Hon Jim Sutton
Member of Parliament for Aoraki

Minister of Agriculture, Minister for Trade Negotiations,
Minister for Biosecurity, and Associate Minister for Rural Affairs

Speech Notes
26 July 2005

Summerfruit NZ annual general meeting
Queenstown

Ladies and Gentlemen, thank you for the invitation to speak today.

In the past few weeks, I have spoken to apple growers and to the Horticulture Export Authority, an umbrella group for fruit and vegetable exporters.

All the comments I have made have been the same - the international trade system is not fair, in many important respects. Till the international trading system is truly comprehensive, and is based on rules fair to all traders, then we are going to run into problems.

Agricultural trade has the most tariffs, subsidies, quotas, and other barriers to trade of all the international markets. And fruit growers in New Zealand, such as you here today, know all about those barriers.

It's because of that unfairness, that the WTO multilateral negotiations are so important to us.

It's a variation on the three R's:

·it is about Returns ? the world economy stand to gain most from maximizing productivity and efficiency through multilateral trade liberalisation;

· it is about Rules ? to govern global trade;

· and it is about Resolution ? the ability for large and small alike to seek fairness through enforcement of those rules.

We have to remember that while the WTO and its predecessor the GATT are about 50 years old, it was only in the last round of multilateral negotiations ? the Uruguay Round completed in 1994 ? that rules for agricultural trade were included for the first time. That round also created the binding disputes resolution process as well, along with the rules on the application of SPS measures.

The way things stand now, access for our products into other countries' markets is a privilege, not a right. We get it on sufferance. In some cases, we have it only because generations of our young men fought, shed blood, and died on foreign soils and those countries felt at the time we were negotiating access that they still owed us something for that. But those feelings fade over time.

Even from our closest friends and neighbours, people with whom we have the most mature and comprehensive trade agreement in the world, want to bar our products.

There was no formal dispute settlement process provided in the CER trade agreement, and there have been a few times recently where I have regretted that.

There is a multilateral system to resolve some sorts of disputes between trading nations, and we are using that.

Last month, we took the unprecedented step of listing a complaint against Australia at the World Trade Organisation's quarantine (SPS) committee. The New Zealand statement was very clear, and delivered a strong message. It was supported by other countries as well, including from the two heavy hitters the United States and the European Union.

It was timed to coincide with the WTO implementation panel ruling on Japan apples, which helpfully demolished the legal pretext for almost all the barriers to trade in apples, trotted out by Australia in their earlier aborted import risk assessment.

WTO members, including Australia, were left in no doubt about New Zealand's frustration with this 84 year-old dispute and the seriousness of our intentions to resolve it.

The significance of this step clearly registered with other WTO members ? this is the first time we have placed an issue of concern with Australia on the agenda of any WTO committee, and only the fourth time we have raised an issue under this category in the SPS committee.

The apple concerns will now remain on the SPS agenda till resolved.

If a mutually acceptable solution cannot be reached, further options for resolving this long-standing issue cannot be ruled out.

I know this does not go far enough for some apple growers, but I can assure you, even if we were to kick over the table in the Cairns Group and boycott CER consultations, as some have advocated, that would not sell a single apple into Australia.

Australia tell us they are working through their quarantine process to design an import health standard for our apples and this should be available soon.

We might have had it by now, but for the fact that the Australian High Court recently threw out a draft pig meat Import Health Standard, for being insufficiently precautionary. Who would be an Australian risk management analyst?

We are keeping the pressure on them and they will be held to their word, and the word of their Prime Minister, that the issue will be resolved on the basis of science.

Likewise for summerfruit, Biosecurity Australia has assured us that the release of the Extension of Existing Policy for stonefruit is imminent and a very high priority. While we appreciate these assurances, our patience is wearing thin. Our High Commission in Canberra has stressed to Biosecurity Australia New Zealand's strong concern that if the document does not come out soon, the industry will miss another export season.We have made Biosecurity Australia well aware of the timing constraints; that the draft stonefruit policy must come out before your registration begins on 1 September.

Given the ongoing delays, we have stepped up the heat on Biosecurity Australia - our High Commission is now contacting them every week to reiterate the urgent need for progress. We will not cease our efforts until the first cases of New Zealand apricots enter Western Australia."

Australia is of concern to me at the moment.

They have a new agriculture minister who displays some unusual intellectual versatility. A 21st century reformer when it comes to exporting, but a 1930s protectionist when it comes to the other side of the trade equation.

I don't know exactly what supermarkets in Australia do, but given that our supermarkets here are mostly owned by the Australian supermarket chains, I think we can safely say they do the same as here ? they say in the fruit and vege section over each piece of produce whether that produce is locally-grown or imported.

Where it's imported from is not really the issue in this debate.

That way, consumers can exercise their powers ? if they want to buy locally grown, they can.

The key thing is not to shut off markets. By doing that, you ensure that you don't have access to the best the world has to offer, that you are limiting yourself to what can be in some cases low quality goods. We all benefit when we can buy the best products at the best prices ? here in New Zealand and in other countries.

And given that Australia exports more than $2 billion of fruit and vegetables each year, I'd like to think that they too believe in that principle ? deep down somewhere.

One thing I do know for sure is that Australians do not have access to some of the best fruit the world has to offer, and for spurious reasons.

On a more positive note, we are making significant progress getting New Zealand cherries into Japan.

The cherry industry and my officials have been working together, particularly over the past year, to gain improved access to the Japan market for New Zealand cherries.

We have been working on new systems that would give Japan continuing confidence that NZ cherries do not host codling moth. Japan MAFF officials have visited New Zealand twice in recent months, at their own expense, to review orchards and systems. The objective of course is for Japan to remove its mandatory fumigation requirement on NZ cherries, which is the big obstacle to developing exports into Japan.

It is pleasing to record that the talks have progressed smoothly, to the stage that a draft protocol has been submitted to Japan. My officials are hopeful that Japan will sign off on the proposal in time for the next export season in December. Let's keep our fingers crossed that this will happen.

This Government is committed to ensuring your interests are able to be realized.

We are extremely busy negotiating bilateral and regional trade agreements, such as the P4 one between New Zealand, Chile, Singapore and Brunei, which I believe are good for our fruit exporters.

That agreement, signed two weeks ago by Singapore and Chile and to be signed this week by Brunei, will come into force next year.

This is the third successful trade agreement signed by the Labour-Progressive Government. We have another three in negotiation at the moment ? with China, ASEAN, and Malaysia.

The new P4 Agreement offers the framework for Chile and New Zealand to build cooperative relationships within the horticultural sectors in both countries, with a focus on joint innovation, research and development, to help create new opportunities for both parties in third markets.

Iseepotential for cherry growers here to work with Chilean counterparts to grow third markets.

Chile has not been much of a market for New Zealand summerfruit and we have imported only small volumes from Chile - around half a million dollars worth of produce a year over the past two years, mostly plums.

All of NZ's tariffs on fresh summerfruit are alredy zero, while tariffs on preserved cherries and frozen summerfruit are 5-7%. Chile currently applies a flat tariff rate of 6 percent.

The conclusion of the P4 Agreement will see all summerfruit tariffs drop to zero when the agreement enters into force, scheduled for 1 January 2006. To help create new opportunities for both countries in the main markets we both export to ? such as the United States, Britain and Taiwan - the agreement includes a framework for Chile and New Zealand to build cooperative relationships within the horticulture sector, among others. It could focus on joint innovation and R&D in areas such as post-harvest technologies and storage, for example.

Cooperation like this is already underway in the kiwifruit sector, for example. Zespri has invested in Chile to extend their growing season and gain better access to target markets.

Those bilateral and regional agreements are important, but the World Trade Organisation negotiations are this Government's top trade priority.

At the moment, it's looking a bit grim.

And we're running out of time to find solutions. I am by nature an optimistic person ? you have to be to be a trade minister ? so I am hopeful that solutions can be found. As some longtime trade commentators observe, trade rounds seem to need a crisis to force some members to focus appropriately. There's still hope, but we WTO members are not making it easy for ourselves.

Ladies and Gentlemen: We are making progress with bilateral trade agreements that have real gains for the fruit export industry, such as the agreement with Thailand and the P4 agreement.

And bilaterally, we are able to make way against some barriers ? for example, we have negotiated a six month delay in the implementation of a proposed screening system in Thailand that would have impacted on our exports there. I'm confident that within the next six months that issue will be resolved satisfactorily.

In fact, the horticulture sector is a big winner from the Thai CEP, and I am advised that already extra trade is occurring.

And we're making progress with Japan.

So there are gains being made. They may be piecemeal compared to a successful multilateral round, but to organic producers getting their product onto the Japanese market without fumigation and loss of organic status may be the difference between boom and bust.

As Agriculture Minister and Trade Negotiations Minister, I can assure you this Government has raised the energy input into trade facilitation to unprecedented levels. We will continue to do everything we can to ensure that you have access to vital international markets.

Thank you.

ENDS

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