Mutual Recognition Arrangements
Mutual Recognition Arrangements (MRAs) are in place between New Zealand Customs Service and customs services in other countries and economies/territories with similar supply chain security standards.
We have MRAs with:
- Hong Kong
- the Republic of Korea
- the United States, and
Practically, MRAs mean that Secure Exports Scheme (SES) partners from mutually-recognised countries and economies are seen as “low-security risk”. In turn, this means they can access fast-tracked customs processing in their destination countries and economies.
As an example, SES exporters are 3.5 times less likely than other traders to be examined for security purposes by United States Customs and Border Protection.
The value of MRAs
In 2019 the New Zealand Institute of Economic Research (NZIER) prepared two reports for Customs exploring the potential economic benefits customs arrangements can bring:
- NZIER literature scan to NZCS - economic benefits of MRAs (PDF 653 KB)
- NZIER modelling report of NZCS - economic benefits of MRAs (PDF 522 KB)
- Part 3: Economic benefits of MRA-AEOs - Focus on SES exports and 0.5 days’ time saving (PDF 539 KB)
- Part 4: Economic benefits of MRA-AEOs - Focus on SES exports and time saving for fruit and electronics (PDF 525 KB)
- Part 5: Economic benefits of MRA-AEOs - Industry insights on time saving and wider benefits (PDF 701 KB)
- Part 6: Economic benefits of MRA-AEOs - Scenario 4 for MRAs and SES firms as at 30 June 2020 (PDF 511 KB)
A summary of the reports (PDF 565 KB) is also available.
The reports used literature reviews as well as economic modelling and data. They looked at Authorised Economic Operators (AEOs) and Mutual Recognition Agreements (MRAs), and were prepared when New Zealand had six bilateral Customs arrangements (Australia, China, Hong Kong, Japan, Korea and the United States). We now have nine, including Canada and Singapore. The Secure Exports Scheme (SES) is New Zealand's AEO programme.
NZIER’s findings were significant. Trade facilitation from MRA-AEOs can raise real GDP and impact on trade flows through increased consumer wellbeing (lower prices) and balance of trade changes.
MRA-AEO arrangements reduce the sheer volume of work for Customs agencies. The compliance checking employed by one nation is completed before the cargo has even left the nation of origin.
NZIER’s analysis revealed the annual benefits to New Zealand from its MRAs are:
- A US$370 million increase to GDP
- US$450 million in increased consumer spending power
- US$90 million in the balance of trade
NZIER estimates the benefits of a potential MRA with the EU to be approximately US$100 million annually. If the MRA with the USA no longer existed, consumer spending power would decrease in both countries by approximately US$70 million annually.
A number of other potential benefits of MRAs, including:
- competitive advantage for entry into new markets
- greater trade facilitation and efficiencies
- assurance of supply chain security
NZIER identified that AEOs facilitated trade through:
- lower transit costs
- reduced inspection times
- reduced certification costs
- lower import costs
- lower transaction costs
AEOs benefit Customs by allowing them to better target non-compliance. AEO membership signals the security of a supply chain, and means Customs can provide assurance on the low risk status of the exporter’s shipments to overseas.