Trade and Export Growth Minister Damien O'Connor speaks with Japanese ministerial representatives before the start of the Indo-Pacific Economic Framework Ministerial meeting in Detroit, Michigan on 27 May, 2023. Photo: AFP / Jeff Kowalsky
Fourteen Indo-Pacific countries have finished negotiations about improving supply chain resilience as part of the Indo-Pacific Economic Framework.
The framework (IPEF), launched in September 2022, includes most members of ASEAN group, as well as the United States, Japan, Korea, and India. Together, they represent 40 percent of the world GDP in 2021.
Trade and Export Growth Minister Damien O'Connor has met with his counterparts in Detroit, USA, for the supply chains agreement - one of four being negotiated as part of IPEF.
It aims to improve the resilience, efficiency, productivity, sustainability, transparency, diversification, security, fairness, and inclusivity of supply chains involving of the partner countries.
Some of the ways the countries want to do this will be via collaborative and individual actions, including:
- provide a framework to build their collective understanding of significant supply chain risks;
- improve crisis coordination and response to supply chain disruptions and work together to support the timely delivery of affected goods during a crisis;
- better prepare businesses in the economies of the IPEF partners to identify, manage, and resolve supply chain bottlenecks, including by strengthening supply chain logistics and infrastructure;
- facilitate cooperation, mobilise investments, and promote regulatory transparency in sectors and goods critical to national security, public health and safety, or the prevention of significant or widespread economic disruptions;
- respect, promote, and realise, in good faith, labour rights in supply chains;
- ensure the availability of a sufficient number of skilled workers in critical sectors and key goods;
- identify opportunities for technical assistance and capacity building;
- respect market principles, minimise market distortions, including unnecessary restrictions and impediments to trade, and protect business confidential information.
Pleased to announce substantial conclusion of an agreement on Supply Chains with IPEF partners. Boosting regional collaboration to shore up crucial supply chains is key for New Zealand ➡️ https://t.co/l5hz0yVNR5 pic.twitter.com/OyQXZDHClO
— Damien O'Connor (@DamienOConnorMP) May 27, 2023
O'Connor said the Covid-19 pandemic and Russia-Ukraine war had shown the importance of making supply chains resilient.
"According to the Customs Brokers and Freight Forwarders Association, the cost of sending a shipping container from New Zealand to the USA grew from $2000 to $10,000 at the peak of the disruption," he said in a statement.
"The time taken for shipping containers to travel across major global shipping routes skyrocketed from under 60 days in 2019 to an all-time high of more than 120 days in 2022, according to Flexport's Ocean Timeliness Indicator."
The IPEF agreement would form part of the plan to protect New Zealand's economy from the sharp edges of a global downturn, O'Connor said.
"Having a big group of countries commit to share information, identify stress points and come up with practical solutions is an important step forward."
The IPEF agreement also suggested the establishment of three new supply chain bodies; a supply chain council to develop sector-specific action plans, a crisis response network to establish emergency communication channels, and a labour rights advisory board to promote workers' rights.
In the release on the negotiations from the US Department of Commerce, it stated that each country will have further domestic consultations and a legal review, to prepare a final text of the proposed IPEF Supply Chain Agreement.
"Once finalised, the proposed agreement will be subject to IPEF partners' domestic processes for signature, followed by ratification, acceptance, or approval."
