More than 30 years ago, the Closer Economic Relations (CER) trade agreement between Australia and New Zealand essentially removed all restrictions on the flow of people, goods, services and investment across the Tasman. Today, the agreement is recognised as global best practice, and its success is apparent in the numbers: Australia exported more than AUD$13 billion worth of goods and services in 2016 to New Zealand, its sixth largest trading partner, a figure that consistently grows year upon year. Meanwhile New Zealand exported nearly NZ$13 billion in goods and services to Australia in the same period, making the land down under its number one trading partner.
"Australia's bilateral relationship with New Zealand is one of the closest, broadest, deepest and most enduring relationships we have with any country," says a spokesman for Steve Ciobo, Australia's Minister for Trade, Tourism and Investment.
Is there scope for the countries to become even closer?
Australian and New Zealand ministers met last autumn to advance the Single Economic Market (SEM) agenda, which aims to build on the CER by creating a seamless trans-Tasman marketplace. However, its impact will reach far beyond the two countries.
Interestingly, at the annual Australia-New Zealand Leaders' Meeting1 that took place in Queenstown on 17 February 2017, the Prime Ministers spoke not only about further improving trans-Tasman business processes – they also "noted that Australia and New Zealand collaboration in third markets can be mutually beneficial", Ciobo's spokesman points out.
This is especially relevant considering New Zealand's signing in March of a memorandum of co-operation with China on the Belt and Road Initiative (BRI). For New Zealand, the first developed Western nation to formally recognise the initiative, this will mean closer bilateral ties and increased trade and investment opportunities with China.
HSBC New Zealand's Head of Global Liquidity and Cash Management (GLCM), Jarron Boulter, says that the agreement between China and New Zealand is an incredibly important initiative that will allow the Australian government to see how a market operates as part of the BRI strategy close to home.
"China is a big advanced market that can bring a lot of innovation to what we do in New Zealand, and secondly, Australia can adopt a wait-and-see approach and draw on the experiences we encounter," Boulter says.
"The agreement also provides the opportunity for New Zealand business to be warmly introduced into China and positions us a little ahead of the game."
Already, the strong ties that exist between New Zealand and Australia provide significant benefits to the mid- to large-sized companies that are based, and have customers based, in both markets – from special travel visa arrangements to mutual classification of occupations, and dual-listing of companies on their stock exchanges. In addition, since late last year, businesses on both sides of the Tasman have benefitted from shared knowledge of upcoming infrastructure projects as part of the SEM's final rollout.
Other benefits to come include joint promotion efforts by both countries' international business development agencies, while the SEM's removal of many hurdles in the legal and regulatory space will further streamline trade flow between the two countries.
With trade in services between Australia and New Zealand topping AUD$8 billion last year, industries from construction to technology and finance will benefit from one market and simplified processes on an everyday basis.
Simon Babbage, HSBC's Australian Head of GLCM, points out that the bank has worked with well over 5,000 corporate customers involved in trans-Tasman business and that the SEM will allow businesses to make the most of HSBC's full suite of services – including automated tracking and management of intercompany lending and borrowing, streamlined payments across the trans-Tasman region, and more.
"The SEM is an opportunity to leverage all of our treasury capabilities across one single market and beyond, especially when it comes to intercompany cash management solutions across borders," Babbage says.
Boulter adds that HSBC supports cross-border businesses by offering seamless connectivity between New Zealand and Australia as well as further afield, including Asia, the United States and Europe.
"We can look after your home patch but we can also go beyond, and that's where our strength lies: common documentation and seamless interaction between countries as well as unique services and insights from other markets," says Boulter. "One platform that expands the globe."
1Joint Statement Leaders Meeting, February 2017