The Australia-New Zealand Closer Economic Relations agreement remains one of the most successful trade agreements in the world, but its next phase will look very different, according to a recent NZIER Insight.
Chris Nixon, principal economist at NZIER and author of the report, says CER did the heavy lifting of removing tariffs, integrating supply chains, and allowing firms to operate across the Tasman with minimal friction.
“But success creates its own challenge. The low-hanging fruit in our trade relationship with Australia has already been picked.”
NZIER says the Insight highlights that further gains from bilateral trade with Australia face significant barriers, including regulatory differences, misaligned standards, and administrative costs, which are economically important but often politically challenging to resolve. At the same time, incentives for deeper bilateral integration have weakened.
Australia is now focused on larger strategic priorities, while New Zealand has shifted toward broader trade initiatives…
“Australia is now focused on larger strategic priorities, while New Zealand has shifted toward broader trade initiatives. That makes sustained bilateral momentum harder to generate,” Nixon says in a statement.
The report argues that the next phase of CER will not be driven solely by the bilateral relationship with Australia.
“Progress is more likely to come from working with third countries, particularly in Southeast Asia, using CER as the platform for progress,” he says.
By leveraging its experience in regulatory co-operation and integration, New Zealand can help build practical, coalition-based initiatives with partners such as ASEAN economies.
“Over time, increased trade integration with the broader region can draw Australia back in by linking trans-Tasman co-operation to wider regional opportunities.”
NZIER concludes that while trade with Australia remains essential, the strategy must evolve.
“The future of CER lies in maintaining the strong bilateral relationship with Australia while using it to engage more effectively with the broader region,” Nixon says.
Click here to see the full report.
