CER’s future lies beyond the bilateral relationship

New Zealand Institute of Economic Research (Inc)
Media Release, 4 May 2026
For immediate release

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 new NZIER Insight released today.

“CER did the heavy lifting of removing tariffs, integrating supply chains, and allowing firms to operate across the Tasman with minimal friction,” says Chris Nixon, Principal Economist at NZIER and author of the report.

“But success creates its own challenge. The low-hanging fruit in our trade relationship with Australia has already been picked.”

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. That makes sustained bilateral momentum harder to generate.”

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”, Nixon says.

By leveraging its experience in regulatory cooperation 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 cooperation 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.

New Zealand faces a more uncertain and fragmented global trading environment, requiring us to redouble our efforts on trade policy, according to a new NZIER Insight released today.

For further information, please contact:
Chris Nixon 
Principal Economist 
Mobile 021 633 127
chris.nixon@nzier.org.nz