Marian Hobbs Speech: Launch of NZAID policy: Harnessing International Trade for Development Grand Hall, Wed May 28, 2003 11.30am

Trade can reduce poverty

Welcome to all of you here this morning and thank you for coming to the New Zealand Agency for International Development – NZAID’s – new policy launch on trade and development.

I’d like to begin by acknowledging the cross-section of interests represented here: NGOs, business, trade people, academics, development experts, and other political parties in parliament.

Because that’s exactly what this policy is all about; that together we stand a chance of reaching the Millennium Development Goal of eradicating extreme poverty by 2015.

Aid can’t do it on its own.

A recent report produced by the global magazine Foreign Policy and the Centre for Global Development ranked rich countries according to whether they help or hinder the economic and social development of poor nations.

New Zealand ranked 4 out of 21. Not bad.

‘An exemplar in many ways’, said the report.

Except that in reality it wasn’t just our aid budget that got us close to the top: that is still too far off the 0.7% GNI that we would like to see. An increase in this year’s aid budget of $20 million dollars is a start.

The truth is, what got us such a good ranking was a combination of: our aid contribution our trade policies which favour some of the poorest countries in the world our excellent peacekeeping work our migration, environmental and investment policies.

The point is we cannot measure the effectiveness of New Zealand’s aid budget in isolation from these other factors.

And at the heart of this policy is the belief that aid and trade must work together to eliminate poverty.

Aid can help developing countries trade their way out of poverty.

Because the gains from trade potentially outweigh the financial gains from international aid.

Research from Oxfam International confirms that if developing countries could increase their share of world exports by just 5%, this would generate some NZ$700 billion in additional income – seven times as much as they receive in aid.

Yet millions of the world’s poorest people are still being left out in the cold when it comes to fair trade.

This policy is about focusing our combined efforts to change that.

We must be realistic too: trade only reduces poverty if poor countries have: things to trade education and work skills good health markets in which to sell their goods.

That’s where our aid support comes in. We fund projects to build that sort of capacity, particularly for developing countries in our own region of the Pacific.

That means help to meet international product standards, help to get adequate market information and contacts, and our assistance to developing countries when they negotiate and implement international trade agreements.

It’s also worth noting that NZAID is working with its colleagues in the wider Ministry to ensure a development outcome from the Doha Development Round at the WTO.

For those of you who were lucky enough to get a bar of Peanut Chokky this morning - let me explain!

Peanut Chokky is made by a Samoan company called Wilex. They’re a small outfit, and at the moment they employ about 30 people. Now that they’ve found a market in New Zealand, that’s likely to increase to at least 40 employees.

That’s – 40 people able to provide for their families 40 people developing job skills 40 people helping Samoa trade its way out of poverty

NZAID funds The Pacific Islands Trade and Investment Commission – PITIC - who are with is today, and PITIC helped Wilex find a New Zealand market for Peanut Chokky.

That’s how your aid dollar does its work.

You could argue that most of our aid budget goes towards helping poor countries build up a trade base:-

- funding basic education, basic health, ensuring public institutions are functioning, that the rule of law is in place – all of these are vital building blocks on which to build a trade base.

But we have also increased some of our specific trade programmes too – by over a million dollars in this year’s budget: An extra $500,000 to help poorer countries in Asia develop trade to reduce poverty. And another $500,000 extra to support sustainable management of the Pacific fisheries resource - the region’s most valuable economic asset.

Aid on its own will never succeed in eliminating poverty. But if we can help poorer countries develop their own trade base, they’ll have more money to tackle poverty, long after our aid dollars have done their job.

I’d like to end with a quote from Secretary General of the United Nations, Kofi Annan:

“No single change could make a greater contribution to eliminating poverty than fully opening the markets pf prosperous countries to the goods produced by poor ones.”

Thank you again for coming, and help yourself to a copy of NZAID’s new policy: Harnessing International Trade for Development and the pamphlet version too. This is only the second policy launch since NZAID’s creation last year, and there’s lots more to come!

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