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Category: Defence
Author: Commander Steve Lenik

In order to conflate security implications with maritime trade there are three main points to consider from the New Zealand perspective. First, due to our geographical remoteness we are utterly dependent on maritime trade for the nation’s prosperity and wellbeing. Second, the New Zealand public is largely ‘sea-blind’ to the importance of maritime areas beyond our Exclusive Economic Zone (EEZ).

Beyond this horizon in New Zealand’s ‘maritime periphery’ lie important geopolitical reference points crucial in developing security measures in support of trade; and third, Defence is an important tool but, due to the potential for a revisionist form of maritime trade warfare, characterised by ‘Grey Zone’ activities, there are other levers of national power that are required as part of a global effort to safeguard the free and unencumbered trading routes that are so pivotal to New Zealand’s prosperity.      

I’ll talk about these in a little more detail however please allow me to indulge in a precis of NZ’s maritime heritage before I move on. 

History of New Zealand as a maritime nation

Much like Australia, New Zealand’s identity as a maritime nation, dependent on maritime trade, draws its lineage from seafarers such as Abel Tasman and James Cook.  However, in the context of the Blue Pacific and policies such as New Zealand’s Pacific Reset it is important to acknowledge that our nation’s true forebears the Polynesian Maori Ora recognised factors important to the preservation of trade way back in the 13th Century. These Pacific navigators knew the importance of establishing safe, navigable and economical Sea Lines of Communication between Pacific islands as they undertook their great voyages from Hawaiiki to New Zealand. These mariners harnessed the maritime environment in a symbiosis that is at risk of being a forlorn Blue Pacific vision if urgent security-related matters aren’t addressed.



In terms of trade, New Zealand’s first settlements by the Pakeha – or white people- was in the Bay of islands, in New Zealand’s north. The area was chosen not so much as a military-strategic outpost for the British Empire but due to its value as a whaling station for American and British Ships. Soon after, New Zealand began trading with Pacific islands, and there are records dating back to 1861 that refer to guano imports into New Zealand from Kiribati and records denoting Auckland as a re-export hub for goods from Britain being on-sold to Pacific islands. The point being that New Zealand has always been reliant on riches borne on the sea.

If we wind the clocks forward two and a half centuries from Cook’s first visit, New Zealand’s blue economy has become a bedrock of our national economic, environmental and social well-being. The current value of trade by sea vis-a-vis by air is noteworthy and I’ll now touch on some of the commercial sectors that contribute to New Zealand’sGross Domestic Product in the maritime domain.

Current statistics indicate that New Zealand conveys over 99% of its imports and exports by volume via the Ocean which equates to 87% of the value of all imports and exports. In monetary terms this was around $50bn imported and $50bn exported goods over the 16/17 F/Y. With all the ancillary benefits from associated commerce, the total annual worth of seaborne trade to New Zealand is in the region of $140bn. There are other commercial sectors that make almost $8bn worth of contributions to the economy, including fishing, oil and gas. The cruise sector alone exceeded $500 million in 2018. The $8bn figure also includes offshore petroleum (oil and gas) production comprising a total acreage of nearly 500 million km². Of course the oil trade is again a topical subject as New Zealand considers its contribution to the IMSC at Bahrain. However, suffice it to say here that New Zealand’s net imported oil dependency ranges from 62-65%.

Some more statistics. New Zealand’s share of world container capacity is only about 1%.  4% of the world container ship capacity services the Oceania trade routes. These small containerised stats for New Zealand belie the fact that this equates to around 70% of all of our imports/exports. The remainder being bulk products, mainly exported timber and imported oil. 

Fishing

Fishing revenue contributes around 2% of annual GDP or approximately $1.8 billion, with exports sold to majority of our main trading partners. Within our EEZ we have a good handle on fishing activity however monitoring of illegal, unreported and unregulated fishing in the EEZs of our Pacific partners is a resource intensive task, but an imperative for New Zealand Defence as we look to contributing to the Blue Pacific notion.  

Cruise Ship industry

The cruise ship industry continues to grow. It brings in over 220,000 people and contributes almost $500 million to the national economy annually.

Undersea Cables

Undersea cables are a non-traditional maritime features associated with trade and of increasing importance. The overwhelming majority of our data flows through a network of undersea fibre optic cables that carry the global internet traffic necessary for any modern economy, and, potentially a strategic target.

Unsurprisingly then, the New Zealand economy is heavily reliant on international maritime trade and despite the growth in global shipping in the last decade, a key barrier to New Zealand success is its geographical remoteness and distance from world markets. As a trading nation we are further from our markets than any other OECD country. This means our exporters have significant cost and time disadvantage. In 2009 the World Bank noted that every day away that a country is from its trading partner means a 1% reduction in probability that its trading partners will purchase goods from that country. 

We cannot physically move New Zealand closer to its markets but we can strive to improve the security and efficiency of New Zealand freight routes in order to make them a palatable choice for trading partners. You will not be surprised by the themes necessary to achieve this: Safe and secure routes, plied by merchants adopting environmentally sound and sustainable practices, underpinned by a rules-based system that permits unfettered access to these routes.

Our Maritime Domain

We are the 74th largest country in the world yet we have the 9th largest EEZ at over 4,000,000 km2 which is some 15 times the area of New Zealand’s land mass, it is one of the largest in the world and one which represents a significant present and future source of economic wealth. New Zealand also has claims to a large Extended Continental Shelf. This extends New Zealand’s direct protection responsibilities still further in this ‘maritime estate’.

We also have SAR responsibilities within NAVAREA XIV of over 30 million Km2 which covers over 20% of the Pacific Ocean. Thus, across Government we see ourselves as a steward of a vast maritime domain stretching from the Ross Sea in Antarctica to Kiribati at the Equator and half way across the Tasman on one side and half way to Chile at Pitcairn island on the other. Within that domain lies our constitutional and historical ties to Pacific Island nations, including the Cook Islands, Niue and the Tokelau’s. 

New Zealand's SAR Area
New Zealand Search and Rescue Area overlaid Europe... shows how large the area is.

So, the area bounded by the EEZ and SAR responsibility area represents a body of water on, under or over which activities should be fully governed. However, we have demanding obligations farther afield in what a previous New Zealand High Commissioner to Canberra, Simon Murdoch refers to as our ‘maritime periphery’. This conceptual area includes the sea lanes to our commercial partners in the America’s and those to the value and supply chains of SE/NE Asia. New Zealand’s efforts in this periphery are hindered by the public’s ‘sea-blindness’. We are a nation culturally connected with the sea, but, to the majority, this connection seems to be severed outside of the recreational fishing and yachting playgrounds on our coast.

Nevertheless the periphery is as important as the nearfield maritime estate and Domain: particularly to concepts such as the G20 Osaka Blue Ocean vision, New Zealand’s own Blue Pacific vision or those aspects of the Boe declaration that will help preserve the economies of our closest Pacific partners whose own resilience, security and economic prosperity is intrinsic to the security and prosperity of New Zealand.  

However, In New Zealand’s case, unlike other larger partners in the Pacific who have a forward presence in the periphery, we can only exert limited influence over state and other commercial actors as we look toward this outer ring.  Here then is where we rely on the rules-based international system which gives smaller nations such as New Zealand a larger voice. There are of course complex disruptors that threaten to disrupt the maritime trading routes so vital to NZ’s interest.  

Throughout the Estate, Domain and Periphery we are seeing risks posed by the intensifying impacts of climate change, transnational organized crime, resource competition, cyber threats, ‘grey zone’ activities including the strategic competition in the Pacific and the impact that the securitisation of the South China Sea is having on maritime trade.  Indeed one delegate at the recent ASEAN regional forum commented that the militarisation of the SCS is blocking up to $2.5 trillion of trade or investment in Asia. The question now is whether this is endemic of the sort of trends we might see trickle into the Pacific as non-traditional Pacific actors create a new ‘geo-legal’ order with some nations incentivised to comply with one nation’s view rather than the universal interpretations of international laws. 

Other factors affecting maritime trade

Aside from geopolitical concerns there are other factors we are mindful. For example:

So, What are the implications for NZ Defence?  

Security and prosperity are inextricably linked. The former setting the conditions for the latter which, for New Zealand, is primarily born on the sea. When we consider the trends emerging, particularly those associated with the complex disruptors and grey zone operations in our region there is an increasing need for us to develop better maritime domain awareness to both recognise the threats and enabling like-minded nations to address the challenges therein.

Whilst our recent Defence Capability Plan points to our desire to introduce enhanced maritime awareness capabilities we can’t do this alone. Strategically speaking, the importance of nurturing multi-lateral defence relationships through an appropriate regional architecture, adopting sustainable and fit-for-task initiatives, underpinned by international rules & norms cannot be overstated.

The areas I’ve spoken about are vast and our Defence Force is small, thus the outcomes of strategic dialogue can be realised through the tried and tested tool of defence diplomacy which has primacy for ensuring our presence can be felt in the sensitive areas of our periphery which will flare up from time to time, creating uncertainty in the minds of indigenous commercial maritime sectors or of our trading partners. 

Operationalising initiatives such as the Pacific Fusion Centre, Indo-Pacific Maritime Coordination Cell, and introducing robust autonomous systems, resilient to cyber threats are vital. There will always be a place for gun-boat diplomacy, thus making our presence seen and felt as a matter of routine in periods short of conflict, such as through routine patrols or contributions to the IMSC or CTF 150 constructs is a must but this is only truly effective when bolstered by capability.

On that point, countering Anti-Access, Area Denial capabilities including the threat of hypersonic missiles is in a region where our major sea lines of communications lie is beyond the means of New Zealand currently. However, we need to contribute to a multi-national effort with meaningful, complimentary, and niche capabilities which is certainly not beyond our means.  

New Zealand needs to ensure the bonds connecting our levers of national power are strong lest they be awash by the grey zone activities in our maritime periphery. The New Zealand Defence Force is a critical strand of our national security machine. However, New Zealand is but one strand in the international tapestry of effort to preserve maritime trade in our region. 

The Maori people have a saying – he waka eke noa.  We are in this canoe together.  New Zealand Inc’ needs to constantly remind ourselves of this point if New Zealand maritime trade is to prosper. 

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Article: https://navalinstitute.com.au/implications-for-maritime-trade-a-nz-perspective/
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