Global Insights – May 2023

North America

AI is a hot topic right now in the US, with Congress grappling with how best to regulate it. This month leading tech CEO’s spoke at Congress about three big questions related to regulation: does the US need a new federal agency? Who owns the data AI trains on? How much will AI influence the 2024 US election? This conversation comes as a recent World Economic Forum report estimated that around 60% of workers will need to be reskilled in the next five years and IBM announced it will slow or freeze hiring for back-office functions representing roughly 26,000 jobs, such as human resources, as it anticipates shifting work to AI. Kiwi companies incorporating AI into their product or service offering should watch closely for any regulatory changes – these could have meaningful impact on the use of AI. Watch this space as the conversation unfolds. 

Good news for South Island exporters planning to visit the US with United Airlines announcement of the first direct flight from the US to the South Island. United Airlines has announced two additional flights connecting New Zealand and the United States, including a direct South Island route. Starting 1 December, United will become the only airline to fly direct between the US and the South Island, with a Christchurch to San Francisco service. United will fly the route three times a week for four months. The airline will also launch an Auckland to Los Angeles service starting 28 October, with flights initially operating three times a week, increasing to four from early December. 

Finally, Kiwi exporters to the US can take their chance at being a winner in this year’s AmCham awards. Entries for the awards close on 30 May, and finalists are interviewed at the end of July. The awards are in their 24th year and celebrate business achievements between New Zealand and the United States – now our third-largest trading partner. Bilateral trade is now worth around $20 billion – goods exports to the USA $7.8b and imports from the USA $7.8b. Good luck to all entrants.

Gary Fortune, Kea North America Regional Director

UK and Europe

This month millions of people around the world tuned in to watch the Coronation of King Charles III. While most of us in the UK watched on TV, a small contingent of Kiwi were lucky enough to attend the celebration at London’s Westminster Abbey. Among the delegation were members of Kea’s World Class New Zealand community, who shared their experiences and emotions with Kea as they took part in the spectacular once-in-a-lifetime opportunity at the historic venue. 

Around 30 Kea community members also joined the welcome reception in London for Prime Minister Chris Hipkins and the New Zealand delegation to the Coronation, which was hosted by the High Commission. Prime Minister Hipkins met UK Prime Minister Rishi Sunak during his visit and both countries agreed to bring forward the entry into force of the Free Trade Agreement to 31 May 2023. The agreement was celebrated by exporters from both countries, with Prime Minister Sunak noting the deal will unlock new opportunities for businesses and investors across New Zealand and the UK, drive growth and boost jobs. 

The UK is New Zealand’s seventh largest trading partner and a crucial market for some of our key exports. From day one New Zealand exporters will save approximately $37 million per year in tariff elimination alone, so the earlier than expected entry into force is a much-needed boost for our exporters. 
Finally, good news for Kiwi businesses that are established in the UK – they may be able to access a new tax benefit. The new 100% first-year capital allowance for qualifying plant and machinery assets, known as full expensing, came into effect in the UK on 1 April 2023, the intention being to help boost business investment and growth. The new measure will initially apply from 1 April 2023 until 31 March 2026 and it may be extended.

Sara Fogarty, Kea UK/Europe Regional Director

China

Good news on international travel this month, with Air New Zealand resuming daily direct flights to Shanghai as major mainland Chinese airlines also returned. Air China resumed its Auckland service on 2 May, offering 4 direct weekly flights to the capital city of Beijing and Air New Zealand increased its flights to Shanghai from 4 times a week to daily. Air New Zealand and Air China are alliance partners and the two companies will provide approximately 6,500 seats per week between Auckland and China every week. It is worth noting that, at present, passengers still need to make a health declaration and apply for a customs health code when entering China.

On 8 May, Kea was invited to attend the welcome reception on the occasion of the visit by the New Zealand China Council led by Mr John McKinnon, twice former New Zealand Ambassador to China. As the first visit to China in over 3 years, the event showed the importance of people-to-people connections between New Zealand and China. Kea was also invited to attend the opening ceremony of the “Altogether Unique 2023” run by New Zealand Wine in Shanghai on 19 May. It was a great pleasure to meet with Charlotte Read, General Manager Marketing of New Zealand Wine.

Kea co-hosted Kiwi Drinks with NZBRiC on 12 May. The event welcomed over 40 kiwis in Shanghai. It was a great evening to receive not only the “usual visitors” but also business travellers from New Zealand. In particular, Kea member Neil Taylor and his partner Cathy visited Beijing and Shanghai to meet with potential distributors of their possum fur boots. It was a great opportunity for them to meet the local Kiwi community in such a welcoming environment. It’s good to see more business focused visits to China since borders reopened.

Rebecca Bao, China Regional Director

New Zealand

Agriculture Minister Damien O’Connor travelled to Washington DC this month to speak at the Agriculture Innovation Mission for Climate Summit. The Government has invested more than $380 million over four years for the reduction of agricultural emissions, seeing early investment in equipment and infrastructure to measure emissions, funding for climate researchers, and the development of methane inhibitor technology. The Agriculture Innovation Mission for Climate Summit is an opportunity for New Zealand to share the work that we are already doing internationally, and to identify opportunities to collaborate on the work that lies ahead.

In a watchout for Kiwi exporters, the EU’s Green Claims Directive is proposing that any environmental claims on products must be communicated and substantiated using set criteria. The Directive is designed to tackle greenwashing regarding the environmental performance of products. The EU exclusively recognises auditing of green claims by public sector bodies, so it’s unlikely that eco-labelling certified by private sector agencies and trade associations – which is the norm here – will be accepted as equivalent in the bloc. Initial conversations with New Zealand industry stakeholders suggest that concerns exist around the risk of member states applying the rules differently and the monitoring and enforcement of green claims. As a Directive, the Greens Claim Directive will be adopted into 27 different national laws and member states will individually be responsible for verifying claims. Finally, New Zealand’s gaming sector enthusiastically received the range of support initiatives announced in last week’s Budget. New funding announced included $160 million over the next four years to introduce a 20% tax rebate for the sector, which was worth $407m in 2022, comparable in size to New Zealand’s wool sector. The rebate would be able to be claimed on spend incurred by game development businesses which meet the threshold of $250,000 in spend per year. Up to $3m may be claimed per individual studio per year. The industry had been calling for a rebate to compete with Australia’s highly competitive rebate and enable developers here to hire and continue to expand their businesses.

Saya Wahrlich, Global Director, Government & Industry