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Speech To Waikato-BOP Institute Of Directors

Hon Jim Sutton

Speech To Waikato-Bay Of Plenty Institute Of Directors:
7.30am, 22 September 2000

Ladies and Gentlemen: thank you for inviting me here to speak with you tonight.

The subject of my speech - New Zealand's future trade prospects - is a fairly broad topic – one I could speak to you all day about. I promise to only use 10 minutes though!

Trade is the lifeblood of New Zealand. We need to trade to maintain our standard of living and so that we can afford to buy things we want.

Barriers to our trade take up most of my time as both Minister of Agriculture and as Minister for Trade Negotiations.

In many markets, our agricultural, horticultural, fishing and forestry products face barriers, sometimes tariffs of 100 per cent, 200 per cent or even higher.

Because technical and other barriers to agricultural exports are so prevalent in world trade, agriculture has also been at the heart of the New Zealand government’s trade liberalisation focus.

Whether it is agriculture, manufacturing, or services, I like to think that New Zealand is becoming smarter in our approach to trade liberalisation. That means taking a hard-headed look at what our interests actually are and taking practical and realistic steps to pursue them.

That hard-headed assessment of our interests tells us that our interests are strongly favoured by the opening up of markets for our exports - markets that are currently massively protected. It means strengthening the rule of international law - the only thing that stands between us and the law of the jungle on the world economic stage. Countries such as New Zealand cannot bully our way into other people's markets. We must rely on robust trade rules, fairly administered.

It means ensuring that our citizens see the trading system as part of a balanced approach that serves their interests and deserves their support. Too often, the only voices the people hear are the voices of commercial or other interests who want to preserve existing privileges.

It is pretty clear that there is an enormous amount at stake. It is also clear that the reason why there is such a huge potential for gain is because our agriculture and resource-based industries are at a disadvantage right now due to huge distorting interventions by our trading partners.

The international economy works best when we can all concentrate on doing what we individually do best and trading with others.

Think of that trade in a smaller context – imagine if everyone here in Hamilton tried to make everything they needed for daily life themselves. So they make their own clothes and shoes, they grow their own vegetables and keep a few chickens and sheep in the backyard. They make their own soap, paper, and so on.

It wouldn't take long before neighbours started doing deals with each other… Mrs Baker made great bread, so the Bakers swapped bread with the Smiths, who made good shoes, and so on.

Trade works at the village level and it is the same for nations. That's how the global trading system works. We all do best by concentrating on the things we do well.

The fewer distortions there are in that trade – the fewer tariffs or quota barriers – the better.

Because trade is so important to New Zealand, this government is working hard to bring down barriers to export growth.

We're taking part in multilateral groups such as the World Trade Organisation and the Asia Pacific Economic Co-operation forum in an effort to influence trading decisions into the direction that's good for us.

We in New Zealand will continue to promote the concept of a broadly based round of negotiations in the WTO. That means all goods, all services, and other trade-related issues of interest to WTO members whether developed or developing.

But while things seem unlikely to progress in that arena in the immediate future, we are also looking at other opportunities to improve our trade access.

We have completed a Closer Economic Partnership agreement with Singapore. This is the first bilateral trade agreement New Zealand has entered into since the CER agreement with Australia in 1983.

I believe this is a very good agreement for New Zealand and a very good agreement for Singapore.

Why is it a good agreement for New Zealand?

First, it will put our trade, economic and investment relationship with Singapore, one of the dynamic Asian economies, on a new and firmer footing, based on a modern and forward looking body of trade rules.

The initial gains for both sides are not huge and neither are the adjustment costs. But it will deliver significant immediate benefits and these will grow over time. Tariffs will be eliminated reciprocally; robust rules of origin will be applied. A provision to verify importers' declarations will ensure there is no scope for circumvention or fraud so that third countries do not benefit from our elimination of tariffs.

Trade in services will be progressively liberalised - both sides have agreed on a package of initial commitments in services which will be expanded over time. A new provision to deal with recognition of qualifications will assist NZ services exporters trying to access the Singapore market.

The provisions to address technical, sanitary and phytosanitary barriers to trade will reduce compliance costs for NZ business; we will have more secure access to the Singapore government procurement market; our respective investment regimes will be made transparent and more certain; barriers to investment will be gradually eliminated.

I believe the agreement is good news for NZ; it will encourage trade in
goods and services and investment, create jobs and assist our economic

Importantly as well, the CEP sends a very positive signal to Singapore and our other Asian trading partners about our willingness to engage with them. Indeed, it sends a positive signal to all other APEC economies about trade liberalisation and economic growth in the region - it sets out a practical and sensible way to achieve the APEC vision of free and open trade and investment by 2010 for developed economies and 2020 for developing economies.

As well as new trade agreements, we are also looking at deepening and broadening the Closer Economic Relations agreement with Australia.

Three weeks ago, my Australian counterpart Mark Vaile and I held an extremely successful ministerial meeting in Auckland.

We are both determined to keep CER as a state-of-the-art trade agreement. It has been of huge benefit to both countries over the past 17 years.

As well as making progress on a number of issues that have vexed the trans-Tasman trading relationship, we also included business participation in the meeting for the first time.

This added to the success of the meeting, I believe, and it is something both New Zealand and Australian ministers are keen to continue. We are both well aware that governments cannot make either country prosper without the efforts of businesspeople.

Mr Vaile and I are both keen to have Australia and New Zealand, working together through CER, to improve our access to markets in other parts of the world, and especially in the Asia-Pacific region.

In a few weeks, I will be joining Mark Vaile and ministers from the ASEAN countries at a meeting in Chiang Mai, Thailand. We will be exploring the scope for freer trade and investment between CER and the ASEAN Free Trade Area, AFTA.

Such a trade agreement would constitute a US$1 trillion trading bloc and be worth $8 billion over 20 years to New Zealand alone.

In closing, New Zealand's future prospects for trade are bright.

We have excellent products, a world-wide reputation for quality and innovation, and a determination to succeed in overseas markets.

There are many trade barriers in our way, but my Government and officials are working hard to break them down so that our suppliers can sell their products without interference.

If we want to create a society in which we can ensure all citizens can participate, promote social and environmental values, and close the gaps, we need to have a flourishing private sector and one that is firmly oriented to trading with the rest of the world.

That's my primary focus as trade minister. We have a busy agenda. Let's get on with it!

Thank you.

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