars being negotiated within the Indo-Pacific Economic Framework (IPEF) initiative launched in September 2022.
“COVID-19 and Russia’s war on Ukraine have shown how supply chain disruption can impact the cost of living for everyday Kiwis, with shipping container and fuel costs driving inflation,” Damien O’Connor said.
“Despite these challenges our trade programme is strong. We hit record total export revenue of nearly $90 billion for the year ending December 2022 along with record food and fibre export revenue of $53 billion last year, and have secured or upgraded seven free trade agreements since 2018.
“We are leaving no stone unturned to ensure supply chains do not constrain the substantial progress we’ve made on trade. It’s in our interest to be part of this IPEF agreement, focussing on ensuring supply chains can weather global events.
“According to the Customs Brokers and Freight Forwarders Association, the cost of sending a shipping container from New Zealand to the USA grew from $2,000 to $10,000 at the peak of the disruption. The time taken for shipping containers to travel across major global shipping routes skyrocketed from under 60 days in 2019 to an all-time high of more than 120 days in 2022, according to Flexport’s Ocean Timeliness Indicator.”
IPEF is a novel type of agreement that will provide new channels of collaboration amongst regional countries. It covers new ground on modern issues such as the digital economy and accelerating climate action. The group includes the United States and many of the large Asian countries, including Japan, Korea, India and most members of ASEAN. Together the 14 represented 40% of world GDP in 2021.
The Supply Chains agreement today signals our intention to act to improve the resilience, efficiency, productivity, sustainability, transparency, diversification, security, fairness, and inclusivity of supply chains involving IPEF countries.
Partners undertake to:
- Promote regulatory transparency in areas which may impact IPEF supply chains;
- Develop a shared understanding of global supply chain risks through each Party identifying their critical sectors and key goods in their supply chains;
- Monitor for and address supply chain vulnerabilities; and
- Promote responsible business conduct and transparency in terms of upholding labour rights in supply chains.
Damien O’Connor said the agreement was another part of the Government’s economic plan to protect New Zealand’s economy from the sharp edges of a global downturn.
“Having a big group of countries commit to share information, identify stress points and come up with practical solutions is an important step forward,” Damien O’Connor said.
“I commend the leadership of the United States in moving the IPEF agenda forward. We look forward to continuing the hard work this year on the remaining parts of IPEF.”
Further information on the Indo-Pacific Economic Framework can be found here:
