Should Australia and New Zealand collaborate more closely in trade and investment promotion in global markets?
David Twine FAICD
August 2012, Auckland
This is not a new question. In both Australia and New Zealand, and by Aussie and Kiwi business people dotted around Asia, I am often asked to comment on whether the trade promotion and facilitation agencies of Australia and New Zealand should work more closely together or even go beyond collaboration to a more formal association or alliance.
As a former diplomat (and having had some involvement in these considerations at a government to government level), I am happy to share some perspectives on the subject, although the question is really one for our political leaders.
It is fair to say that I am a strong advocate of the concept although that disposition is not grounded in any idealism or ideological agenda. Rather it derives from measured and considered pragmatism, and the prospects of material mutual value creation to deliver ‘Net Trans-Tasman Benefit’, together with greater efficiency and effectiveness in the application of taxpayer-funded government resources in both countries. In pursuing any such agenda though, the respective national interests must remain paramount or advocacy will quickly erode.
Frankly, my perspectives and earlier association with this subject as a diplomat, are arguably academic. What really matters on this subject is both strong will and leadership at the political level, and the vocal, engaged (and informed) advocacy and participation of the business community on both sides of the Tasman.
That said, some comments (in no particular order) I offer for consideration are as follows:
1. For context, it needs to be remembered that this is not a new idea. It has been around for many years, consistent with, and in part flowing from, the objectives of the Closer Economic Relations (CER) agreement between our two countries. Some efforts to foster closer collaboration in trade promotion were pursued in the mid-90s but did not achieve sufficient momentum to translate into the embedding of a longer term strategic framework or program and in time fizzled. More recently, in 2009, the Prime Ministers of Australia and New Zealand committed to further strengthen cooperation to promote open markets and trade opportunities for exporters, including through the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), and, to expand joint trade promotion (Austrade and NZTE) activities to increase global market shares for the trans-Tasman economy.
Some good progress was made, with a draft agenda developed for targeted closer collaboration in select markets and sectors with both short and longer term action plans. Unfortunately a range of ‘real-world’ circumstantial factors constrained momentum and the initiative effectively stalled. Perhaps, a more conducive political setting will arise again – on both sides of the Tasman – for the matter to be revisited and given new currency.
2. It would be erroneous to assume that such a concept starts from a zero base. Some good collaboration has already been achieved. The idea of enhancing and expanding collaboration between Austrade and NZTE builds on a good history of joint activities, particularly in markets offshore. Driven primarily by local relationships around the world between Austrade and NZTE diplomatic staff, led especially by senior diplomats in Asia, the two agencies have collaborated on a number of trade and investment promotion activities over time. Most of that activity though occurred on an ad-hoc basis, arising informally, and has typically been ‘opportunistic’ in nature, not based around particularly strategic objectives per se and nor has it engaged the advocacy of key stakeholders which will be critical to success politically. That doesn’t diminish its value though.
3. The rationale for a more strategic and structured approach to collaboration is I think strong. The aim ought to be to find further areas where Australian and New Zealand businesses could benefit from enhanced, more strategically-based and structured, collaboration between their respective trade and investment agencies as well as at a government-to-government level more broadly. The aim should be to use collaboration as a means to deliver greater commercial outcomes for each country’s businesses and economic interests in both trade and investment. The guiding tenet needs to be about delivering net value to the stakeholders of both agencies.
4. Winning business in major overseas markets is highly competitive. Comparatively small economies like NZ and Australia need to continue to find smart and innovative ways to market and promote our countries, our industries and our businesses to build profile, reputation/brand and awareness of our capabilities and find new ways to deliver value for respective governments and the constituents and companies they serve. (Noting the EU works together as one as well as individual countries.)
5. Collaboration should therefore be pragmatically focused on areas in which clear commercial outcomes can be achieved above and beyond those that each government’s agency efforts can achieve separately. If that is done, some of the benefits imaginable could include:
• leveraging existing industry capabilities to provide a more significant joint market offering in highly competitive events offshore;
• building on existing complementarities to achieve commercial impact and realise cost efficiencies;
• learning from and supporting each other, to maximise the benefit to the Trans-Tasman economy internationally;
• commercial partnerships and alliance between Australian and New Zealand companies, including in international markets (together offering a stronger value proposition than operating independently or worse, in competition);
• adding “Australasian” critical mass of capacity and/or capability in sectors where separately that might be lacking (eg: as has been evident in some of the joint activities to date – the clean energy sector is a good case in point);
• combining complementary Australian and New Zealand industry capabilities to provide more compelling (and complete) value propositions to offshore customers and investors – i.e. “the best of Australia and NZ capability together under one banner”, in turn increasing customer/investor interest and critical mass in the combined offerings of two countries at key events;
• combining the reach and market relationships of both organisations’ international networks to capture, interpret and act upon behind-the-border intel and other market access issues of common concern and opportunity; and
• cross-promoting each other, particularly in the context of Foreign Direct Investment (FDI) attraction, and facilitating prospective investor visits to both countries.
6. Despite these possible strategic benefits, it should be noted that closer collaboration should not mean that the companies involved in joint government promotion activities have to be always compatible and complementary – quite the opposite. The companies that NZTE and Austrade assist to pursue international business opportunities will have to compete with others from their own countries and internationally whether the two trade agencies are involved or not – and so it should be. Even if, say, a joint dairy foods promotion was facilitated offshore, companies from both sides of the Tasman would be strong competitors against each other, as well as with all those from different Australian states and other countries. In this respect, nothing would change.
7. It should not be the role or intention of either organisation to limit or impair competition between Australian and NZ companies, rather to plan and deliver the collaborative activities undertaken to build an image of respective relevant industry capabilities and better position our companies and industries to compete and win business globally, especially in Asia.
8. Fundamentally though, the over-riding objective of both agencies must surely be to remain pragmatically focussed on their respective strategic and ‘offensive’ national interests.
9. Greater formal collaboration between NZ and Australia in trade and investment would appear to be in harmony with both existing government to government architecture and multiple precedents. For example, NZ currently participates in at least 21 of 27 Council of Australian Governments’ (COAG) councils or committees. That’s already quite a compelling level of integration sending a strong message about direction. Aside from other logic, collaboration in trade and investment promotion would seem to be a natural evolution consistent with current arrangements and trends and the migration towards a single economic community.
10. In global terms, New Zealand and Australia are both relatively small economies with modestly (leanly?) resourced trade and investment promotion agencies which have both endured years of progressive downsizing due to budget reductions and/or increasing costs; regional and global opportunities are big enough in most sectors for both Australia and New Zealand. While sensible, responsible and value-based use of government resources would need to be the over-riding reference point, in the spirit of both governments’ commitment to open, liberalised economies, stakeholders on both sides of the Tasman would need to look beyond parochial and protectionist tendencies and be openly prepared to pragmatically consider and test all possible areas as to whether there is more to be gained in working together than independently. That challenge should be embraced, not resisted in my view.
11. Nevertheless, it is to be anticipated that such ideas of increased collaboration could attract resistance at times by companies in one or other country regarding the justification for “cooperating with the competition”. To sensitively address these concerns it will be important to:
• focus cooperation on areas where there are clear commercial benefits for both countries;
• share costs proportionately between respective government agencies (for those components of costs of activities being funded by each country’s taxpayers;
• ensure an equitable approach to charging where companies are required to pay for their involvement (or customised services) in a joint activity.
• adopt operating guidelines and protocols in order to manage, and demonstrate, commercial integrity and consistency in all joint activities for the benefit of respective stakeholder communities;
• identify and enlist the support of companies and business groups on both sides of the Tasman as public advocates (several have already made their support and willingness to contribute clear); and;
• jointly develop and manage proactive communication plans together as well as channels for ongoing business communities feedback and consultation.
12. One of the untold benefits of doing more together is that the more Australian and NZ companies collaborate in the pursuit of international business, the more potential there is for them to identify and pursue business with each other, leveraging natural synergies and efficiencies. While it is currently beyond the charter of the respective trans-Tasman trade and investment agencies to monitor or measure such outcomes, there is sufficient anecdotal evidence to prove it has been a regular outcome from many joint activities over the years.
13. Finally, again, what really matters on this subject is both strong will and leadership at the political level, and the vocal, engaged, informed advocacy and participation of the business community on both sides of the Tasman.
Find me at