June 12, 2024

People-to-people interactions at core of trade

Built on deep historical connections between New Zealand and Pacific Island nations

There are historical cultural, political, economic, and environmental ties that bind New Zealand together with island nations across the Pacific.

New Zealand plays an active role in the Pacific region, supporting economic development through trade and sector investment, enabling labour mobility, and encouraging collaboration on regional issues such as climate change. 

Particular cooperation is maintained within the Pacific Islands Forum (PIF), an inter-governmental organisation comprising 18 nations, including New Zealand and Australia. Furthermore, the Pacific Agreement on Closer Economic Relations (PACER) Plus is a trade and development agreement that brings ten members within the PIF under an umbrella of enhanced trade. This includes the widespread elimination of tariffs, albeit over a longer timeframe than typical trade agreements, as well as developmental support to uplift Pacific export capabilities. Another key mechanism for support is the Pacific Development Cooperation programme, which receives more than 60 percent of New Zealand’s foreign policy aid (as of 31 March 2024). 

The current coalition Government has shown commitment to enhancing Pacific ties, as have previous governments. Most recently, in June 2024, the Prime Minister visited Fiji and Niue, announcing a clean energy project and additional investment towards ocean conservation and climate resilience in Niue, as well as the removal of transit visa requirements for Fijian nationals passing through New Zealand. 

Although comparatively smaller than most of New Zealand’s major trading partners, island nations that form the PIF and the Pacific Islands more broadly are an important area of focus for New Zealand. The relationships held within this region extend beyond New Zealand’s traditional two-way trade profile, with people-to-people connections and movement at their core. In an increasingly geopolitically contested region, managing and enhancing these interactions will remain critical. 

Total two-way trade between New Zealand and the Pacific Islands Forum was $3.99 billion in the year ended March 2024 

If the PIF (excluding Australia) were treated as a single country, it would be considered New Zealand’s seventh largest export market, and our eleventh largest trading partner in terms of total value. This is led by Fiji, where two-way trade of $1.39 billion exceeds the combined value of two-way trade between New Zealand and the Cook Islands ($512 million), Samoa ($458 million), and French Polynesia ($368 million), the three next largest Pacific trading partners.  

Source: Stats NZ

Travel is the largest component of New Zealand’s trade with most nations in the Pacific. This includes the Pacific Islands being a popular tourism destination for New Zealanders, as well as Pacific Peoples visiting friends and family in New Zealand. In the year ended March 2024, travel exports with nations in the PIF increased to $758 million, a jump from $425 million the previous year, which represented 83.4 percent of all service exports. Travel also represented 55.8 percent of imports. New Zealand also exports more traditional goods to the PIF, including dairy ($188 million) and meat ($156 million), as well as electrical and mechanical machinery ($351 million).  

Labour mobility in the Pacific

Labour mobility is a fundamental characteristic of New Zealand’s relationship with the Pacific. In particular, the Recognised Seasonal Employer (RSE) Scheme, although contentious at times, has been very successful. Established in 2007, with a cap of 5,000 workers, the scheme has increased to a present cap of 19,000 workers following significant demand from employers. The Prime Minister has also indicated that he will double this cap in the near future. In 2020, an impact study detailed how participation in the RSE Scheme can contribute to improving living standards and productive livelihoods in Pacific nations by way of RSE earnings and remittances. For New Zealand, a consistent and reliable supply of labour through the Scheme has boosted horticulture production and exports.  

The importance of labour mobility has been reinforced through New Zealand’s commitment to supporting the Strengthening Pacific Labour Mobility (SPLM) Programme and the RSE Worker Training Programme, as well as the arrangement on labour mobility in PACER Plus. This arrangement aims to further advance benefits generated through labour mobility. 

Keeping people-to-people interactions at the core of New Zealand-Pacific relationships 

Most Pacific Island countries have small populations and are remote and distant from larger international markets. This means that they face high transportation costs for their exports and are extremely vulnerable to economic shocks. Almost without exception, Pacific Island countries have, over the last few decades, recorded substantial trade deficits with the rest of the world, including New Zealand. To offset such deficits, these countries have relied heavily on non-commodity sources of foreign exchange, predominantly in the form of earnings from tourism and migrant remittances. New Zealand should continue to support our Pacific neighbours and grow industries where people-to-people interactions are supported.