Prime Minister Luxon delivered a robust defence of free trade and the rules-based international order during a speech to the Wellington Chamber of Commerce this morning, warning that growing global protectionism poses a significant threat to New Zealand’s prosperity.
In a wide-ranging address that blended foreign policy with economic strategy, Luxon said recent international events marked the “most significant challenge to the rules-based trading system since the General Agreement on Tariffs and Trade (GATT) was formed in 1947.” He acknowledged growing volatility in global markets following new tariffs introduced by the United States last week and said the economic fallout could cost New Zealand around $900 million, or 0.2% of GDP.
“Action, reaction, and response have shocked financial markets,” Luxon said. “But the second order consequences of a region and a world retreating from trade… will be more significant.”
While noting some relief in recent de-escalatory signals, the Prime Minister stressed that the broader geopolitical backdrop demanded vigilance. “For countries whose prosperity is underpinned by global trade, the months ahead will be challenging for their economic interests,” he said.
Trade at the Core of Economic Policy
Luxon used the speech to reiterate his government’s commitment to trade as a cornerstone of New Zealand’s economic growth. He credited previous generations of political leaders and trade negotiators for securing major agreements such as CER, the China FTA, CPTPP, and more recently, deals with the EU, UK, UAE and the GCC.
“Our rural economy in particular represents the very best of open and competitive trade – selling into difficult markets, with no direct financial support, and consistently coming out on top,” he said.
Luxon also made a point of defending not just exports, but the role of imports in lifting living standards and productivity. “It’s not realistic to expect that in a country of just five million people, we could make everything we need here at home,” he said, warning against a return to the protectionist policies of past decades.
Navigating a Shifting Global Order
Luxon pushed back against narratives suggesting an inevitable retreat from globalisation. “I’m not ready to throw in the towel quite yet. Kiwis have worked too hard and for too long, to give up on the values and institutions which have seen our country and the region we live in thrive,” he said.
He held up the evolution of the CPTPP as a model for international cooperation. The trade pact, which began as a small agreement between New Zealand, Chile, and Singapore, now spans 12 countries and around 15% of global economic activity. Luxon said it demonstrated what smaller nations could achieve by “practicing what we preach” and championing open markets.
Looking ahead, he floated the possibility of greater cooperation between the CPTPP and the European Union to reinforce trade norms and prevent unilateral restrictions. “Collective action, and a collective commitment, by a large portion of the global economy would be a significant step towards preserving free trade flows and protecting supply chains,” he said.
A Diplomatic and Economic Push
The Prime Minister outlined his government’s multi-pronged approach to strengthening New Zealand’s global trade position, including deepening bilateral ties in Asia, the Pacific, and beyond. He cited recent visits to Japan, Korea, Southeast Asia, the United States, and India – where free trade negotiations have begun – as evidence of this commitment.
He also pointed to the closure of new trade deals with the UAE and GCC, and an Auckland-hosted Investment Summit aimed at attracting long-term foreign capital into New Zealand infrastructure. Defence policy was not left out, with Luxon highlighting the newly released Defence Capability Plan, which lifts spending to 2% of GDP to support regional stability.
Later this month, Luxon will travel to the UK for talks with British Prime Minister Sir Keir Starmer, focusing on trade, security, and the broader Indo-Pacific strategic outlook.
Domestic Reform and Growth Agenda
Luxon said the international environment underscored the urgency of his government’s domestic reform agenda. “Back home, the volatility offshore is a fresh reminder of just how important our focus on economic growth will be in the coming years,” he said.
He referenced the government’s “Going for Growth” plan, which is built around five key pillars: developing talent, supporting innovation, introducing competitive business settings, promoting trade and investment, and delivering infrastructure. The plan includes reforms to fast-track major projects, streamline overseas investment approvals, and overhaul energy and resource consent regimes.
“We are tearing down the barriers to fresh investment in renewable and non-renewable energy, by repealing the oil and gas ban and ushering in new consenting rules for wind, solar, hydro, and geothermal,” Luxon said.
“Free Trade Works”
Luxon concluded the speech with a firm pledge to continue advocating for open markets and international cooperation. “I’m not ready to call time on the rules-based trading system. And I’m not ready for New Zealand to give up on our efforts to advocate for it on the world stage,” he said.
Asserting that free trade “lifts incomes,” “creates jobs,” and “secures peace,” the Prime Minister left no doubt that his government sees global engagement, not retrenchment, as the path forward.
“I think that’s worth fighting for – and I’m up for that fight,” he said.