Hon Murray McCully
Minister of Foreign Affairs

Embargoed until 9.15pm, 20 February 2009

Speech Notes
 

Time for greater focus on the Pacific

Speech to the Pacific Pioneer Traders Evening,

New Zealand-Pacific Business Council,

Auckland Botanical Gardens,

9.15pm, 20 February

Warm Pacific greetings to you all.

It is a real pleasure to speak at the Pacific Pioneer Traders’ Evening, which fittingly commemorates “traders that went before us”.

Three months ago the public of New Zealand elected a new government.

While my colleagues and I in the National Party had signed up to a bipartisan architecture for this country’s foreign policy, we had signalled that there would be differences of degree and of emphasis.

Some of those differences – differences that were signalled very clearly before the election – have implications for our role in the region that is the focus of your organisation: the Pacific.

The most important shift that we signalled was that the Pacific would assume of larger significance in our thinking; that it would attract more of our energy, and a greater share of the total aid budget.

Some of you will have noticed that unlike most of my immediate predecessors, I have retained direct responsibility for New Zealand’s Official Development Assistance budget and for NZAID, rather than delegating that role to an associate minister.

That was a deliberate decision that reflects both the importance that this government attaches to our role in this region, and our determination to lift the outcomes we achieve.

Another shift we clearly signalled was a move away from the old mantra of poverty alleviation in favour of a clear focus on sustainable economic development.

To borrow the jargon, we want to deliver a hand up, not a hand out.

We have a clear sense that in a region that is as resource rich as the Pacific, we must be able to create sustainable economic activity much more successfully than has been the case to date.

That means we need to be hard-headed in our focus on those initiatives that will contribute to sustainable economic growth.

A good example is the provision of air services and shipping services – the arteries for tourism and trade.

Recently the Samoan and Tongan governments requested support from the New Zealand government in retaining the Los Angeles link that is so vital to tourism traffic from the United States and Europe.

We have agreed to an underwrite for the next year while we focus on longer-term solutions in this area.

If we can’t maintain the essential services that make trade and tourism possible, the rest of the debate is futile.

The new government has also made it clear that we want to see a much closer alignment between our aid and development activities and our overall foreign policy goals.

That will mean both structural and cultural changes within MFAT and NZAID, and I will have more to say about this in the coming weeks.

As you are well aware, New Zealand’s links with the Pacific are close and long-standing, and getting stronger year by year.

Our last census in 2006 recorded over a quarter of million New Zealanders who identified themselves as having Pacific ethnicity.

And as the number of Pacific New Zealanders has grown in recent years, so too has the level of two-way trade between New Zealand and the Pacific.

In the year ended June 2008, that trade was worth over a billion dollars. 

That makes the Pacific market as a whole as valuable to New Zealand as the markets we have in Singapore, Germany, Thailand, the Philippines, and Taiwan.

But viewed as a measure of success of our aid programmes over the years, these statistics do not tell a positive story.

Let me give you the numbers from the perspective of individual Pacific nations:

New Zealand’s exports to Fiji were worth $363 million last year, while imports reached only $71 million. That excludes the considerable trade in services in Fiji’s favour, which faces uncertain times given the current pressures on Fiji’s tourism industry.

The story is similar for our next largest Pacific markets. Exports to New Caledonia and French Polynesia in 2008 totalled $185 and $184 million respectively. Imports from each totalled just $2.5 million.

I’ve just been in Samoa where there is some good growth taking place in two-way trade.  Nevertheless, while our exports reached $97 million last year, imports were still worth only $6.7 million.

The story is similar with Tonga: exports of $50 million against imports of only $3 million.

These numbers hardly provide a ringing endorsement of our aid policies if our goal has been to create Pacific economies that are increasingly capable of standing on their own two feet.

Improving these statistics will take time, but I believe that over time measurable increases in imports from the Pacific will be an important gauge of the effectiveness of New Zealand’s development efforts in the region.

I appreciate that these matters are not your immediate problem.

You are all in business to make a profit. But I do suggest that you have a vital stake in the outcome. More than most, you will want to see growing economies in the Pacific if your profits are going to continue.

The government is certainly committed to helping Pacific economies grow, and we hope you will be a part of the solution.

My purpose for raising this with you is two-fold.

Firstly, as I have already outlined, I want to flag the importance the government attaches to supporting sustainable economic development in the region.

Secondly, the wealth of experience and contacts you have in the region can play a vital role in bringing greater balance to two-way trade.

Nevertheless, development assistance still has a vital role in helping developing countries take advantage of new opportunities arising from an open international trading system.

One of the best ways that we can build the Pacific into a stronger economic unit is to ensure regional architecture exists that is conducive to promoting trade

Several agreements aimed at strengthening and expanding trade in the Pacific are already in place. 

Last year, Pacific Forum Leaders reaffirmed the importance of the Pacific Plan and the priority they attached to pursuing greater economic integration and trade.

The Pacific Agreement on Closer Economic Relations, more commonly known as PACER, will be a key driver in pursing this objective.

PACER is the framework that outlines the future development of trade across the region.  This agreement envisages a free trade agreement between Australia, New Zealand, and Pacific Island countries.

This won’t be your typical free trade agreement. Indeed PACER and the FTA flowing from it will compliment our Official Development Assistance efforts to bring about sustainable economic growth in the Pacific.

But improving two-way trade isn’t just about negotiating free trade agreements with Pacific Island countries.

Non-tariff barriers can be just as formidable as harsh tariff schedules. Tackling those barriers forms is an important part of nurturing Pacific trade, but to do that effectively, I need your help.

If you are aware of obstacles – for example, onerous customs or quarantine measures – which are impeding your business in the Pacific, please do not hesitate to approach my office, or officials at New Zealand Trade and Enterprise, or the Ministry of Foreign Affairs and Trade.

We are ready to hear your views on this and, where possible, to act to remedy the problem.

The government is currently involved in a number of initiatives aimed at eliminating trade impediments in the Pacific, but this is an area in which I believe there is room for new energy and new ideas.

Some momentum is being made towards clearing away non-tariff barriers, and one of the best ways to maintain this momentum is to encourage stronger connections between nations through trade and investment.  

Discussions are also underway on improving links by establishing New Zealand-focussed private sector “business clubs” in the Pacific.

In closing, the key message I would like you to take away tonight is the importance of us working together to reduce the trade imbalance that currently exists between New Zealand and our Pacific neighbours.

There are a number of avenues through which that can be done, and business has a vital role to play in ensuring two-way trade gets on an more even keel.

I can promise you that from the government’s position, we will be making this an important priority.

 
ends

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