Hon Todd McClay

Minister of Trade

3 February 2016

Speech to Viet Nam – New Zealand Business Forum on TPP

Your Excellency Minister Hoang, Excellencies, distinguished guests, members of the Vietnamese business community, ladies and gentlemen.

It is an honour to be here today. I’ve recently commenced in this role as New Zealand’s Minister of Trade and it is great to have the opportunity to celebrate trade success so early in my tenure.

There are of course two successes to celebrate this morning. Firstly, there is cause to celebrate what has brought us all together in Auckland - the signing of the Trans-Pacific Partnership, set to take place tomorrow.

It’s not an understatement to say that the TPP is the most significant trade deal to have been concluded since the Uruguay Round all those years ago.

New Zealand and Viet Nam are of course only two of twelve TPP Partners, but our bilateral relationship in particular is another cause for celebration this morning. We should celebrate not only because we are both part of TPP but because our trade relationship is worth celebrating in its own right.

Viet Nam has been New Zealand’s fastest growing trading partner in South East Asia over the past five years. Two-way trade is now worth over $1 billion. And with predictions that Viet Nam will be one of the fastest growing major economies in the world in 2016, I expect to see this continue.

Prime Minister Dung visited New Zealand in March last year and we were very pleased we could agree on an ambitious goal of doubling trade in goods and services by 2020. This is big recognition of the immense potential for growth in our trading relationship.

A few months after our two Prime Ministers set the goal of doubling our trade and just days before Prime Minister Key made a reciprocal visit to Viet Nam, Air New Zealand announced that it would commence a seasonal direct flight between Auckland and Ho Chi Minh City from June 2016. This will prove a boost for our trade relationship as we look to meet this goal of doubling trade. In addition to an increase in tourists travelling between our two countries, this new service will led to increased people-to-people exchanges, education links, exchange of services and trade in goods.

Ladies and gentlemen, we should also recall that for New Zealand and Viet Nam, the TPP is another layer to the existing trade structures that exist between us, building on the opportunities for our business communities under the Agreement establishing the ASEAN-Australia-New Zealand Free Trade Area, or AANZFTA as it’s known.

The AANZFTA agreement has now been in force for over five years. In 2009, when the concept of TPP was in its infancy, New Zealand and Viet Nam were two of twelve countries to sign up to AANZFTA.

The conclusion of AANZFTA was one of the key building blocks toward regional economic integration in the Asia-Pacific and the positive benefits continue to emerge.

With tariff eliminations under AANZFTA accelerating in 2016, we estimate that around 90 percent of New Zealand’s $550 million in exports to Viet Nam will enter duty-free this year. This is up from around 30 percent duty free in 2015 and includes many of our most important commodities, including milk powder, butter, apples, kiwifruit and lamb.

AANZFTA also gives Vietnamese businesses great opportunities, with over half of Viet Nam’s exports currently entering New Zealand duty free. Between now and 2020, Viet Nam will additionally gain duty free access for footwear, fabrics and furniture.

Now is the perfect time for businesses from Viet Nam and New Zealand to explore new opportunities together and the trade relationship between our two countries promises to maintain its strong growth in the coming years.

The conclusion and eventual entry into force of TPP will ensure that our trade relationship continues to grow and I have little doubt that we will meet our mutual ambitions. The breadth and depth of commitments in TPP will not only grow the amount of trade between our two countries but also diversify it.

For example, trade in services comprises 10 percent of two-way trade. Our largest services export, education, has recently been valued at $50 million. The TPP includes a depth of commitment in services trade not seen before in a deal of this stature.

I’m sure over the coming days we will hear a great deal about the quality within the TPP and its ability to boost the regional economy.

For Viet Nam, sitting alongside developments under AANZFTA and TPP, the launch of the ASEAN Economic Community (AEC) is also an important development. The launch of the AEC and Viet Nam’s recent activity negotiating FTAs is predicted to cement Viet Nam at the centre of regional supply chains, bringing in all the foreign investment that comes with this. There are huge opportunities for New Zealand and Vietnamese enterprises to operate in this way – using New Zealand expertise and know-how, alongside Vietnamese skills and labour, to take advantage of opportunities in the world.

Last year, New Zealand and Viet Nam celebrated 40 years of diplomatic relations. We have come a long way in that time. As Viet Nam has developed, so has the nature of our relationship, from one of assistance to one which offers mutual benefit. Our two countries are focusing on areas of mutual benefit, where there are complementary strengths and needs.

While the 40th anniversary of diplomatic relations was a significant milestone for our relationship, it is almost fitting that in 2016, the first year of new era, our economic relationship takes a major step forward. The conclusion of TPP establishes a new base from which we will build while the maturation of the AANZFTA agreement rewards us for all the hard work we have put into our relationship over this previous era.

I thank you once again for providing the opportunity to speak today.

ends

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