Prime Minister Helen Clark’s Speech to Celebrate the 20th Anniversary of CER

Rangitoto Ballroom Sheraton Hotel Auckland

Saturday 8 March 2003

Welcome to the Prime Minister of Australia, the Honourable John Howard and Mrs Howard. It is a pleasure to welcome you to Auckland again in this twentieth anniversary year of CER.

As Prime Ministers we meet regularly at international gatherings. These annual consultations, however, give us a chance to focus specifically on issues which are of special relevance to our countries as close neighbours and longstanding friends. I look forward to our discussions over the next two days.

There are a number of issues – Iraq in particular – which both of us, I am sure, would wish were not having to require either our attention or that of the international community. We all wish that Iraq would disarm comprehensively as it has been asked to do for many years.

But on this occasion in New Zealand’s major business centre, Auckland, let me acknowledge one of many issues on which New Zealand and Australia have much to celebrate: our closer economic relationship.

The CER Treaty was signed this month twenty years ago after provisionally entering into force on 1 January 1983.

The New Zealand and Australian economies were very different then from the dynamic, globally-engaged economies they are today.

New Zealand had an import licensing system which was designed during the Great Depression with the best of intentions. Our manufacturing base had developed uncompetitively for import substitution purposes, without any particular attention to areas of natural advantage. In the primary sectors, subsidies were wide spread.

Today New Zealand’s economy has been transformed. CER was an early step along the way, as it opened up trans Tasman trade to the mutual benefit of both countries.

Looking back, it was a farsighted undertaking. Twenty years ago - before the European Economic Community became the European Union, before the North American Free Trade Agreement was signed, and before the agreement setting up the World Trade Organisation – New Zealand and Australia created a free trade area that remains one of the most open and most comprehensive trade agreements in the world.

Total free trade in goods was achieved by 1990, five years ahead of schedule.

The CER Services Protocol, signed in 1988, was a model of its kind in achieving free trade in all services except for a small number of inscriptions, and has since reduced further.

Later, the Trans-Tasman Mutual Recognition Arrangement further facilitated trade in goods, and allowed full mobility of occupations.

In our view, CER has been good for both countries.

New Zealand exports to Australia have doubled in real terms over the course of the last twenty years. We now send a fifth of what we export across the Tasman, up from around a tenth of our exports when CER was signed. New Zealand is Australia’s fifth-largest market and its second – after the USA – for elaborately transformed manufactures. Over the past ten years, Trans-Tasman trade has increased by a greater amount than the trade of either country with the rest of the world. Together, we provide our businesses with easy access to a combined market of 24 million people. CER has given many New Zealand businesses a first experience of exporting, before they seek other markets further afield. CER has also given both countries a particular credibility and experience, which others respect, on international trade issues. Our two economies, which together equate to the size of the combined ASEAN markets, have a greater coherence and attractiveness together than apart. As a result of CER, Australia has access to another domestic market about the size of Queensland, and the effective size of the New Zealand domestic market has been increased sixfold. Australia and New Zealand combined are the twelfth largest export partner for the United States in terms of goods. Increasing economic inter-connectedness, and an intensive web of trans-Tasman family links, mean we have a strong stake in each other’s success. When Australia does well economically, it’s good for New Zealand, and vice versa.

When New Zealand’s economy is growing, as it is currently, the market for Australian goods and services here also grows.

Indeed, amongst its major markets, Australia has experienced a higher rate of growth into the New Zealand market in the last year than it has with any other country outside China.

The integration of the Australian and New Zealand economies, and the success of CER, helps to explain why we are both so keen for an FTA with the United States. Economic partnerships of this kind deliver results – as CER itself has shown. Australia, New Zealand, and the United States work very closely together in the WTO, and we want to develop the bilateral trading relationships with the USA further as well.

Looking ahead, there are further areas where increased economic integration would be to our mutual benefit. Work on CER is increasingly about what we call ‘behind the border detail’.

Our intention is to come up with commonsense, practical solutions to the problems faced by business operating on both sides of the Tasman.

Last month Australian Treasurer Peter Costello and Dr Cullen announced an agreement resolving the so-called “triangular tax” issue.

I welcome that announcement. It removes a long-standing impediment to trans-Tasman investment.

Work is also being progressed in areas of business, regulatory, and tax law, aiming to reduce the burden of compliance inherent in two different systems.

We are also negotiating a joint therapeutics agency. Through it we can pool our expertise to ensure that New Zealanders and Australians benefit from the rapid advances being made in medicines technology, while being protected by standards of the highest order.

CER will continue to be a model trade agreement.

Its openness and comprehensiveness can be used as benchmarks in the development of other free trade initiatives in the region. CER has created an economic framework of enduring significance to Australia and New Zealand.

Looking ahead, CER should continue as a dynamic agreement, adapting to the changing requirements of business in an increasingly inter-dependent world.

The New Zealand Government is committed to furthering the economic relationship with Australia. My colleagues and I look forward to discussion in the next two days with Prime Minister John Howard on how we can take the process forward.

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