New Zealand’s ‘Latin America’ strategy
In the 2000s New Zealand began to look more seriously towards Latin America. The Labour-led government established the Latin America strategy, launched in 2001. This attempted to stimulate complementary investment, person-to-person links and trade through the pursuit of strategic economic agreements. Much was made of the concept of New Zealand as a bridge into Asia and of Latin America as a door into the wider Americas.
A successor Latin America strategy was launched in 2010, reaffirming New Zealand’s commitment to the region and focusing particularly on strategic trade and economic links. A small aid programme to the region exists in the New Zealand International Development Group.
The Trans-Pacific Partnership
In 2006 a Trans-Pacific Partnership involving New Zealand, Singapore, Brunei and Chile began. This agreement allowed for complete free trade from 2015 and included comprehensive agreements on investment, taxation, labour law and environmental cooperation. In 2011 negotiations were underway to expand the agreement, with Peru among those being considered for participation.
Chilean wines have generally been associated with the lower end of the New Zealand market. In 2011 the Chilean Patrick Hurley toured New Zealand in ‘a one-man crusade to show his country’s wines are more than just cheap and cheerful fruit bombs’.1 By showcasing some premium wines from his Chilean winery he hoped to win over those with discerning palates and fat wallets.
While New Zealand is not a particularly significant destination for Latin American products (or vice versa), trade has grown, especially in agricultural products. Total New Zealand exports to Latin America were approximately NZ $1.2 billion in 2010, with $715 million going to South America. South American exports to New Zealand were NZ $310 million. New Zealand’s main exports to the region are dairy products.
Latin American countries export a range of products including soy products from Brazil, animal feed from Argentina, and fruit and wood from Chile.
New Zealand’s most important trading partner in terms of absolute value is Venezuela, with a trade value of over NZ $464 million in 2010. This largely comprised milk powder exports from New Zealand.
Investment in the dairy sector, and agriculture more generally, represents the largest economic link between New Zealand and the continent. Fonterra, a huge New Zealand-based dairy cooperative, has holdings in several countries including Chile and Brazil. It is also the majority owner of Chile’s largest dairy company, Soprole. There are New Zealand dairy farmers at work in the south of Chile, and there has been active diffusion of New Zealand technical innovations in the sector.
Fonterra’s Brazilian venture
In 2011 New Zealand’s largest company, Fonterra, bought an 850-hectare dairy farm in Brazil. The country was Latin America’s biggest economy, with 200 million people, and demand for fresh dairy produce was increasing. Fonterra wanted to encourage and profit from this growth.
The relationship with South American dairy sectors has occasionally been controversial. As the most efficient producer in the world, New Zealand competition has caused some concern among farmers in South America. The dairy industry, located mainly in southern Chile, is populated by small-scale, sometimes indigenous farmers who have seen their livelihoods threatened by modernisation.
PGG Wrightson is another firm actively involved in dairy in the region, investing NZ $300 million in land in Uruguay in 2007. There are other examples of New Zealand investment in the wood, wine and salmon aquaculture industries in various locations across the continent. There is very little Latin American investment in New Zealand.
Latin America New Zealand Business Council
The Latin America New Zealand Business Council was formed in 1991 and works to encourage and support New Zealand business links with Latin American countries. It acts independently of the New Zealand government.