The setting aside of 50 spots for Kiwi exporters sends the signal they are being elevated to the same levels previously reserved for sports teams and dignitaries – and shows the Government’s commitment to trade recovery, writes Dr Eldrede Kahiya
The recent announcement that the Government will allocate a total of 50 managed isolation and quarantine (MIQ) spots during November and December to New Zealand exporters has been welcomed by the export community.
Coming more than a year after the launch of the Trade Recovery Strategy, this lifeline has long been overdue. New Zealand Trade and Enterprise (NZTE), which sponsored the application for group allocation, will manage the scheme.
Getting one of these 50 slots will depend on the reason for travel – and perhaps some luck. Under the scheme, exporters seeking to deliver goods and services overseas, or to commission plant and equipment, get first priority; second priority is reserved for exporters who need to present in-person bids and tenders, provide maintenance or training on the use of equipment, or perform other contractual obligations.
The third priority covers exporters travelling to trade shows/industry events, to perform due diligence, or to meet or interview key people, such as distributors.
The importance of this scheme and the role of the sponsoring trade promotion organisation, NZTE, should not be overlooked. Export promotion programmes help overcome information asymmetry, circumvent trade barriers, and counter market failure.
While some researchers question the relevance of export promotion in a market-based global business landscape, export-promotion programmes influence export success and economic growth. For example, a multiple country study by the International Trade Centre shows that $1 spent on export promotion raises exports by $87 and gross domestic product by $384.
There are four main interventions – information, education and training, financing, and trade mobility – from which export-promotion programmes stem. The Covid-19 pandemic has induced market failure across vast parts of global commerce, and the disruptions to the movement of goods and people have made trade mobility a focal point.
In this regard, the air freight support offered during the early days of the pandemic was vital for increasing cargo capacity at a time when air travel was grinding to a halt. By enabling exporters to travel and to return to reserved MIQ spots, this scheme facilitates additional trade mobility including market visits, business development, international negotiations, and participation in trade shows.
This matters for various reasons. Among all export promotion interventions, trade mobility has the strongest positive impact on export success, as it provides a way to uncover opportunities, validate markets, learn about market developments, and in some cases to close a deal.
In fact, there is some empirical research on ‘face-to-face’ exports, which demonstrates a strong positive effect of business travel on trade. For instance, a United States study illustrates that “each additional international business trip will increase US commodity exports to the visited country by $36,693 per year on average”.
The effectiveness of current trade mobility interventions that do not involve foreign travel (e.g. remote prospecting and virtual events) remains limited. As we begin to grapple with Zoom fatigue, nothing communicates commitment, sincerity and trust more than meeting a foreign client in person.
The scheme is being rolled out as a pilot and is open to all “established New Zealand businesses” which are “actively engaged in exporting”, regardless of whether they are current NZTE clients.
Because there are 12,000 New Zealand businesses with some level of export involvement, about 25 percent of which have ongoing export activity, getting one of those coveted 50 spots may come down to chance.
Exporters should be grateful for this development, given there is a queue of 25,000 New Zealanders who need and deserve to get back home to their families.
Yet for the export community, it is not so much the 50 spots on offer as it is the signal being transmitted.
The Exporter MIQ Allocation pilot shows exporters are being elevated to the same levels previously reserved for a select group of sports teams and dignitaries, and shows the Government’s commitment to trade recovery.
On Monday this week, Covid-19 Response Minister Chris Hipkins announced the Government would be launching a self-isolation pilot open to 150 business travellers.
This additional capacity should further help lift exporter confidence.