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Standards NZ Report Launch - Sutton Speech

Hon Jim Sutton Speech Notes
22 August 2001

Standards NZ Report Launch, Wellington

Ladies and Gentlemen: thank you for inviting me here today.

I welcome the release of this report. It was project managed by Standards NZ and funded by Trade NZ, the Ministry of Foreign Affairs and Trade, the Ministry of Agriculture and Forestry, and the Ministry for Economic Development.

It sets out clearly for us just how much of a burden non-tariff trade barriers are to our exporters and potential exporters.

The rise of non-tariff barriers as a trade issue is paradoxically a sign of how successful Governments over the years have been in reducing tariff barriers. As the tariff tide has gone out, it has left more clearly exposed than ever before all the other rocks and shoals that are an obstacle to international trade.

Non-tariff barriers encompass all the rules and regulations that stop us from doing or selling what we like when we like. These days, probably the most significant non-tariff barriers - certainly borne out by the AC Nielsen survey - are standards.

Standards regulate not what crosses a border but what can be legally sold inside it - but if importers can't sell your product in a market of interest, they will hardly want to buy it from you.

Although usually imposed for perfectly legitimate reasons such as health and safety or environmental protection, the mere fact that standards vary from country to country is a real nuisance to exporters and adds to their costs.

The last big round of comprehensive multilateral trade negotiations set out some important rules on standards. The standards, and the procedures for assessing the conformity of products against them, must not be more trade-restrictive than necessary to achieve their purpose.

If an international standard exists, you must follow it unless you have a good reason for departing from it. As well, standards must be transparent, that is, each member of the World Trade Organisation has to designate an "enquiry point" where prospective exporters can find out exactly what standards applying to their product in that country they must comply with. In New Zealand, that's Standards NZ.

Where standards and other non-tariff barriers remain, we need to know about them if we are to do anything about them. This is the value of this survey. It tells us whether we are concentrating our negotiating effort in the right areas - generally, we are.

Trade barriers are not the sort of thing on which the Government can promise instant results - getting rid of them needs to be seen as a long-term hard slog.

And often nations relinquishing their non-tariff trade barriers want a quid pro quo. That is why multilateral trade rounds,such as the one we hope will be launched at Doha later this year, are vital to keep the system functioning. They act as a supplement to negotiating one-on-one for the removal of a particular barrier. Instead, rounds can develop worldwide rules that deprive whole classes of barriers of legitimacy when used as cover for protectionism.

Of course, protectionist instincts remain strong. In the past, the trade game has been like the tax game: just as new avoidance schemes tend to emerge whenever governments shut existing ones down, so the efforts of traders to sweep away old barriers can be frustrated by the erection of new ones.

In fact we can see this happening now against our brand-new organic agriculture export industry.

On Monday, the Ministry for the Environment released a report about New Zealand's clean, green image. Based on the responses of two British importers, we were told that should there be field trials of GM plants, Britain would no longer want to import any of our food - organic or conventional.

This strikes me as extremely odd: I am told that Britain, the United States, and Europe have thriving organic industries. Yet all these places have GM food field trials, and in some cases, more than that. Despite that, it is still possible to produce GM food in Britain - so why not in New Zealand??

In Europe, the concept of "food miles" is gaining strength. So even if our food exports were all clean, green, and totally organic, they would still not be acceptable in Europe because they had to be flown or shipped 12,000 kilometres to market, using resources to get there.

That concept has the potential to become a serious non-tariff trade barrier.

Recently, I met a Green MEP - frequently quoted as an "authority" on the evils of international trade in food. It quickly became clear her calculations were based on the assumption that all New Zealand's food exports were air-freighted. I disabused her of this, but within the hour, she was repeating the same misinformation to others. Truly, protectionists are often reluctant to allow the facts to get in the way of a good story. According to the report we're launching today, it is clear that non-tariff trade barriers tend to be most prevalent and most significant in areas of traditional sensitivity - especially food. The most intractable barriers apply to foodstuffs, exported under quota to countries such as the European Union, the United States, and Japan.

This report indicates priorities for follow-up work by isolating barriers in terms of relative seriousness and country of application. For the first time we have clear and specific details of compliance cost problems.

As well, we have learned that non-tariff trade barriers are increasing in some areas (in spite of the Uruguay Round). And we have discovered a significant incidence of standards and conformance problems.

This report has given us in the Government much to think about, and will help us formulate our strategy in improving market access for our exporters. New and inexperienced exporters can learn from the strategies identified by successful established exporters.

I commend this report to you all.

Thank you.

Office of Hon Jim Sutton

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