Transtasman trade stream trickles

By Greg Ansley

CANBERRA - The stream is seeping out of transtasman trade. For the past four years the ardour that followed the signing of the closer economic relations agreement has been cooling, accelerated by the spillover of the Asian crisis.

Australian Treasury analysts expect their exporters to again target New Zealand - especially in elaborately transformed manufactures - as the Kiwi economy recovers, and trade statistics have become clouded somewhat by the growth of transtasman companies.

But new figures from the Australian Bureau of Statistics suggest a longer term cooling in growth in trade between the two countries.

New Zealand's relative importance as a source of merchandise imports has also waned, slipping several notches to seventh place behind the United States, Japan, China, Germany, Britain and South Korea.

However, New Zealand remains significant as a merchandise market - ranking fourth behind Japan, the US and Korea - and is crucial to the nation's exports of sophisticated manufactured goods.

Total growth in transtasman trade in goods and services remains impressive, with exports from Australia soaring 64.5 per cent, to $A7.48 billion, between 1992-93 and 1997-98, and New Zealand exports rising by a smaller 40 per cent, to $A5.12 billion.

There has also been a small, but growing, shift in the balance between goods and services in the composition of New Zealand exports to Australia.

In the five years to 1997-98 services' slice of New Zealand's transtasman exports rose from 24 per cent to almost 27 per cent, with the value of exports rising more than 55 per cent, to $A1.37 billion.

But the brakes have been applied to the double-digit growth that marked two-way trade for most of the early years of CER. Since 1994-95 the rate of growth in Australia's sales of goods to New Zealand has steadily slowed, from 19.5 per cent to 10.75 per cent in 1996-97, and crashing to a negative 8.9 per cent in 1997-98.

New Zealand's performance has been worse. From a rate of 15.3 per cent in 1993, growth in Kiwi exports of goods to Australia has slumped to between 1 and 2 per cent.

The good news is that Australia's declining performance shaved $A540 million from Canberra's hefty transtasman surplus in goods, reducing it from $A2.54 billion in 1996-97 to $A1.94 billion the following year.

The latest merchandise trade figures show a further pruning of the surplus, with a $A146 million fall in the March quarter adding to a slide that saw New Zealand's deficit reduced by 23 per cent, to $A1.85 billion, in the 12 months to March 31.