Luxon Signs World-First Essential Supplies Pact With Singapore as Fuel Crisis Drags On

New Zealand and Singapore have signed a binding agreement promising not to impose export restrictions on each other’s essential supplies during global supply shocks, in what officials are calling the most ambitious supply chain pact New Zealand has ever entered into.

Prime Minister Christopher Luxon and his Singaporean counterpart Lawrence Wong put pen to paper on the Agreement on Trade in Essential Supplies in Singapore on Monday, on the final leg of Luxon’s three-day visit. Trade Minister Todd McClay was alongside the Prime Minister for the signing.

The agreement covers fuel, food, medicines, medical equipment and construction materials. Under its terms neither country will be permitted to slap export bans, quotas or other restrictions on goods within those categories during a crisis or other supply chain disruption. The deal will be folded into the existing New Zealand-Singapore free trade agreement once both governments have completed domestic approval steps. No firm date has been set for that.

The strategic logic is simple. New Zealand imports 100 per cent of its refined fuels — petrol, diesel and jet fuel — and roughly one third of that volume is processed at Singapore’s massive refinery complex. Singapore in turn imports about 90 per cent of its food and has long looked to New Zealand as a high-trust supplier of dairy, meat and horticultural product. Each country sits on something the other cannot easily produce at home.

That mutual dependence has been thrown into sharp relief by the closure of the Strait of Hormuz and the wider energy market disruption stemming from the Iran war. Singapore’s refineries have spent the past two months scrambling to source alternative crude feedstocks. New Zealand’s diesel and jet fuel inventories have only just begun to refill after several weeks of pressure on supply. Both leaders have signalled they expect the disruption to persist at least through to the end of the year.

Luxon framed the deal as a partnership of equals during a joint press conference with Wong. “This is a relationship which both countries can rely on one another. We have each other’s backs,” he said, according to 1News reporting. He also flagged ambitions to expand the agreement, suggesting “there’s potentially a group of countries that might be interested in that” and comparing the trajectory to the way the CPTPP started with a smaller membership before growing.

Wong was equally explicit about what the agreement is trying to achieve. “This agreement is our answer. It’s a commitment that we will do things differently, that we will keep markets open and stand by one another,” he said. He added that “we will not shut each other out. This matters because in difficult times every country will be tempted to look inward.”

The deal is being marketed in both capitals as a world first, and on its strict terms — a legally binding bilateral commitment not to restrict essential exports — there is something to that. But Singapore has been laying this groundwork for some weeks. On 17 April it signed a Protocol on Economic Resilience and Essential Supplies with Australia covering similar ground, and analysts in the region are now watching to see which other middle powers move next. Luxon’s reference to a wider club of like-minded countries is not accidental.

The political reception at home is likely to be mostly favourable. Trade liberalisation with Singapore enjoys cross-party support and the deal’s framing as a fuel security measure is hard to argue against during the present squeeze. Labour and the Greens have not yet released formal positions on the AOTES, but the opposition has been pressing the coalition for a more coherent fuel security strategy for several weeks and is unlikely to oppose a specific instrument that locks in supply.

There are still questions to answer about how binding the commitments really are. The treaty text is yet to be released in full. The mechanisms for enforcement — whether dispute settlement runs through the existing NZ-Singapore FTA architecture or some new bespoke process — will determine how meaningful the no-export-restrictions promise is when one party is genuinely under domestic pressure to keep something at home. Past supply shocks have shown that even legally binding commitments can bend when essential goods become scarce on a country’s own shelves.

The agreement also leaves untouched the structural vulnerability that makes such pacts necessary in the first place. New Zealand’s reliance on imported refined fuel reflects the closure of the Marsden Point refinery in 2022, a decision that successive governments now openly acknowledge has reduced the country’s energy resilience. Building that capacity back, or finding alternatives such as expanded biofuels and electrification, would do more to insulate New Zealand from future Hormuz-style events than any treaty. The AOTES is a practical bandage on that wound rather than a cure.

For now, though, the signing gives Luxon a tangible win to show voters from a trip that was as much about reassuring nervous freight operators and farmers as about diplomacy. The Prime Minister’s office has flagged that he will visit a Singapore refinery before flying home, in what is likely to be the most photographed stop of the visit.

Cabinet papers on the AOTES are expected to be tabled in the next sitting block, with the implementing legislation following shortly after. Watch for whether the bill enjoys the unanimous support the existing NZ-Singapore FTA has historically attracted, or whether the opposition uses the committee stages to push for a wider conversation on fuel security and refinery capacity.

Is the AOTES a smart hedge against the next supply shock, or a fig leaf that lets the government avoid the harder conversation about rebuilding domestic fuel capacity? Have your say in the comments below.