What the deal with Singapore means for New Zealand

Explainer - New Zealand has signed a deal with Singapore that will ensure exports of essential supplies like food and fuel keep flowing, even during a crisis.

A bit like the one we're facing now.

While it was inked this week, negotiations concluded last year, and Singapore has kept the fuel coming since the outbreak of the war on Iran.

Neither Christopher Luxon nor his Singaporean counterpart Lawrence Wong would have known just how handy that deal was going to become back in October.

It's a pretty simple equation, crisis or no crisis: New Zealand needs fuel, Singapore supplies fuel. Singapore needs food, New Zealand supplies food.

With no refinery in New Zealand since the closure of Marsden Point, we've had to rely on importing refined fuel from elsewhere. Singapore has supplied around a third of that.

The background

New Zealand and Singapore have a longstanding trade relationship.

In the year to June 2025, two-way trade was worth $11.07 billion.

The two countries signed a free trade agreement (the New Zealand-Singapore Closer Economic Partnership, or CEP) all the way back in 2000.

In April 2020, they committed to a declaration on trade in essential goods, in response to the Covid-19 pandemic.

That declaration ensured neither New Zealand nor Singapore would impose export restrictions like tariffs on 120 essential goods like various foods, pharmaceuticals, and medical equipment.

While the declaration was non-binding, in 2022 former New Zealand prime minister Jacinda Ardern and former Singapore prime minister Lee Hsien Loong established a supply chain working group to build on those commitments and spirit of cooperation.

In October 2024, Cabinet agreed to launch negotiations, and a year later the Agreement on Trade in Essential Supplies (AOTES) was agreed to.

Were we at risk of fuel being cut off?

Singapore has made it clear it was hardly going to turn the tap off anyway, given the relationship and how much it runs counter to our general trade philosophies.

New Zealand farmers are pretty reliant on diesel, in order to produce the food that is then exported to Singapore.

So there was never much of a motivation for Singapore or New Zealand to all of a sudden become more protectionist.

But now it's in writing, with legal obligations, and sitting within the CEP.

"Unlike the declaration, the AOTES is a binding, treaty level agreement and is not responding to an immediate supply shock but helping both of our countries prepare for future crises," Ministry of Foreign Affairs and Trade officials wrote in a national interest analysis.

Countries can use a critical shortages exception under the General Agreement on Tariffs and Trade (GATT), but this new deal is "novel," officials said, because it prevents that from happening.

Not that New Zealand has ever used that exception. To the best of their knowledge, officials couldn't find an example.

So, even if Singapore experiences a supply shock, it still can't apply that shortages exception, which gives New Zealand more certainty.

But what if the worst happens?

If we're talking about the absolute worst of the worst of situations, like a nuclear apocalypse which wipes out all of our crops, or the island where Singapore's refineries are based all of a sudden sinks into the sea, then yes, sure, Singapore and New Zealand could technically circumvent the agreement.

The countries can still use other provisions or exceptions in the GATT or their World Trade Organisation agreements, so they can still impose export controls for "reasons such as national security threats, the protection of human, plant and animal health, public morals, or the regulation of classification, grading or marketing of commodities in international trade."

That's where a rapid review clause comes in, meaning both parties can call an emergency meeting to discuss adding or removing goods to or from the list.

Singapore and New Zealand have also promised to share information with each other in the event of a significant or imminent supply chain disruption, such as the predicted impact on their economy or national security, or how long it may last.

There is a provision within Singapore and New Zealand's CEP which allows Singapore to adopt "any measure" to address critical shortages of essential imports.

So, if there's a supply chain crisis, Singapore could use the provision within the CEP to prove an exemption from the AOTES.

But, officials said, the threshold was high, as the "relevant goods need to be listed as essential in Singapore's domestic law, the critical shortages need to give rise to major difficulties for Singapore, and the measure should not be used to arbitrarily discriminate against New Zealand or to impose a disguised restriction on trade."

So why is fuel still so expensive?

While the deal reduces New Zealand's risk of fuel shortages, it doesn't reduce our exposure to prices.

The AOTES ensures both countries continue to "expedite and facilitate" the flow of supplies, and prevents them from imposing export restrictions.

It does not "cut across" the role of the private sector in the production or management of supply chains, and there's no regulation within the agreement for the private sector.

It also doesn't mean New Zealand or Singapore have to commit to procurement, or guarantee the supply of goods.

New Zealand importers still have to pay the market rate for the fuel, and that inevitably gets passed on to consumers.

Singapore's refineries have had to adapt to process sweeter crude than they're used to, and sourcing it from elsewhere has also brought in extra costs.

The fuel companies can source it. They can refine it. They can transport it. But it's still going to cost us, especially if that supply gets more constrained.

That's why, even though the fuel is still coming into New Zealand, we're still seeing those prices at the pump.

Both Wong and Luxon have been bleak in their assessments of the fuel crisis, with neither thinking it's going to end any time soon.

What else is in there?

Food and fuel are the headline items, mainly because they're the most pressing things the respective countries would need in a crisis.

The lists can be changed, but only if both parties agree to the edits.

New Zealand's list includes petroleum and oils (other than crude, which we wouldn't need anyway without a refinery), hydrocarbons, medications, vaccines, polymers, medical equipment, and building materials like steel and glass insulation.

Officials on the New Zealand side said the list was chosen to reflect what New Zealand already imported from Singapore, as well as "whether New Zealand could or could not stand-up production of the specific good in the times of crisis, how substitutable the good is, and whether we can easily source the good from elsewhere."

Singapore's list is almost entirely food: meats, vegetables, legumes, fruits, dairy, grains.

Coal is also on Singapore's list, as are photographic cameras, for some reason.

Is it really a world first?

The "first of its kind" definition is technically true.

Australia concluded negotiations on a similar economic resilience deal with Singapore last month, committing to keep supplying Singapore with liquefied natural gas while Singapore promised to keep supplying Australia with refined fuel.

But even though New Zealand's deal has only just been signed now, it has been locked in for longer.

Luxon has used that to rebuff criticisms that he should have got on a plane to Singapore sooner. The deal was agreed to in October, Singapore promised to abide by it in-principle once the war started, there was no rush.

"We didn't need to, because the Australians didn't have what we have. They probably still haven't got what we have. We put this in place in October, Prime Minister Wong and I are good friends, and we agreed that we would work to this and formally sign it on this visit. So it's served us incredibly well. We haven't needed to go sooner as a result of this," he told RNZ ahead of the trip.

Can we expect others to join in?

Luxon is pointing to the deal as an example of smaller countries innovating and modernising trade architecture, rather than responding to the United States' tariffs with a tit-for-tat protectionism.

Both he and Wong have expressed openness to other countries wanting to join in.

Singapore and New Zealand's deal had an advantage because they came from a running start, and had identified the products each other wanted, but both prime ministers have said others can sign up, as long as they can meet the same standards, guarantees, and commitments.

In July, New Zealand will chair a meeting with 15 other like-minded economies such as Malaysia, Switzerland, Norway, and the United Arab Emirates, and Luxon has said it's possible some of those countries may want to give it a go.

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