FRIDAY 28 NOVEMBER 2003

Rt Hon Helen Clark
Prime Minister

Post–Apec Address to
AUCKLAND CHAMBER OF COMMERCE

at

Royal New Zealand Yacht Squadron,
Westhaven,
AUCKLAND

Friday, 28 November 2003

Thank you for the invitation once again to address the Chamber following my return from the APEC Leaders' Summit.

Events over the past few weeks have enabled me to focus particularly closely on New Zealand's relationships with the Asia Pacific region.

En route to APEC, I visited both Singapore and Viet Nam, and almost immediately after APEC the President of China was in New Zealand for a three-day visit.

This week we have hosted the Deputy Prime Minister of Singapore and other distinguished visitors from Asia who came for the Seriously Asia conference.

Thailand's Foreign Minister has also been in New Zealand for four days in the past week, following up on discussions which Phil Goff, Jim Sutton, and I had with Thai leaders when we were in Bangkok for APEC.

As you know, I do regard APEC as a particularly important forum for New Zealand. The APEC economies take 73 per cent of our exports, and we source 72 per cent of our imports from APEC economies.

So the opportunity for New Zealand at the levels of other ministers, and senior officials to be able to meet regularly with our counterparts from right around the Pacific Rim is a very valuable one, and we make the most of it.

APEC leaders' and ministers' forums are a good opportunity not only to hear the key issues of the day debated, but also because they provide time for bilateral business to be done with other countries all in the one place. This makes attendance a good use of one's time.

Last year's APEC Summit took place just over a year after the September 11 terrorist attacks, only a couple of weeks after the Bali attacks, and just months before the war on Iraq. The Russian President was unable to attend that summit in Mexico because he was dealing with the ghastly terrorist drama being played out in a Moscow theatre.

It wasn't surprising therefore that security issues dominated the Los Cabos Summit. Moreover, those issues have now become a permanent part of the APEC agenda. It is well recognised that insecurity is impacting on all our economies, both in impeding growth and in imposing additional costs on trade and travel.

This year I thought a good balance was struck between the security issues and the issues of trade and economic development. Leaders did agree to a number of trade-related security measures, but we were also able to have substantial discussions on trade.

This APEC summit was the first major international meeting to be held after the failure of the WTO's Cancun Ministerial Meeting. That made it especially important for the Leaders to issue a strong statement aimed at getting the WTO Round back on track.

What New Zealand was keen to see was a commitment by all leaders to picking up the Doha negotiations from the most forward point reached in Cancun.

In our view, reasonable progress had been made on the agricultural issues which are dear to our heart. The major differences occurred over the so-called Singapore issues of investment, competition, trade facilitation, and procurement, where divisions between some developed and developing nations were very deep.

APEC itself contains representatives of some of the most significant groupings at the WTO. The United States, Canada, and Japan are G7 economies; and New Zealand and others are active in the Cairns Group.

The new phenomenon at Cancun was the G20 grouping of larger developing countries, including some of APEC's Latin American and Asian members.

Thus, getting agreement across the diverse range of players represented at APEC was in itself an achievement, and we were pleased with the outcome.

The APEC Leaders did commit to the abolition of agricultural export subsidies as a goal for the Doha Round. The Trade Ministers meeting just prior to the Leaders' Summit also signalled greater flexibility in relation to trade facilitation – one of the Singapore issues on which it might be possible to get progress in the Round.

Overall, we believe the APEC meetings were positive in signalling a way ahead for the WTO Round. What is needed though is for the commitments the Leaders and Ministers have made in Bangkok to be followed through by their mandated negotiators in Geneva and at the next WTO ministerial.

It will also be important for much more contact to be made with the smaller developing countries of particularly Africa, the Caribbean, and the Pacific, which need to be engaged for the Round to move forward. Their deep discontent with the developed country agenda was very evident at Cancun.

Next weekend, at the Commonwealth Heads of Government Summit in Nigeria, many of those smaller countries will be present. The Commonwealth has taken strong positions in the past on opening up world agricultural trade. Thus we see the forthcoming CHOGM as an opportunity to work with another wide group of nations to move the Doha Round forward.

At an earlier stage of its development, APEC set the ambitious Bogor goals for freeing up trade within the Asia Pacific. Developed countries were to have opened up by 2010, and developing countries by 2020.

This year New Zealand's progress towards the goals has been peer reviewed and has been judged to be exemplary. We do, however, tend to be at the head of the pack.

In recent months the government has reviewed New Zealand's remaining tariffs, and has agreed on a programme of further reductions through to 2009. We will consider the post-2009 regime in 2006 in the light of more information about the WTO round and about progress by other APEC economies towards the commitments they made towards the Bogor goals.

Meantime we have given the sectors here still covered by tariffs space and time to continue their repositioning and re-engineering to cope with lower tariff environments. In my view a more gradual approach along these lines in the earlier years of New Zealand's restructuring may well have seen us able to retain more of our businesses as internationally competitive than in the event we did.

By world standards New Zealand is now a very open and competitive economy. But, because of that, and also because we are a small market, we are not a particularly attractive target for bilateral free trade agreements. Much of what others have to trade in negotiations for FTAs we have already ceded unilaterally.

So those who go down the FTA track with us are more likely to do so for the demonstration effect of showing the way for such agreements, and because they see the strategic benefits of allowing a more free flow of goods, services, and people.

So, while multilateral trade negotiations are a long, slow, and frustrating business, the reality is that they do offer the best outcomes for New Zealand. That is why the WTO round remains the Government's top trade policy priority. The effect is like negotiating 147 trade agreements in one go. Add to that the fact that, agricultural trade rules remain more restricted than those for any other sector, and the case for prioritising the multilateral negotiations is compelling.

There are, however, possibilities within our region which are worth pursuing. Thailand, for example, is pursuing a policy of openness, and is keen to move rapidly towards an FTA with us. We expect to progress those negotiations next year.

The prospects with China are also tantalising. In the early months of next year we will begin talking about a formal Trade and Economic Framework Agreement. If that can be concluded, then it provides a basis for discussing a future FTA.

Australia signed such a framework agreement in October. As part of that it has waived for a two year period certain rights under China's accession agreement to the WTO. We are presently studying the implications of that move, as no doubt are others who wish to do more business with China.

None of New Zealand's major trading relationships have grown as fast as our trade with China in recent years. Five years ago, we exported just over $700 million worth of goods there. By last year, that figure had more than doubled.

This year China displaced the United Kingdom to become our fourth biggest export destination. China is also the only export market in our top ten presently registering growth.

And it's not only the goods trade which has grown dramatically. Services have grown even faster, especially for education and tourism. In education, we do have some issues of sustainability and quality to work through in order to maintain our international reputation. This is an area where regulation and standards are vital.

Asia's economic and financial crisis in the late 1990s caused a loss of confidence in the region and its potential. But while much of Asia has rebounded from that crisis, Asia has not been registering as strongly on New Zealand's horizons as it could.

East Asia is now growing at five to six per cent a year, but the share of our exports which goes there has fallen.

It may well be that we have found better opportunities elsewhere, but for the medium and long term there must be more growth potential in Asia than in the more mature markets of Europe and North America.

This sense that New Zealand isn't maximising the potential of its relationships with Asia was the motivation for the organisation of the Seriously Asia project which culminated in the major conference in Wellington this week.

The process was a model in how to use the Internet to facilitate participation in important public debates.

Background papers about many aspects of our relations with Asia went on the web and submissions were invited on the way ahead.

From the time the project was launched at the end of August, there were 1000 hits a week on the website, and 230 thoughtful submissions were received. Working groups convened by Asia 2000 then produced proposals for the conference of stakeholders to consider.

Apart from the range of worthwhile specific proposals, there was broad agreement that we need clear, consistent, and coherent strategies for New Zealand Incorporated in Asia.

Within government we are looking at how we can co-ordinate better our own many activities in the region, and I am considering bringing together a ministerial taskforce to do that.

But to be effective we will need to link up with the private sector and with stakeholders across local government, education and research institutions, NGOS, and the media.

There is not a crisis in our relations with Asia. But there are significant developments there which we need to be aware of and should be able to engage with.

Consider, for example, the deepening of economic integration within ASEAN, and its focus on its relations to its north and to its west, rather than to its south.

Shortly before APEC, the ASEAN leaders met in Bali and hosted the Premier of China, the Prime Minister of Japan, and the Korean President.

The prospect is there for an East Asian economic community of two billion people with a combined GDP of three trillion US dollars.

ASEAN is also engaged in opening up trade with India. Its vast potential as a market, and its rapid economic progress is not well understood in New Zealand. Current projections suggest that by 2013 India's population will outnumber China's. Nineteen per cent of China's people are under the age of fifteen, compared with 31 per cent of India's.

2005 marks the thirtieth anniversary of New Zealand becoming an ASEAN Dialogue partner. But despite that long-term engagement, we see initiatives like the AFTA – CER talks making slow progress in comparison to developments between ASEAN and India and the Plus Three group.

So it is time for some fresh thinking and approaches. There is an emerging architecture in the region of which New Zealand and Australia are not part. I have been discussing how to change that with a number of Asian leaders and ministers over the past few weeks. The Seriously Asia project has also been useful in focusing a broader range of stakeholders here on the importance of our Asian relationships.

The economic potential of those relationships is obvious. The nations of Asia account for one third of our foreign trade and one fifth of our inward foreign investment. One third of our tourism revenues and eighty per cent of our international students are coming from Asia.

But the relationships we have with Asia won't prosper if they are too narrowly focused on economics. The political relationships and the people to people relationships are also vital.

Japan's Prime Minister has promoted the concept of a broader East Asian community, inclusive of New Zealand and Australia and with a focus broader than economics. That is to be encouraged.

Perhaps the most encouraging part of the Seriously Asia Conference was the very positive feedback from the senior invited Asian guests about New Zealand's image in the region.

They reported variously that New Zealand is respected, trusted, and reliable. Our perceived independence is also an asset, as it enables us to interact constructively with a wide range of nations. These reputational attributes give us a strong basis for further engagement.

Thank you for the opportunity to address you on these issues today.

End

© Scoop Media