2. New Zealand’s trade policy settings
Chapter 2 outlines New Zealand’s trade policy settings that are of particular importance to women. It includes a review of the gender-related provisions in its trade agreements ‒ both those that specifically mention non-discrimination and women’s empowerment, and those that, although they do not specifically mention women, may most affect them. New Zealand’s performance in facilitating trade is compared with that of other small, open economies: trade facilitating measures most aid small businesses, where women business owners and leaders are disproportionately represented. This chapter also includes an overview of New Zealand’s barriers to trade in services sectors, where women work most.
This chapter will examine New Zealand’s trade policy settings in several areas of particular importance for women. The chapter will begin with a survey of the gender-related provisions in New Zealand’s trade agreements, both those that refer to gender and women explicitly, and those that are of particular importance to women although they are not explicitly targeted by the provisions. New Zealand’s trade facilitating policies are then reviewed. Women entrepreneurs are strongly impacted by trade policies that facilitate trade because they generally own and lead businesses that tend to be smaller than those owned and led by men; women also have access to less capital. The last section examines the trade restrictiveness of New Zealand’s services sectors; as noted in Chapter 1, a high majority of women work and lead businesses in the services sectors.
Like most countries, New Zealand has not traditionally included specific provisions relating to women or gender equality in its trade agreements. In recent years, however, New Zealand has increasingly focussed on the gendered impacts of trade and trade rules; for instance, by having played an instrumental role in the Global Trade and Gender Arrangement (GTAGA).
There is no single definition of a "gender-related" provision in a trade agreement (Monteiro, 2018[1]). Here we consider as “gender-related” any text that acknowledges the gender-based inequalities that can be reinforced or reduced by international trade and investment, and text that offers commitment, vision, or actions to challenge such inequalities, irrespective of whether it explicitly uses the words “women” or “gender equality.”1
Of the twelve bilateral and regional trade agreements (PTAs) that New Zealand has ratified, only three mention women explicitly: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Digital Economy Partnership Agreement (DEPA) and the NZ-Singapore Closer Economic Partnership Agreement. New Zealand-Singapore mentions women specifically only in its Preamble. New Zealand has also agreed to two non-binding international texts dedicated to trade and gender: the 2017 Buenos Aires Declaration on Trade and Women’s Economic Empowerment and the 2020 Global Trade and Gender Arrangement.
The gender-related content of New Zealand’s trade agreements is summarised in Table 2.1. This chapter will survey explicit gender-related provisions in New Zealand’s trade agreements before considering implicit gender-related provisions.
Agreements with explicit gender-related provisions
New Zealand – United Kingdom Free Trade Agreement (NZ-UK FTA)
New Zealand and the United Kingdom reached agreement on the key elements of a new FTA in October 2021. The Agreement in Principle (AIP) commits to including in the FTA a dedicated chapter that will advance women’s economic empowerment and promote gender equality in trade.2 This chapter will be supplemented by a number of gender equality provisions agreed across the FTA. Commitments in the trade and gender equality chapter will include:
Provisions to implement the obligations under existing international agreements and instruments that New Zealand and the United Kingdom have signed up to and which address women’s rights or gender equality.
Commitments on cooperative activities that aim to enhance the ability of women to benefit from the FTA and address barriers for women in trade such as lack of access to markets, business and leadership networks, and finance. Future cooperation may focus on promoting financial inclusion, building trade-related capacity and enhancing skills of women at work, in business and at senior levels, fostering women’s entrepreneurship, and supporting economic opportunities for diverse groups of women in trade and investment, including wāhine Māori.
A commitment to develop a framework for analysing sex or gender-disaggregated data, and gender-focused analysis of trade policies.
In addition to the Trade and Gender chapter, gender-related provisions will be incorporated in the Labour and Trade and Development chapters. The Labour chapter affirms obligations as members of the ILO and will include provisions with respect to women’s equality in the workplace.
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
The CPTPP contains two explicit references to women. One is in its Labour chapter, which notes that Parties “shall, as appropriate leverage their respective membership in regional and multilateral fora to further their common interests in addressing labour issues,” identifying amongst areas for cooperation, promotion of equality of, elimination of discrimination against, and the employment interests of women.3
The second reference is in the Development chapter, which contains a specific article on Women and Economic Growth.4 In this, CPTPP Parties “recognise that enhancing opportunities in their territories for women, including workers and business owners, to participate in the domestic and global economy contributes to economic development.” The Parties further recognise the benefit of sharing experiences “in designing, implementing and strengthening programmes to encourage this participation.” The article sets out the types of cooperative activities that Parties “shall consider undertaking.” These include providing advice or training and exchanging information and experience on programmes aimed at helping women build their skills and capacity, enhancing their access to markets, technology and financing, developing women’s leadership networks, and identifying best practices related to workplace flexibility.
The agreement also includes various provisions that, although worded in a gender-neutral way, may help advance gender equality or help women in CPTPP economies to trade more successfully. Some of its implicit gender-related provisions in CPTPP are presented in Section 3.1.2. More generally, as it addresses regulatory barriers – with a strong emphasis on non-tariff barriers (NTBs) such as procedural obstacles or opaque technical regulations– the CPTPP can be viewed as supportive of women given that the burden of many NTBs falls disproportionately heavily on women entrepreneurs and SMEs as a result of the high fixed costs involved (Honey, 2018[2]).
When they signed the CPTPP, New Zealand, Canada and Chile adopted a Declaration on Progressive and Inclusive Trade. Through this they agreed to work together to examine the effectiveness of the CPTPP with respect to sustainable development, gender, SMEs and labour rights, within three years of the entry into force of CPTPP.5
Digital Economy Partnership Agreement (DEPA)
The Digital Economy Partnership Agreement was signed by New Zealand, Chile and Singapore in June 2020. DEPA integrates gender provisions in a number of ways. Its Preamble reaffirms the importance of promoting public interest goals such as gender equality, labour rights and inclusive trade. Its article on digital inclusion acknowledges the value of ensuring that “all people and businesses have what they need to participate in, contribute to, and benefit from the digital economy”. It stipulates that Parties shall cooperate on matters relating to digital inclusion, including participation of women, rural populations, Indigenous Peoples and more vulnerable groups, and sets out possible ways of cooperating such as addressing barriers in accessing opportunities afforded by the digital economy and sharing best practices with respect to digital inclusion.
Buenos Aires Declaration on Trade and Women’s Economic Empowerment
WTO Members which have endorsed the Buenos Aires Declaration agree to collaborate on making their trade and development policies more gender-responsive, acknowledging that international trade and investment are engines of economic growth. They acknowledge the need to develop evidence-based interventions to address barriers that limit opportunities for women in the economy.
The Declaration sets out a number of activities to this end: sharing experiences relating to policies and programs to encourage women’s participation nationally and internationally; sharing best practices for conducting gender-based analysis of trade policies and for the monitoring of their effects; sharing methods and procedures for collecting and analysing gender-disaggregated data and monitoring and evaluation methodologies; working together in the WTO to remove barriers to women’s economic empowerment and increase their participation in trade; and ensuring that Aid for Trade supports the analysis, design and implementation of more gender-responsive trade policies. In its Preamble, the Declaration recalls SDG5, covering the achievement of gender equality and empowerment of all women and girls, and reaffirms signatories’ commitment to implement the obligations under the Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW).
The Buenos Aires Declaration created a mandate within the WTO for further work on gender equality and on trade and women’s economic empowerment, which has been mainly undertaken through the Informal Working Group on Trade and Gender established in 2020. New Zealand co-sponsored the follow up declaration, although this has not yet been launched due to the postponement of the Twelfth WTO Ministerial Conference.
Global Trade and Gender Arrangement (GTAGA)
As an instrument dedicated wholly to trade and gender, GTAGA contains many explicit references to gender equality, women’s economic empowerment and women’s participation in the economy. Its Preamble (General Understandings) recalls SDG 5, notes that it is inappropriate to derogate from gender equality laws and regulations to encourage trade or investment, and acknowledges the need to identify the range of barriers that limit opportunities for women in the economy and deliver evidence-based interventions in response.
In its operative provisions, Participants reaffirm their commitments under CEDAW and “any other international agreement addressing women's rights or gender equality to which they are party” and acknowledge the CEDAW Committee’s general recommendations. They also agree to implement the Buenos Aires Declaration.
GTAGA’s General Dispositions specify the purposes of the “mutually supportive trade and gender policies” to which Participants agree. These are to improve women’s access to economic opportunities to further women’s economic empowerment and sustainable development, to improve and increase women’s participation in trade and investment, to enforce signatories’ laws and regulations promoting gender equality and avoid encouraging trade and investment by weakening or reducing protections for women.
GTAGA sets out specific provisions on gender and trade in services, gender and responsible business conduct and discrimination in the workplace. It provides that Participants will share experiences relating to policies and programmes to encourage women’s full and equal participation. Participants also commit to report on progress under the WTO Trade Policy Review Mechanism. Similar to the gender chapters in recent bilateral trade agreements between Canada, Chile, Brazil and others,6 it sets out means of cooperation and non-exhaustive lists of areas for cooperation, including supporting economic opportunities for Indigenous women. GTAGA creates a Trade and Gender Working Group and mandates that a Contact Point for Trade and Gender be set up in each of the Parties. A first periodic review of the Arrangement is due to take place within three years.
WTO Reference Paper on Services Domestic Regulation
In 2021, a group of WTO Members adopted new rules with a view to clarifying and harmonising the processes by which countries regulate authorisation of foreign service suppliers. These rules – set out in the Reference Paper – cover licensing and qualification requirements and procedures as well as technical standards. They include a provision on non-discrimination between men and women: the first of its kind to be included in a WTO text (World Trade Organization, 2021[3]). The provision stipulates that if a Member adopts or maintains measures relating to the authorisation for the supply of a service, the Member shall ensure that such measures do not discriminate between men and women. Significantly, the Reference Paper specifies that “[d]ifferential treatment that is reasonable and objective, and aims to achieve a legitimate purpose, and adoption by Members of temporary special measures aimed at accelerating de facto equality between men and women, shall not be considered discrimination for the purposes of this provision.”
Implicit gender-related provisions in trade agreements
Trade agreements prior to 2017 were generally drafted with no explicit reference to the fact that men and women participate in, and are affected by, trade in different ways.7 Nonetheless, for the purposes of this Review, the texts of all New Zealand’s PTAs have been examined to glean whether any of their provisions might implicitly be favourable to women. Those provisions that are most relevant to women are presented here under five headings: (1) SMEs, (2) labour standards, (3 inclusive development, (4) redressing inequalities, and (5) the right to regulate.
Provisions in favour of SMEs
Most of New Zealand’s trade agreements acknowledge that SMEs need special assistance to benefit from international trade. For instance, the Investment Chapter of the 2005 New Zealand-Thailand agreement notes “capacity building, including for small and medium enterprises” as one of the areas in which the Parties may strengthen and develop cooperation efforts. As Table 2 indicates, the attention paid to SMEs’ has increased over time, with the more recent agreements containing dedicated chapters on the topic. None of New Zealand’s PTAs explicitly make the link between SMEs and gender equality or women’s economic empowerment, but GTAGA does.
The Regional Comprehensive Economic Partnership Agreement (RCEP) has no reference to gender equality or women. It does however have a chapter on SMEs.8 CPTPP, in addition to its explicit gender-related provisions, includes a dedicated chapter on SMEs.9 SME chapters’ contents may particularly benefit women. Both RCEP’s and CPTPP’s provide for information sharing and cooperation to enable SMEs to benefit from the agreement. RCEP’s SME chapter requires each Party to establish a Contact Point to “facilitate cooperation and information sharing under this Chapter.” CPTPP goes further in that it sets up a formal intergovernmental SME Committee to cooperate on, and share experiences regarding, support for SMEs.
Other RCEP and CPTPP chapters also address the needs of SMEs. One example is RCEP’s chapter on economic and technical cooperation says that the Parties shall explore and undertake cooperation activities, including capacity building and technical assistance that focus on small and medium enterprises. CPTPP’s chapters on Government Procurement10 and on Cooperation and Capacity-Building recognise respectively the importance of facilitating the participation of SMEs and that SMEs may require assistance in participating in global markets. Of these three chapters, only the one on government procurement is subject to the CPTPP dispute settlement mechanism. DEPA also contains a section on trade and investment opportunities for SMEs in the digital economy.
Other RCEP and CPTPP chapters also address the needs of SMEs. One example is RCEP’s chapter on economic and technical cooperation says that the Parties shall explore and undertake cooperation activities, including capacity building and technical assistance that focus on small and medium enterprises. CPTPP’s chapters on Government Procurement11 and on Cooperation and Capacity-Building12 recognise respectively the importance of facilitating the participation of SMEs and that SMEs may require assistance in participating in global markets. Of these three chapters, only the one on government procurement is subject to the CPTPP dispute settlement mechanism. DEPA also contains a section on trade and investment opportunities for SMEs in the digital economy.
Labour standards
All New Zealand PTAs adopted since 2005 include at least some reference to labour standards – most referring to the need to cooperate in this area. Some of these references are contained in the text itself, some in labour side-agreements or Memorandi of Understanding (MoUs). The more recent PTAs refer to Parties’ obligations as members of the ILO and/or the 1998 ILO Declaration on Fundamental Principles and Rights at Work13 (ILO Declaration), one of the principles of which is to eliminate discrimination in respect of employment and occupation.
Some agreements ‒ e.g. PACER Plus ‒ cite the need to avoid lowering labour (and other) standards to attract investment or increase trade and some specify that labour standards should not be used to disguise otherwise protectionist measures. CPTPP further specifies that no Party shall fail to effectively enforce its labour laws “through a sustained or recurring course of action or inaction in a manner affecting trade or investment between the Parties after the date of entry into force of this Agreement.”14 Several agreements mandate cooperation on labour-related issues.
CPTPP’s Labour Chapter mandates Parties to “…leverage their respective membership in regional and multilateral fora to further their common interests in addressing labour issues.” It also includes a provision requiring Parties to endeavour to encourage enterprises to voluntarily adopt corporate social responsibility initiatives on labour issues that have been endorsed or are supported by that Party.15 The chapter sets up a cooperative labour dialogue and a Labour Council composed of senior government representatives. Disputes under the labour chapter are subject to the CPTPP dispute settlement mechanism.
Inclusive development
New Zealand’s PTAs have only very recently started mentioning inclusive economic growth or development (Table 2.1). Prior to these, one has referenced the objective of sustainable development (AANZFTA) and two have acknowledged that economic development and social development are interdependent (NZ-Hong Kong China Closer Economic Partnership, PACER Plus).
CPTPP goes further. In reaffirming the importance of inclusive trade,16 its Preamble indirectly acknowledges the need to pay heed to vulnerable groups. Further, Article 23.1.2 of the Development chapter states that "The Parties acknowledge the importance of development in promoting inclusive economic growth…”. Other parts of the Development Chapter recognise the potential for joint development activities between the Parties “to reinforce efforts to achieve sustainable development goals”.
Redressing inequalities
Treaty provisions that seek to provide training, facilitate information sharing, or develop business networks may benefit women particularly. Most New Zealand PTAs provide for some form of cooperation on capacity-building or training. None of the agreements note priority to women or suggest gender balance, but these gender-neutral provisions may be especially valuable for women. CPTPP’s Development Chapter, for instance, recognises that generating and sustaining broad-based economic growth requires sustained high-level commitment by CPTPP governments “to effectively and efficiently administer public institutions, invest in public infrastructure, welfare, health and education systems, and foster entrepreneurship and access to economic opportunity”. Article 23.5 on Education, Science and Technology, Research and Innovation recognises that promotion and development of education, science and technology, research and innovation can play an important role in accelerating growth, enhancing competitiveness, creating jobs, and expanding trade and investment among the Parties.
Right to regulate
“Right to regulate” provisions are meant to ensure that domestic gender-supportive policies are sheltered from dispute under the agreement. These can take the form of exemptions and reservations listed by the parties to some of their PTA commitments. “Right to regulate” provisions often aim to ensure that other PTA provisions do not cause gender-positive action to backtrack, or to allay concerns about the PTA’s potential to aggravate existing gender gaps (Korinek, Moïsé and Tange, 2021[4]). Most of New Zealand’s PTAs have recognised governments’ right to regulate to meet national policy objectives. Some provide more detail through noting the right to introduce new regulations and/or recognise the role of governments in providing and funding public services. In the NZ-Korea agreement, for example, both Korea and New Zealand reserve the right to adopt or maintain any measure with respect to a number of social services established or maintained for public purposes that may be particularly valuable to women, such as social security or insurance, social welfare, public training, public utilities, public transport, public housing, health, and child care.”17
Benefits of trade facilitation for women-led businesses
Women traders are often at a disadvantage to meet the high cost and time demands of complex trading requirements since they own and manage smaller businesses than men do, and they have less time due to an increased burden of unpaid work. Trade facilitation reforms particularly benefit micro and small firms, where women entrepreneurs are disproportionately represented. Trade facilitation reforms can help everyone to trade, but particularly women business owners and leaders.
Trade facilitation reforms making border processes more efficient ‒ as measured by the OECD Trade Facilitation Indicators (TFIs)18 ‒ can reduce trade costs on average for OECD countries by more than 10%. The trade facilitation policies that contribute most to reducing trade costs are the streamlining of trade procedures and formalities, the automation of border processes, and the availability of information (OECD, 2018[5]).
The automation of the border process can be particularly important for women-led micro, small and medium-sized enterprises (MSMEs), not only because it reduces the costs of processing documentation, but also because by dematerialising formalities it shelters women entrepreneurs from potential harassment and discrimination. Additionally, reforms that reduce the time required for processes can benefit women who often face additional constraints on their time related to care responsibilities. Greater transparency particularly benefits women-led businesses with fewer professional networks (Korinek, Moïsé and Tange, 2021[4]).
Moreover, measures such as the inclusion of MSMEs in consultation processes or the efficiency of appeal procedures ‒ measures which can be associated with higher fixed costs ‒ have a greater impact on the propensity or probability of firms to engage in exporting and importing ‒ that is, on trade at the extensive margin. In turn, measures such as fees and charges, streamlining of procedures and automating border processes, which tend to be associated with reductions in variable costs, have a bigger impact on the export and import values of firms ‒ trade at the intensive margin. Automation and streamlining of border processes can each support MSMEs in OECD countries to both start engaging in international trade and enhance the value of their exports and imports by up to 7.5% (López González and Sorescu, 2019[6]).
In the digital era where more small parcels cross international borders, issues such as trade facilitation have taken on greater significance. This type of trade is especially important for individuals and smaller firms, offering new opportunities to engage in trade whether as importers or exporters. When parcels cross borders, it is the role of Customs authorities and other border agencies to manage traffic. This means enforcing trade rules, such as tariffs, but also undertaking health and safety, security and quality checks. Even modest improvements in trade facilitation policies such as transparency, automation and streamlining of processes at borders, as well as border agency co-operation, are found to have a positive impact on parcel exports of between 6% and 14% (López González and Sorescu, 2021[7]). An increase in the ease of trade in parcels may affect women-owned businesses even more than those owned by men since women-owned businesses tend to export more to individuals whereas men-owned businesses export more to other businesses (Korinek, Moïsé and Tange, 2021[4]).
Trade facilitation state of play in New Zealand19
New Zealand exceeds or is close to worldwide best practice in the following areas covered by the OECD Trade Facilitation Indicators: information availability, involvement of trade community, appeal procedures, fees and charges, simplification and harmonisation of documents, automation of border processes, streamlining of procedures, border agency co-operation, and governance and impartiality (Figure 28).
New Zealand performs on par with other small open economies such as Denmark, Ireland and Switzerland. Economies such as Finland or Singapore perform better in some areas such as advance rulings and simplification of trade documents, but New Zealand is better or on par in areas of fees and charges and streamlining of procedures. In turn, New Zealand exceeds the performance of other small open economies such as Israel, notably in the involvement of trade community, streamlining of procedures, and border agency co-operation (Figure 2.1).
Since the conclusion of the WTO Trade Facilitation Agreement (TFA) in 2013, New Zealand improved its performance particularly in the automation and streamlining of border processes ‒ both areas of particular importance as regards women traders ‒ as well as domestic border agency co-operation (Figure 2.2). This progress is reflected in reductions of more than 50% in the average costs to export and import over the past decade, albeit costs and time to trade appear to remain stable over recent years.20
One of the areas where significant progress was made concerns the Authorised Economic Operators (AEO) programme Secure Exports Scheme. The Secure Exports Scheme currently provides for a wide range of benefits to traders that are certified AEOs, namely: deferred payment of duties, taxes, fees and charges; use of comprehensive guarantees or reduced guarantees; low rate of physical inspections; low documentary and data requirements; and rapid release time. Information on the requirements and process for certification ‒ particularly beneficial to women traders ‒ is also made fully available, while the time for obtaining the AEO certification has been reduced to 50 days.
Note: Each indicator goes from 0 to 2, with 2 being the best possible score. Best practice is the 25th percentile by TFI area.
Source: OECD Trade Facilitation Indicators, https://www.compareyourcountry.org/trade-facilitation.
Note: Each indicator goes from 0 to 2, with 2 being the best possible score.
Source: OECD Trade Facilitation Indicators, https://www.compareyourcountry.org/trade-facilitation.
Among digital tools for trade facilitation, New Zealand increased the percentage of import and export declarations cleared electronically and the share of procedures that allow for electronic processing. It also made progress on the electronic exchange of documents such as certificates of origin and SPS certificates.
Significant progress has also been recorded in the implementation of the Trade Single Window (TSW), particularly as regards the legal framework and technological architecture supporting it. The Trade Single Window is an electronic channel for the cargo and excise industries to submit information to and receive responses from border agencies.21
Progress in the TSW has also supported the overall advances in improving domestic border agency co-operation. The TFIs highlight that New Zealand’s institutionalised mechanism supporting inter-agency coordination has a permanent technical Secretariat; clear provisions for its financing; and includes the majority of relevant agencies. New Zealand has also made progress in harmonising data requirements, documentary controls and computer systems among the different agencies involved in the management of cross-border trade.
Beyond digital tools at the border, progress has been achieved in the overall digitalisation of trade processes. E-authentication, e-signatures, e-contracts, e-invoices and e-payments support today a growing number of physical and digital transactions worldwide. The OECD Digital Trade Inventory (DTI)22 highlights that in the case of New Zealand, various regional trade agreements (RTAs) it is a party to include provisions on e-transaction frameworks, e-signatures and paperless trading.
This chapter sheds light on trade policies and relevant domestic policies affecting New Zealand services sectors, where the majority of women work and lead businesses. The trade cost equivalent of services trade barriers largely exceeds the average tariff on traded goods and these barriers have as strong an impact on services exports as on services imports (OECD, 2020[8]).23
Due to the nature of services trade barriers, these do not only include laws and regulations only affecting foreign providers. To a large extent, barriers to services trade result from non-discriminatory rules and regulations behind the border. These laws and regulations do not only affect activities of foreign companies providing services in New Zealand on a cross-border basis or New Zealand affiliates of foreign multinationals, but also domestic New Zealand services companies.
At the same time, restrictive services policies not only limit the ability of services providers to access foreign markets, but also the ability of domestic firms to access services inputs at competitive prices. There is evidence that services trade barriers represent a significant cost for importers as well as exporters of services. High levels of services restrictiveness are strongly associated with low levels of services exports, which can be explained by lower competitiveness of services suppliers in highly restrictive environments (Nordås and Rouzet, 2015[9]). Also, these barriers have a strong negative impact on the value of cross-border services transactions. Expressed as percentages of total trade value, average multilateral services trade costs represent around 57% for communication services and 54% in business services, around 60% for transport services, around 103% for insurance services, and around 255% for financial services (Benz and Jaax, 2020[10]). Restrictive services policies also increase costs for firms in the manufacturing sector (Nordås and Rouzet, 2015[9]). Such cross-sectoral spillovers are a consequence of the creation of new business models where goods and services are bundled and due to the integration of services and goods in global value chains (Miroudot and Cadestin, 2017[11]).
OECD has estimated the impact of services trade barriers on trade costs for New Zealand firms. The hypothetical scenario is a unilateral reform that closes half of the gap in services trade restrictiveness between New Zealand and the most liberal country in each sector (Figure 2.3). The impact would be substantial for services that are crucial supporting activities to other sectors, such as commercial banking (where firms’ trade costs would be reduced by about 20% if New Zealand closed the gap with the most liberal country by half), air transport (around 15% trade cost reduction) and cargo handling (around 13% trade cost reduction). Even for services where New Zealand is relatively close to the most liberal country, such as insurance services, there is still potential for a sizable reduction of services trade costs in the range of 6%. Lowering restrictions in these sectors would lower costs and enable trade in a wide range of goods and services sectors.
Note: Trade cost reduction in percentage of import value; 90% confidence intervals are computed using the standard errors of the trade elasticity estimated from a gravity model.
Source: OECD calculations using the STRI database and Benz and Jaax (2020[10]).
Trade costs due to strict regulations on services impact firms in all sectors, and smaller firms are more heavily impacted than larger firms. They are less likely to export or establish in less open markets than larger firms, and are less able to gain substantial market shares in challenging regulatory environments. Since women-owned and women-led businesses are generally smaller than those owned and led by men, they are more strongly impacted by the higher costs of services inputs into their production processes (see evidence above on women-led and women-owned businesses). The costs of complying with regulations ‒ even more so with diverging regulations in every new market ‒ fall more heavily on micro-, small- and medium-sized enterprises. For very small firms engaging in cross-border exports, an average level of services trade restrictiveness represents an additional 7% in trade costs relative to large firms. Establishing an affiliate abroad involves even higher costs: for a small firm, an average level of services trade restrictiveness is estimated to be equivalent to an additional 12% tariff compared to large firms (Rouzet, Benz and Spinelli, 2017[12]).
Horizontal services trade barriers
The 2020 STRI of New Zealand is slightly below the average of all countries in the STRI database, indicating that New Zealand’s services-related regulations are slightly less restrictive that most other countries in the sample (Figure 2.4). This position is explained in large part by an overall favourable regulatory framework. Moreover, New Zealand’s regulatory environment for services was relatively stable over the past years. However, some restrictions remain, representing unnecessary barriers to foreign services providers and hampering access of foreign services firms to the New Zealand market. At the same time, these barriers entail additional costs for domestic consumers and businesses relying on the services of foreign providers to facilitate their operations or their own exports. This section describes the horizontal barriers that apply in all services sectors.
Some restrictions remain related to the entry of foreign services providers. For example, the Companies Act requires that at least one member of a company’s board of directors must be resident in New Zealand or Australia. This requirement may hamper the operations of small foreign-owned firms with incorporated subsidiaries in New Zealand. Moreover, the Overseas Investment Act requires that consent for investment in sensitive New Zealand assets, including business assets valued more than NZD 100 million. Such foreign investment is only approved when in New Zealand's national interest. The "Benefit to New Zealand test" includes economic factors, such as additional investment for development purposes, added market competition, greater efficiency or productivity or enhanced domestic services, increased processing of primary products, increased export receipts, creation of new job opportunities or retention of existing jobs, and new technology or business skills. Such a procedure can act as a deterrent to investment. In addition, there is a risk of incorrect assessment of economic factors and the process can open the door to discretionary rejections of foreign investment.
Note: The STRI indices take values between zero and one, one being the most restrictive. The STRI database records measures on a Most Favoured Nation basis. Air transport and road freight cover only commercial establishment (with accompanying movement of people). The indices are based on laws and regulations in force on 31 October 2020. The STRI regulatory database for the year 2020 covers the 38 OECD countries, Brazil, China, India, Indonesia, Kazakhstan, Malaysia, Peru, Russian Federation, South Africa, and Thailand.
Source: OECD (2020). STRI and TiVA databases.
Personal data can be transferred outside of New Zealand if it is subject to laws providing comparable safeguards to those in the New Zealand Privacy Act. At the same time, offshore storage of tax records according to the Tax Administration Act and the Goods and Services Tax Act is only possible under some conditions and on a case-by-case basis. Firms of all sizes and across all sectors use, process, and store data as part of their business models. While the protection of personal information is a legitimate policy objective, data regulation should be non-discriminatory and should not be more trade-restrictive than strictly necessary, achieving the dual goals of safeguarding data and enabling its flow across borders (Casalini, López González and Nemoto, 2021[13]).
Further horizontal restrictions exist in relation to the movement of natural persons. The initial duration of stay for contractual or independent services suppliers is twelve months on a Specific Purpose Visa. Intra-corporate transferees, however, are exempted from this restriction, facilitating stays in New Zealand of up to three years. New Zealand is not the only country offering visas with a relatively short duration of stay for temporary services providers. In fact, short duration of stays for contractual or independent services providers are relatively common across the OECD and other large economies covered in the STRI. Around half of all countries offer visas with an initial duration of stay of twelve months or less.
Moreover, this Specific Purpose Visa requires a labour market test, showing that it is not possible or appropriate for New Zealand citizens or residents to undertake an activity, however, a number of different regimes are grouped under this item, some of which are less restrictive than others. Such a requirement is relatively common, currently being applied in around three quarters of all countries in the sample. In order to ensure businesses have access to needed professionals, some countries apply a positive list of occupations for which employers are not required to show that workers are unavailable on the domestic labour market. In other countries, such a requirement can be waived if the foreign candidate’s remuneration is above a certain threshold.
Scope for further horizontal liberalisation also results from a relatively long time and high cost for processing a business visa. While business visitors from a number of New Zealand’s major trading partners benefit from visa waivers, lengthy and costly procedures can be a deterrent to Mode 4 (movement of natural persons) services trade with other countries. The processing time was around 28 days before the beginning of the COVID-19 pandemic and the fee for a business visitor visa was raised from NZD 170 to NZD 190 on 5 November 2018.24 At the time of writing, visa processing for most applicants outside of New Zealand is still on hold due to travel restrictions implemented in the context of COVID-19.
New Zealand’s regime on these two measures is more burdensome than the average and median of the OECD and other STRI countries. Median processing time for business visas is around 15 days while median cost of a business visa application is around USD 70. According to the STRI methodology, a processing time of less than ten days and a cost of less than USD 94 is required for a non-restrictive assessment of these measures.
New Zealand’s services restrictiveness is below the average in 21 out of 22 sectors (Figure 2.5). The only exception is logistics cargo-handling. Other relatively restrictive sectors compared to the respective cross-country averages are logistics storage and warehousing, logistics freight-forwarding and computer services. The highest level of restrictiveness across sectors can be found for air transport services. However, this sector is subject to restrictive laws and regulations in a number of countries. For example, several countries apply foreign equity limitations in this sector, including New Zealand.
It should be noted that air transport connectivity, which is related to the level of restrictiveness in the sector, can have an enabling effect on trade in other services. The expansion of air travel has been found to account for 30% of total export growth in services on average (Benz and Jaax, 2022, forthcoming[14]). This suggests that services exporters rely on a set of complementary factors including in-person contact and business meetings. Air transport connectivity also positively impacts trade in goods. Countries with more frequent air connections trade more, and trade in more complex products. This is in part due to the share of goods trade that is transported by air (30% on average, half of which is transported in passenger planes) and the facilitating nature of business travel for increasing trade opportunities (Botero Garcia, Reshef and Umana-Dajud, 2021[15]).
Another enabling service, which has come to the foreground during the Covid-19 pandemic, is computer services and telecommunications connectivity. Moreover, it was seen above that women-led businesses tend to conduct much of their business online, in some cases more than men-led ones. Preliminary estimates imply that improvements in ICT infrastructure can explain roughly 30% of the total increase in services exports relative to domestic services consumption between 2000 and 2017 (Benz and Jaax, 2022, forthcoming[14]). New Zealand is less restrictive in these areas than the average of countries covered in the STRI, but is substantially more restrictive than the most liberal regimes (Figure 3.5).
By contrast, New Zealand’s STRI is significantly lower than the cross-country average in legal services, accounting services, insurance and broadcasting. Insurance is also the sector with the lowest absolute STRI for New Zealand. In the insurance sector, New Zealand is relatively close to the least-restrictive country. In all other sectors, there is still significant scope for further liberalisation of services trade.
Note: The STRI indices take values between zero and one, one being the most restrictive. The STRI database records measures on a Most Favoured Nation basis. Preferential trade agreements are not taken into account. Air transport and road freight cover only commercial establishment (with accompanying movement of people). The indices are based on laws and regulations in force on 31 October 2020. The average is computed over the 48 countries covered by the STRI in 2020.
Source: STRI regulatory database.
A complementary feature in the STRI suite of tools is the Digital STRI. It measures cross-cutting barriers to digitally enabled services trade in all sectors and classifies barriers in five categories: infrastructure, electronic transactions, payments, weak intellectual property rights (trademark and copyright), and other barriers such as forced technology transfers (Ferencz, 2019[16]). New Zealand’s restrictiveness towards digitally enabled services is below the average of countries covered. The majority of these barriers results from the category of infrastructure-related measures, similar to what is observed for other countries. Amongst others, this category includes restrictions to cross-border data flows, see above.
The following section digs deeper into the applicable laws and regulations in retail and wholesale distribution, a services sector where women are prevalent as workers and as business owners and leaders.
Trade restrictiveness in the distribution sector, where women are highly represented as workers and business owners and leaders
The retail trade sector is one of the main traded sectors in New Zealand where women are more likely to be employed than men, including in exporting firms.25 The STRI for the distribution services sector covers general wholesale and retail sales of consumer goods (specific regulation of speciality distribution sectors such as pharmaceuticals and motor vehicles are not considered). The STRI in this sector also covers regulations relating to electronic commerce, given the increasing prevalence of multi-channel retail services as a form of distribution services.
New Zealand’s restrictiveness for distribution services is very close to the average of all countries. Twenty-four countries were less restrictive and 23 countries were more restrictive than New Zealand in 2020. Other OECD countries with similar scores in this sector are France and Italy (Figure 2.6).
Note: The STRI indices take values between zero and one, one being the most restrictive. The STRI database records measures on a Most Favoured Nation basis. Air transport and road freight cover only commercial establishment (with accompanying movement of people). The indices are based on laws and regulations in force on 31 October 2020. The STRI regulatory database for the year 2020 covers the 38 OECD countries, Brazil, China, India, Indonesia, Kazakhstan, Malaysia, Peru, Russian Federation, South Africa, and Thailand.
Source: OECD (2020). STRI database.
This result might seem surprising when only comparing STRIs across sectors, such as in Figure 2.6. This figure shows that New Zealand’s STRI in the distribution sector is the second lowest of all sectors. However, distribution is the sector with the least restrictions of all sectors (OECD, 2021[17]). Hence, in comparison with the international benchmark, New Zealand’s performance looks slightly less impressive. Sector-specific restrictions mostly come from the regulatory transparency policy area and partly also related to barriers to competition.
When engaging with trading partners in negotiations of new or modernised trade agreements, negotiators could review New Zealand’s and partner countries’ levels of restrictiveness in services sectors where women engage most, such as distribution services and some professional services. These sectors could be prioritised for obtaining market access in partner countries, in particular if barriers to entry into those sectors are high. Trade negotiators could make use of the STRI sectoral database to ascertain which sectors are most highly restricted to trade.
In conclusion, less restrictive services sectors positively impact competitiveness of both services and goods sectors. Lower levels of services restrictiveness are strongly correlated with higher levels of services exports (Nordås and Rouzet, 2015[9]), where New Zealand women generally work and lead businesses. Overall, New Zealand’s services sectors are generally more open than many of the other countries for which the OECD tracks services restrictions, although areas for consideration have been highlighted above.
References
[10] Benz, S. and A. Jaax (2020), “The costs of regulatory barriers to trade in services: New estimates of ad valorem tariff equivalents”, OECD Trade Policy Papers, No. 238, OECD Publishing, Paris, https://doi.org/10.1787/bae97f98-en.
[14] Benz, S. and A. Jaax (2022, forthcoming), Shedding light on drivers of services tradability over two decades, OECD Publications, Paris.
[15] Botero Garcia, D., A. Reshef and C. Umana-Dajud (2021), “Moins d’avions, c’est mois de commerce”, La lettre du CEPII, Vol. December/422, http://www.cepii.fr/PDF_PUB/lettre/2021/let422.pdf.
[13] Casalini, F., J. López González and T. Nemoto (2021), “Mapping commonalities in regulatory approaches to cross-border data transfers”, OECD Trade Policy Papers, No. 248, OECD Publishing, Paris, https://doi.org/10.1787/ca9f974e-en.
[16] Ferencz, J. (2019), “The OECD Digital Services Trade Restrictiveness Index”, OECD Trade Policy Papers, No. 221, OECD Publishing, Paris, https://doi.org/10.1787/16ed2d78-en.
[2] Honey, S. (2018), Will CPTPP Offer Tangible Improvements for Women?, https://www.cigionline.org/articles/will-cptpp-offer-tangible-improvements-women/.
[4] Korinek, J., E. Moïsé and J. Tange (2021), “Trade and gender: A Framework of analysis”, OECD Trade Policy Papers, No. 246, OECD Publishing, Paris, https://doi.org/10.1787/6db59d80-en.
[7] López González, J. and S. Sorescu (2021), “Trade in the time of parcels”, OECD Trade Policy Papers, No. 249, OECD Publishing, Paris, https://doi.org/10.1787/0faac348-en.
[6] López González, J. and S. Sorescu (2019), “Helping SMEs internationalise through trade facilitation”, OECD Trade Policy Papers, No. 229, OECD Publishing, Paris, https://doi.org/10.1787/2050e6b0-en.
[11] Miroudot, S. and C. Cadestin (2017), “Services In Global Value Chains: From Inputs to Value-Creating Activities”, OECD Trade Policy Papers, No. 197, OECD Publishing, Paris, https://doi.org/10.1787/465f0d8b-en.
[1] Monteiro, J. (2018), “Gender related Provisions in Regional Trade Agreements”, WTO Staff Working Paper ERSD-2018-15 December.
[9] Nordås, H. and D. Rouzet (2015), “The Impact of Services Trade Restrictiveness on Trade Flows: First Estimates”, OECD Trade Policy Papers, No. 178, OECD Publishing, Paris, https://doi.org/10.1787/5js6ds9b6kjb-en.
[17] OECD (2021), The OECD Services Trade Restrictiveness Index: Policy Trends up to 2021, https://www.oecd.org/trade/topics/services-trade/documents/oecd-stri-policy-trends-2021.pdf.
[8] OECD (2020), OECD Services Trade Restrictiveness Index: Policy trends up to 2020, https://www.oecd.org/trade/topics/services-trade/documents/oecd-stri-policy-trends-up-to-2020.pdf.
[5] OECD (2018), Trade Facilitation and the Global Economy, OECD Publishing, Paris, https://doi.org/10.1787/9789264277571-en.
[12] Rouzet, D., S. Benz and F. Spinelli (2017), “Trading firms and trading costs in services: Firm-level analysis”, OECD Trade Policy Papers, No. 210, OECD Publishing, Paris, https://doi.org/10.1787/b1c1a0e9-en.
[3] World Trade Organization (2021), Negotiations on Services Domestic Regulation Conclude Successfully in Geneva, https://www.wto.org/english/news_e/news21_e/jssdr_02dec21_e.htm.
Notes
← 1. It is worth noting that even explicit gender-related provisions vary in their objectives. Some aim to promote gender equality, some refer to women’s economic empowerment whilst some have the narrower objective of increasing women’s participation in international trade. Other gender-related provisions seek to protect women (usually women workers) from adverse impacts of trade competition.
← 2. See https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-under-negotiation/new-zealand-united-kingdom-free-trade-agreement/resources/agreement-in-principle.
← 3. Article 19.10: Cooperation.
← 4. Article 23.4: Women and Economic Growth.
← 5. See Joint Declaration on Fostering Progressive and Inclusive Trade.
← 6. See the Trade and Gender Chapters of the 2016 Chile–Uruguay trade agreement, the 2017 Canada–Chile, Argentina–Chile, Canada–Israel trade agreements, as well as the 2020 Brazil–Chile and Chile–Ecuador trade agreements.
← 7. Table 201 presents New Zealand’s trade agreements chronologically, showing that the inclusion of gender-related provisions is a recent development.
← 8. Chapter 14.
← 9. Chapter 24.
← 10. Chapter 15.
← 11. Chapter 15.
← 12. Chapter 21.
← 13. ILO Declaration on Fundamental Principles and Rights at Work.
← 14. Article 19.5: Enforcement of Labour Laws.
← 15. Article 19.7: Corporate Social Responsibility.
← 16. CPTPP indicates that inclusive economic growth includes a more broad-based distribution of the benefits of economic growth (Article 23.1.2). Elsewhere, inclusive trade has been taken to refer to trade that all people, including vulnerable groups such as women, young people, Indigenous groups and small businesses, can contribute to and benefit from.
← 17. NZ-Korea, Annex II, Services and Investment Non-Conforming Measures.
← 18. The OECD Trade Facilitation Indicators cover the full spectrum of border procedures for more than 160 economies. The eleven indicators are: (a) information availability; (b) involvement of trade community; (c) advance rulings; (d) appeal procedures; (e)fees and charges; (f) formalities – documents; (g) formalities – automation; (h) formalities – procedures; (i) internal border agency co-operation; (j) external border agency co-operation; (k) governance and impartiality. Detailed measures are available at: https://sim.oecd.org/default.ashx?ds=TFI .
← 19. The analysis in this section is based on latest available from the 2019-20 Trade Facilitation Indicators (TFIs) database. The update for the 2021-22 TFIs database is ongoing until Q1 2022.
← 20. World Bank Doing Business Trading Across Borders.
← 21. The agencies included are: Customs, Ministry for Primary industries, Maritime NZ and Ministry of Health.
← 22. OECD Digital Trade Inventory (2021): https://www.compareyourcountry.org/digital-trade-inventory-international-instruments; https://www.compareyourcountry.org/digital-trade-inventory-regional-trade-agreements .
← 23. This analysis is based on the OECD Services Trade Restrictiveness Index (STRI). The STRI is an online regulatory database and composite index, collecting information on laws and regulations in 22 services sectors. As of 2021, the STRI regulatory database covers 50 economies, the 38 OECD countries, Brazil, China, India, Indonesia, Kazakhstan, Malaysia, Peru, Russian Federation, Singapore, South Africa, Thailand, and Viet Nam.
← 24. The scoring in the OECD STRI is based on the regime faced by Indian nationals.
← 25. Women work in many services sectors that are less traded such as health, education, child and elder care and personal services. None of those sectors are included in the STRI. This section covers one STRI sector where women tend to work, including in export-related jobs.