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Jim Sutton Speech - Wellington Regional Chamber

Trade Minister Jim Sutton Speech

Wellington Regional Chamber of Commerce

Good morning, Ladies and Gentlemen.

Thank you for the opportunity to talk to you this morning about the export initiatives of the new Government.

I would like to congratulate the Wellington Regional Chamber of Commerce for the excellent programme of services and activities it offers it members.

I have been impressed by the way it has raised issues such as the transport infrastructure. These are issues that affect all exporters.

I know your organisation is opposed to changes to the ACC system and to the Employment Relations Bill.

My Government obviously disagrees with that.

The ACC regulator has information that shows that more than 70 per cent of employers are better off under the Government's changes.

As for the ERB, my Government sees this bill as part of building a modern and productive economy. It's about restoring the balance of power in the workforce and brings New Zealand into line with international practice.

Basically, good employers won't notice the difference.

As Trade Negotiations Minister, I am proud of New Zealand’s achievements in the way we have kept pace with the challenges the world has presented our export economy. Given the odds and the obstacles we have faced, it is a remarkable story.

Wellington is very much an example of the best of everything we are doing, with examples that cover a wide range of sectors that include: the food industry; telecommunications; engineering consultancy (notably earthquake engineering); film and multi-media production; fashion apparel and design; computer software; tourism and events; specialist engineering; forestry; building and automotive products; biotechnology; management consultancy; and education.

Here, I would like to congratulate a Wellington company for becoming a finalist in the year?s New Zealand Export Awards.

Jennifer Pudney Ltd is a craft company that exports needlepoint kits and tapestry and applique products. It is one of four finalists in the DHL E-Commerce Innovation Award for companies that have established an online business to service their overseas companies.

This successes are worth applauding.

But, as you and I know, we need to do a great deal more if we are going to secure a prosperous, sustainable economy that will produce benefits for everyone and for both current and future generations.

The Government knows as well as any business that New Zealand?s future lies in our ability to compete in the world?s markets. Export growth is fundamental to our economic growth strategy.

We have started out with a commitment for the Government to play a more positive, hands-on role toward providing assistance to New Zealand businesses.

This will be delivered to the ?front line? of business through Trade New Zealand and Industry New Zealand.

Trade NZ plays a key role in our strategy to accelerate the internationalisation of the New Zealand economy.

It plays a remarkable, and often unsung, part in helping exporters like yourselves enter and develop market opportunities overseas and overcome the numerous challenges that exporting invariable presents.

A year ago, in the year to June 1999, exporters verified that Trade NZ had helped them earn some $612 million. They also reported help with an additional $1 billion. This was the first year that Trade NZ measured this result, which was independently audited.

In the year to June 2000, exporters verified that Trade NZ had assisted them in earning nearly $1.3 billion in exports.

Trade NZ?s success has to a large extent been due to a major refocusing of its effort on its clients, on the exporters who choose to use its services.

The Government believes it is making a major difference to many exporters and is a model for the kind of partnership we envisage between business, communities and Government.

We intend to continue to invest in Trade NZ, in its global network and the valuable services it provides.

If you are not using its services now, I would recommend that you look at how Trade NZ might be able to help you. If you are using them, find out what more about what they can do for you.

As a first step to doing more for exporters, we have introduced three new initiatives in the first Budget of the new millennium.

The Government will invest $9.5 million over two years in Trade NZ?s e-commerce strategy for exporters to assist their entry into this new delivery channel that is fast becoming critical to survival in the global environment.

The objectives of the e-commerce strategy are fourfold. They are to: Promote e-commerce to exporters (particularly SMEs) and provide education.

- Improve Trade NZ’s delivery of services to exporters.

- Facilitate New Zealand companies into on-line exporting through client profiling and opportunity matching.

- Enable exporters to gain access to full on-line trading facilities.

E-commerce is dramatically changing the way the world is doing business. It is fast becoming critical to successfully competing in the global marketplace. And New Zealand is no exception. Without it, the future sustainability and profitability of our exports may well be at risk.

Although New Zealand has a high uptake of technology and high use of the Internet, entry into e-commerce ahs been relatively slow, particularly amongst the SMEs.

This strategy is all about business to business commerce for exporters, rather than business to consumer. It will help small and medium sized companies gain much needed access to the new global economy and increase overal export earnings through trading online.

The Government will also invest $3.5 million over five years in an international marketing strategy for the education export sector that will be managed by Trade NZ, Tourism NZ and Education NZ.

Education is a key sunrise industry and with effective development the sector could double its annual foreign exchange earnings to over $1 billion in this time.

The key elements of the strategy are:

- Market research in target markets to identify the underlying factors that drive the decision-making process.

- Investigate and quantify the economic impact of providing education services to international students.

- Build a unified brand for New Zealand education.

- Develop a multi-lingual web-site for the industry.

- Undertake a range of market development activities, including media campaigns overseas, media visits, visits by agents to New Zealand, and trade missions.

Thirdly, the Government has increased its investment in the promotion of New Zealand as a location for international businesses and capital by $2.9 million.

We recognise the extent to which international direct investment underpins our economic development. It creates new business in New Zealand, which in turn creates jobs and exports. As well as supplementing New Zealand’s limited domestic capital investment, it can also provide market access, technology and management expertise.

The funding is being used for a new, proactive strategy that will help attract overseas investors to New Zealand to create new businesses which will bring jobs, technology and expertise, and increase exports.

The key elements of this strategy are:

- Target export focussed opportunities for corporate location and joint ventures, which includes a Visiting Investor Programme.

- Support high added-value investment.

- Offer one authoritative Government portal for overseas investors.

- Strengthen the alliance of regional economic development agencies, the private sector and central government agencies.

We recognise the concerns expressed by a number of exporters that the lack of government-backed export credit guarantee, financing and bonding facilities may be restricting their export earnings potential.

This is a complex area. There are a number of private sector solutions in the market place already and the Government has asked Trade NZ in association with the MED, MFAT and Treasury to give advice on the nature of any market failure and how it can be addressed.

The technical nature of export financing has required specialist input and, having consulted widely throughout the relevant parts of the export sector and the banking/finance industry, the last stage of the project is now underway, utilising the services of a specialist financial consultancy firm.

Firm recommendations are expected in the next couple of weeks and the Government has a commitment to implementing appropriate solutions.

New Zealand is a very small player in most world markets. We account for just 0.26% of international trade.

The opportunities for us to grow are enormous. Our challenge is usually one of capability rather than opportunity, and much of capability begins at home.

Trade NZ and the sector organisations have long identified capability as a major gap in Government assistance. Trade NZ has acted as a facilitator with groups of exporters and other organisations to address these issues, though its core business is the development of markets overseas.

Capability issues are familiar to all of us.

They range from skills to access to capital and export financing, innovation and technology to management expertise, critical mass to export culture and infrastructure.

The Government has taken the first major steps towards helping New Zealand businesses overcome these barriers to exporting by setting up the Ministry of Economic Development and Industry New Zealand.

When Hon Jim Anderton launched Industry NZ on 4 July he signalled the beginning of a new partnership for economic and regional development and business in New Zealand.

When it is incorporated on 1 September, Industry NZ will work with Trade NZ to provide a springboard for the growth that is needed to create more jobs and higher incomes for New Zealanders.

Government spending on industry and regional development will increase by $34 million this financial year. In the following year, this will go up to $73 million, and then $112 million for each of the two years after that.

As a first step, we launched three new programmes last month.

- The Enterprise Awards Scheme. This scheme offers financial support to innovative entrepreneurs and small business owners, including exporters, to help them test and develop concepts with strong growth potential.

- The Regional Partnerships Programme, which will help strengthen regional economies.

- The Investment Ready Scheme, which gives innovative small businesses and entrepreneurs a better chance of raising finance in the early stages of development.

I encourage you to take advantage of these new programmes and join in the partnership for growth they are promoting.

No-one can sell into a market unless they have access and unless they are competitive. Often governments play a role in controlling or preventing access altogether and in distorting the competitive playing field through subsidies and regulations.

In New Zealand, the Government is determined to help our exporters and producers overcome these obstacles, but we are not prepared to sell ourselves short by giving away more than we gain.

Export subsidies are the probably the most distorting of trade measures. These measures, used by other countries, are particularly crippling to us because they are largely on primary products - our key exports.

New Zealand has abiding national interests in sustaining progress towards an open trading system and fair rules governing the conduct of international trade.

It is clear that some of our key objectives - such as removing barriers to primary sector trade and trade-distorting export subsidies which depress our market returns - can best be achieved through multilateral negotiation.

As the Prime Minister said recently, given that over 60 percent of New Zealand?s exports come from the farm, forests, fisheries and from horticulture, this is an issue of the highest national priority.

We are working hard in government to get another comprehensive round of international trade talks off the ground ? and it is essential that these talks include agriculture.

Meantime the WTO can benefit us - and is doing so - by encouraging adherence to the agreed rules of trade. This has been a sore point in the past for smaller, less powerful exporting countries. One example is the case New Zealand took against a dairy export subsidy programme in Canada which was affecting our markets on a daily basis ? the WTO ruled last year that that subsidy was inconsistent with the rules and Canada has since committed to remove the subsidy. Prior to the WTO there was no mechanism for enforcing such decisions.

We have also been giving close attention to another important trade relationship in the Asia-pacific region. That with Singapore.

We have had six rounds of negotiations with the Singaporeans on a Closer Economic Partnership. The negotiation is now close to conclusion. There are only a few remaining outstanding issues.

The CEP Agreement with Singapore will deliver reciprocal benefits, encourage trade and investment and significantly enhance our economic partnership with a key Asian economy. All tariffs on bilateral goods trade will be eliminated on entry into force of the CEP.

New Zealand exporters will benefit from this Agreement. The CEP aims to provide New Zealand with improved market access opportunities in the Singapore services market and reduce compliance costs to New Zealand goods exporters through the proposed disciplines on technical regulations and standards.

Singapore has improved access for New Zealand suppliers in a number of key services sectors, including education, telecommunications, environmental services, medical services, architecture and engineering services. There will be a mechanism to address recognition of professional qualifications. We have negotiated a mutual recognition agreement on the electrical/electronic goods sector, and a commitment to look at a number of other sectors to reduce TBTs. This includes food - an important sector for New Zealand.

For transparency and certainty, each side will bind its existing investment regimes. For New Zealand this means the OIC thresholds will be bound (to Singapore only) but not the Overseas Investment Regime?s procedures.

Ministers will meet every two years to review the CEP agreement and to expand on commitments, such as those in services. A full review of the CEP will be undertaken after five years.

I?ll comment on our more traditional markets for agricultural products in Europe following a visit I made there recently.

While in Paris for the OECD Ministerial Council, I had the chance to meet with EU Trade Commissioner Pascal Lamy and with my French trade and agriculture counterparts, Francois Huwart and Jean Glavany. The meetings with French Ministers were particularly timely given France's assumption of the EU Presidency in July.

These meetings underscored the value of an open dialogue with the EU Commission and with Member States on trade issues. The future course of issues like reform of the Common Agricultural Policy - which is probably the biggest government influence on world agricultural trade and prices - eastward enlargement of the Union and WTO negotiations are crucial to New Zealand's interests.

It was clear from my meetings that the EU faces some difficult issues in coming years. The CAP is already too expensive, and the accession of the countries to the east would make it doubly so. Reform is inevitable and the direction seems clear - greater reliance on market prices and fewer production and trade distorting subsidies. I think the policy argument has already been won on that score. The battle will be over the pace and the extent of these changes.

I need not remind this audience of the interests opposing change. The French Minister of Agriculture reminded me, however. Despite the outcome of the Uruguay Round which legally binds our current access rights; despite the fact that the EU can no longer reduce our access, especially the growth of NZ chilled lamb exports; despite the fact that NZ has been supplying Europe for a very long time and that we, too, can justifiably regard it as our market ; despite this, local interests are still pressuring their leaders to do something about NZ exports.

My message is: there's no room for complacency about our sheepmeat access (or dairy access for that matter). We need to be very watchful and very careful. We have to make sure that we remain the ones making the commercial choices - not letting these be made for us by EU officials.

In closing, New Zealand has a remarkable export story and we have the potential for an even more remarkable export future.

Our fortunes are dependent on export.

But we are not Ireland, with the European market on our doorstep, the largesse of the EU at our disposal, or the US just across the sea.

Nor do we have the critical mass, domestic market and mineral wealth of our neighbour, Australia.

We are a small country in the southern Pacific ocean.

Nevertheless, we have successfully charted our own course toward carving out a place in the international economy.

The Government is committed to working with you to ensure we do even better in the future. Where we can help, and where it makes good sense to do so, we will.

Thank you.

Office of Hon Jim Sutton

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