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Business, Government And World Trade

Cpa/Wto Regional Workshop For Pacific Parliamentarians

Friday 30 April 2004 Wellington, New Zealand

Business, Government And World Trade

I am just delighted to have been invited to speak to you this morning. I just adore my job and want to impart some of that passion to you in the next hour or so.

We are going to explore the relationship between business, government and the world or, multilateral, trading system. For the last couple of days you have been looking at the mechanics of the WTO and trade. We are now getting to the real nitty gritty. What the WTO is really all about …

If you take nothing else away from my presentation, it should be this; at its heart the World Trade Organization is about providing the best possible environment for ordinary people to buy and sell their goods and services. Businesses pursuing success want an environment that is as free as it can be of market distortions and barriers to their doing business.

They want to be able to trade without having to factor the cost of tariffs into the deal, without having to comply with unjustified technical, bio security, safety and health laws and without being thwarted by quotas and other volume restrictions.

I have been asked to be non-political and I will certainly respect that in a narrow sense. We will not get into a philosophical discussion about the merits of left and right political view points, but I do think it is vital to acknowledge that trade does not exist in a political vacuum.

Political considerations will always be relevant in trade deals – be they bilateral, regional or multilateral. The Doha Development Round, for instance, will only conclude successfully if there is enough political mileage in it for all the participant members to sell it to their domestic constituencies at home.

So that’s the introduction. You will all have noticed, and probably had a look, in the brown paper bags you found on your seats as you came in this morning. We are going discuss the contents of perhaps half a dozen of them and the role the multilateral trading system, governments and business play in their trade before addressing my topic in more detail.

[The bags contained among other things, a kiwi fruit, postage stamps, some butter, computer CDs, chocolate, instant coffee, a bank deposit slip, some cotton underwear, an apple, some sugar cubes, a tourism brochure, an apple, a plastic container and wood chips.]

In the remaining time I have I want to give you a few insights into the organization I work for – the Trade Liberalisation Network – what it is, how we get our message out and why we do it. I will then explain why the multilateral trading system and business should be mutually supportive and finally give you a few brief observations from my recent three week world trip visiting some of the trade policy hot spots.

The Trade Liberalisation Network

As far as we have been able to determine the Trade Liberalisation Network is globally unique. It is a privately funded business lobby group established to broaden public understanding and support for trade. All our funding comes from New Zealand businesses.

We’re about promoting policies that accelerate the prosperity and social development of all New Zealanders. That may sound rather bureaucratic and boring, but by god we mean it.

We’re very proud of our independence from Government and the fact that we represent about 75% of New Zealand’s exports. Our independence gives us the right to have a poke at the Government if we deem it necessary and we believe the depth of our representation gives us credibility when we do so.

So how do we “broaden public understanding and support for trade”?

We use four or five different methods. First, we constantly feed into policy making by staying in regular and close contact with the Government. I meet at least a couple of times a month with Ministers, other Members of Parliament and government officials.

We also form lobbying alliances with other business sectors such as farming, forestry, services and horticultural interests.

The TLN has an active networking and outreach programme. I meet as often as time allows with trade union representatives, church groups, Maori and ethnic groups, environmental and other non-government organisations like the Christian World Service and Oxfam.

We keep a close eye on international trade developments and release six weekly policy reports which our members and others draw on as part of their business planning.

Finally, we make as much use of the media as we can through press statements, newspaper articles, radio and television interviews and speeches. In all of these forums we make the benefits of trade liberalisation as relevant to the wider public as it is to our big exporting businesses. Trade, we constantly remind the New Zealand public, is about more job opportunities, a wider range of goods and services to choose from, better access to cost competitive industrial inputs and cheaper consumer goods such as clothing, food, toys and cars.

So why do we do this?

New Zealand business and more broadly, New Zealand as a whole, needs to be globally competitive to survive and succeed. We will only survive and succeed if the Government pursues liberal, open trade policies. Obviously not all businesses and political parties share this view. Some totally disagree and others agree, but attach all sorts of conditions and caveats to their support. These conditions sometimes end up making their support almost meaningless.

The TLN exists because our business members should not assume that the Government automatically knows how commercial needs are best served. To be honest, even when it does know, this is no guarantee that business interests will necessarily be taken into account or be accorded the highest possible priority if there are competing political imperatives.

We are lucky in New Zealand that the two largest political parties both support the multilateral trade system and trade liberalisation. Part of the TLN’s role is to bolster that support. In some cases we are able to push the benefits of trade liberalisation harder and with fewer nuances than the Government may be compelled to include.

By keeping in close touch with the Government we can ensure their goals for international trade policy development truly accord with business needs and aspirations. This is mutually beneficial. The Government gets committed support from business and business gets an environment that truly fosters trade and commercial growth.

Why does business support the multilateral trade system?

As I mentioned at the outset, but it bears repeating because this is the point I want you to take away from this presentation - businesses want and need a system that promotes a world where we can all do what we do best; without those economies that can afford it (and let’s face it, some who can not) thwarting that ability by erecting unjustified barriers to trade.

The WTO provides a set of international trade rules on which business can rely. It allows small island states, like those all of you represent here this morning, to take on the economic super powers and win. New Zealand is a great example. We have won every one of the almost dozen cases we have taken to the WTO.

The multilateral trading system, in the guise of the GATT and WTO has been in existence for over fifty years now. It has proven its worth to business. Industrial tariffs have fallen to an average of 4% from 40%, today the WTO tackles non-tariff barriers as well, and since 1995agriculture and services trade have become subject to international trade disciplines.

So how does the Doha Round look from a business perspective?

In February I spent three weeks visiting the US, Europe and Singapore to try and get a better sense of the prospects for the Doha Development Round.

In the course of twenty one days I spoke to over eighty people from more than a dozen countries. I believe there is still a real commitment to global trade reform; as ever though, there are differences about the pace and direction of that reform. Many commentators have predicted 2004 will be a lost year for the Doha Round. This view is based on the Cancun failure and the fact that most of the key players face elections this year; including India, Indonesia, the EU, the Philippines, South Africa and the USA.

But some progress is likely this year. It won’t be anything startling and will probably amount to no more than agreement on the negotiating framework for agriculture. Forward momentum is certainly needed in the next two months. An agreement on the agricultural framework is part of the work required to build the right atmosphere for a consensus decision towards the end of the year to extend the Doha Mandate beyond 31 December 2004.

When I asked for a prediction about the end of the round, most picked 2007. This will be mid-way through the US election cycle, the US Farm Bill expires in 2007, US Trade Policy Authority expires in June 2007 and French President, Jacques Chirac’s, term ends in 2007.

This is only two and a half years away. The Doha Development Agenda would be six years old. The Uruguay Round took eight years to conclude. 2007 certainly has a good ring to it, but ultimately concluding a trade round it is all about political commitment. This will exist when the perceived political rewards outweigh the political downsides. Political commitment will be easier to come by if two other important conditions are met in the next eighteen months; finding a charismatic leader for “the cause” and more support from business.

Business can, and ought to, influence international trade policy. Trade liberalisation should not be left to the Government.

ENDS

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