Jim Sutton Speech: Romeo Bragato conference, Gisborne
Chairman Brian Vieceli, deputy chairman John Webber, chief executive Philip Gregan, ladies and gentlemen: I am
delighted to be here.
Grape growing and wine making are industries with a glamorous image. I know of many other horticultural and
agricultural industries that would like to have the profile you have.
I think a lot of that relates to the circumstances in which most people encounter wine ? generally during pleasant
encounters, where wine works as a social lubricant. That tends to leave a positive glow around the memories, something
that you don't tend to get with frozen vegetables or hides and tallows, or even onions, other exports up there with
wine, dollar-wise.
The success of New Zealand winemakers is something we all take pride in, whether its Marlborough sauvignon blanc being
served at lunch with the Queen or the wine served a function on the Great Wall of China.
To follow on from Brian's comments about only being able to grow New Zealand grapes in New Zealand, that New Zealand
image has a real impact.
That impact didn't come from nowhere.
We've had to work at it, and building on that strong cultural identity is something the Labour-led Government has been
promoting since we became the government in December 1999. It's about being proud to be New Zealanders, proud of what
our country produces: and it comes down to attitude ? whether you want to launch something to the strains of Dunedin
music icons The Clean, rather than the twangs of some other country's bards singing "Sweet Caroline".
The recent death of former Prime Minister David Lange threw this into the foreground again, as did the debate about our
nuclear-free policy.
Social commentator Russell Brown describes watching Lange in the famous
1985 Oxford University debate with "a mixture of pride and
astonishment".
"Pride, because a New Zealand Prime Minister was commanding a room;
arguing on an international stage with wit, presence and intellectual
virtuosity. Astonishment, because it was happening at all.
"And yet, here was this big, booming man, full of a confidence that was
not common to us at the time, arguing an independent foreign policy for
New Zealand. David Lange said recently that in the years from 1984 to
1990, New Zealanders "stood up" in the world and began to assert an
identity. I think that was how I felt watching him, right then, " so
said Russell Brown.
As a minister, I've talked a lot about the "three-legged stool" of
sustainability ? how you have to have economic sustainability,
environmental sustainability, and social sustainability ? and all three
have to be sound. If one is missing, or one is bigger than the others,
the stool falls over.
Cultural strength is part of that social sustainability.
It's part of what gives us the strength as a small nation, a long way
away from our trading partners, to pursue international trade despite
all the barriers. And your wine industry is an example of an industry
that does it extremely well.
At last year's conference in Blenheim, I was quite undiplomatic about one of those new barriers, the Australian wine
equalization tax.
The extension of the Australian Wine Equalisation Tax rebate to New Zealand producers is significant for our industry.
Australia has put into place the formal arrangements to extend the rebate to eligible New Zealand wine producers who
export wine to the Australian market. The measures were to have effect from 1 July 2005, but because of the
implementation delay, they are retrospective.
The Australian government has budgeted $7 million for the first year in the extension, and $8 million for subsequent
years.
This move puts New Zealand wine producers back on the same footing as your Australian counterparts. The rebate scheme
put you at a serious disadvantage in the Australian market. This will put that right.
The move to extend the rebate to New Zealand came after strong representations from New Zealand ministers that the
scheme put Australia out of step with its CER commitments.
I am very pleased that the Australian Government is honouring its CER obligations, although I understand there are
still a few implementation issues being ironed out.
The extension of the WET rebate to New Zealand winemakers is an important issue for New Zealand, and the Government
will continue to monitor the scheme's implementation.
Plurilaterally, the World Wine Trade Group has been a highly effective vehicle for pursuing our strategic objectives in
wine trade and removing regulatory restrictions on wine exports.
The 2001 Mutual Acceptance Agreement of Oenological Practices is now in force and ensures that wine can be traded
between the New World member countries without having to meet different rules in each country relating to winemaking
practices.
Some of you here will already have enjoyed the practical benefits that this new agreement offers.
The WWTG's next step is an agreement on wine labelling. This is aimed at reducing costs to exporters by hopefully
making it possible for New Zealand exporters to use a common front label in all six WWTG markets.
Excellent progress has been made in this negotiation thanks, in part, to the efforts of Wade Armstrong, our Ambassador
in Brussels, who has chaired the negotiations over recent months.
I am optimistic that an agreement will be soon concluded and will serve to reduce costs for New Zealand wine exporters
to such key markets as the United States, Canada and Australia.
Longer term, we are hopeful that this Group will succeed in getting new markets, especially those in Asia, to buy into
the less trade restrictive model offered by the agreements and the principles that the Group is developing.
Ladies and Gentlemen: last year I said the wine industry of New Zealand is a thriving one, with a significant presence
in export markets. That holds even more so today.
You have carved out an excellent reputation internationally for high-quality, top notch wines. And you're taking good
advantage of opportunities: given your past history, I don't have much doubt that you will reach your forecast growth.
Maintaining and increasing our share of international markets is a key issue for your industry, along with many other
exporters in New Zealand.
It is important to the Government as well. I can reaffirm categorically that a successful conclusion to the Doha
Development Round of multilateral trade negotiations remains New Zealand's top trade priority.
Put simply, nothing else can match the potential returns to the New Zealand economy from global trade liberalisation.
It is the equivalent of conducting bilateral negotiations with 147 other partners.
We're working hard at it. Earlier this week, I spent a couple of days with United States secretary of agriculture Mike
Johanns, the first US cabinet member to visit New Zealand since the APEC conference in 1999. He confirmed to me that the
Doha Development Agenda is the United States' top trade priority also, that President Bush was completely serious when
he proposed the elimination of agriculture subsidies all over the world, and that we will work together for the best
possible outcome.
The next full ministerial meeting of the WTO is in Hong Kong in December. It's crunch point, and we need to see some
movement.
Having said that, bilateral and regional trade agreements have their place too.
Under the Thailand-New Zealand Closer Economic Partnership which came into force from July 1 this year, Thai tariffs on
wine dropped from 60% to 30% and will phase to zero by 2015. This should enable our wine exporters to build on their
current low base in the Thai market and expand market share. In return, Thailand offers no direct competition on wine
into New Zealand. And I can confirm, from personal knowledge, they do appreciate our product.
Then there is the Trans Pacific Strategic Economic Partnership, or P4, which links New Zealand, Singapore, Chile, and
Brunei. This agreement was completed earlier this year and we hope it will come into force on 1 January 2006 subject to
ratification by the four parties. This agreement could see the New Zealand wine sector could face slightly greater
competition from Chilean imports which totalled just under NZ$2.5 million in 2004 and a duty range of between 4.5-5.5%.
But in return, your wine exports to Chile will phase down from 6% currently to zero.
As set out in a side letter to the Trans-Pacific SEP, a small range of products including alcohol is excluded from
Brunei Darussalam's tariff elimination schedule for the time being for moral, human health and security reasons. There
will be further discussion regarding the way in which these products will be accommodated in the context of the SEP.
We have negotiations currently underway with China, Malaysia, and the Association of South East Asian Nations, and
there should be opportunities for your industry in those negotiations as well. I know your representatives, especially
Philip Gregan, work closely with officials in the Ministry of Foreign Affairs and Trade, so I am confident you will take
full advantage of any opportunities in this area.
Certainly, New Zealand Trade & Enterprise sees a lot of in developing a firm foothold for New Zealand wines in the Asian market where market trends
and demographics are moving in favour of your products.
NZT has also increased efforts in conjunction with NZW seminars in the main wine growing regions to publicise the range of
NZTE programmes available to individual New Zealand wineries to help build their capability for expanding sales and
exports.
Ladies and gentlemen: as long as we maintain a commitment to high quality products at appropriate prices, I am sure
there will be a market for New Zealand wines. I know you have that commitment, and I have every confidence in your
abilities.
The Government is working hard to enhance trade liberalisation in our key markets, and there is hope for improvements
in our access to important markets for wine. I want to assure you today that we will continue to push hard for those
benefits, at the WTO, in regional agreements, and in bilateral situations as well.