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Institue Of International Affairs Meeting - Sutton

25 October 2001

Speech Notes - Hon J Sutton

Institue of International Affairs meeting, Timaru

Ladies and Gentlemen: New Zealand is an agricultural trading nation. We make the vast majority of our money by selling our dairy products, our meat and wool, and our trees to other countries.

We rely on being able to sell enough of the things we are good at making overseas, so that we can afford to maintain decent living standards and to buy from other countries the things they are good at making.

Most farmers in our country work to produce food, not just for people in the cities, but for people in other countries. More than 80 per cent of all meat produced in this country is available for export - 95 per cent of the milk produced in this country is processed for export.

We rely on access into other countries' markets to sell our products.

Given all these things, you would have thought it was self-evident that New Zealand would benefit from trade liberalisation, from the lowering of barriers that prevent us from selling our products in other markets.

Unfortunately, it's not that easy.

Maybe it's understandable. Trade policy and the intricacies of international diplomacy are not simple things. We don't teach this in our schools.

When Helen Clark told me, almost two years ago now, that I would be trade representative in a Labour Government, I was surprised. I didn't know much about the portfolio. I had never shadowed it in opposition.

It was a rude shock - a bit of a baptism of fire. My first event was the Seattle conference.

That meant leaving New Zealand early on the morning after the election victory, heading for the United States with Lockwood Smith. While it was apparent Labour had the biggest vote, it was still unclear who the government would be. So it was decided to send both of us.

As I'm sure you know, Seattle was a debacle.

200 different groups protesting outside - everything from saving the turtles to the American Steelworkers' Union angry about competition from the sweatshops of countries like New Zealand.

Inside, it wasn't much better. The preparatory work had not been done and countries were not ready to negotiate. Domestic politics affected the interest of the Americans involved and a new round of world trade talks did not get underway.

Almost two years on, and things are quite different.

For a start, I'm going to Doha knowing a lot more about our trade policy than I did at Seattle!

Internationally, the groundwork for an agreement has been done now. Leaders and their trade ministers have been travelling around the world, drumming up support. They meeting each other at various events around the world to talk about getting a new round underway.

There are now just 14 days till trade ministers from the 140 members of the World Trade Organisation are to meet in Doha, Qatar.

As my former colleague Mike Moore, now the WTO's director-general, says, "this is where the rubber hits the road". I have made no secret of my conviction that a new trade round is necessary. The arguments are compelling and have been made cogently by many world leaders. In a recent speech, Mike Moore set out three arguments for a round. There is the development argument. Currently, 1.2 billion people live on less than $1 a day; another 1.6 billion people live on less than $2 a day. The first responsibility lies with Governments - development requires peace, good governance, sound economic policies, and investment in health care and education. But the international community can and must help. Poor countries need to grow their way out of poverty. Trade is a key engine for growth but currently developing country products face many obstacles entering rich country markets. By opening these markets, we can help lift millions of people out of poverty. And the most effective way to achieve these market openings is by launching a new round. Poor countries are caught in a vicious circle: they need foreign investment but can offer little to attract such investment. In order to break out of the circle, poor countries need to export and need open markets in which their goods can compete. But those exports face formidable barriers, both tariffs and non-tariff barriers - hence the need for a new round. A new round will advance the gift of opportunity which is all that market access is. We should recall too the figures. By one study, developing countries would gain $155 billion a year from further trade liberalisation. That is more than three times the $43 billion they get each year in overseas aid. Then there is the economic argument. If we cut by a third barriers to trade in agriculture, manufacturing and services, that will boost the world economy by $613 billion, according to one study from Michigan University. That is equivalent to adding an economy the size of Canada to the world economy. If we cut trade barriers completely, that will boost the world economy by nearly $1.9 trillion: the equivalent of adding two more Chinas to the world economy. To give another perspective to the economic argument; OECD agricultural subsidies in dollar terms are two thirds of Africa's total GDP. Think of the gains to the global economy if these subsidies were removed. Nor can we ignore the fact that the world economy is looking decidedly vulnerable at present. There is no better way to address the problems of economic slowdown than by strengthening the multilateral trading system through new negotiations. There is another argument, an historical one, for launching a round. Liberalisation works. The multilateral trading system works. The past 50 years has seen unparalleled prosperity and growth and more has been done to address poverty in these past 50 years than in the previous 500. Since 1960, child death rates have halved in developing countries; malnutrition rates have declined by a third; access to safe water has improved dramatically. While the current UN Millennium Declaration targets show there is still a long way to go, and we need to keep in mind that the multilateral trading system is not the sole contributor to the progress that has been secured, we should not lose sight of the fact that the system has proved its worth repeatedly. I believe there is another reason, more fundamental, more profound and more immediate, why we need a successful meeting next month. This meeting is a chance for the international community to reaffirm its commitment to common values of openness, sharing, peaceful exchange and rule of law rather than rule of the jungle. Leaders and Governments have long recognised the need for international and regional responses to problems we have in common. No single nation alone can combat AIDS, clean the environment, run a tax system and manage airlines without the cooperation of others. Nor can they deal in isolation with the threat of international terrorism. Institutions such as the United Nations, the World Bank, the IMF and the WTO are expressions of the international community's commitment to work together. For small countries - such as New Zealand - that commitment to working together is important. It is only through the rules-based trading system of the WTO that we can force larger, more powerful countries to obey the rules and to stop blocking our products - as has been shown with the lamb tariff case against the United States and the beef case against South Korea.

This Labour-Alliance Government is for trade - but rules-based trade, not free trade. Free trade is law of the jungle stuff, and we're not looking to get into that. Small countries like us need rules, we need an enforcement agency like the WTO, to protect our interests.

Ladies and Gentlemen: for New Zealand, our position is quite clear. We want another round of world trade negotiations.

Our core interests in a round include further liberalisation of market access for agriculture, non-agricultural goods (including fish and forestry), and services; strengthened trade rules to guard against protectionism and unfair trade practices; and better integration of the work of the WTO with other international priority areas, such as sustainable development.

This Government sees these things as a vital part of maintaining, if not improving, New Zealanders' living standards.

New Zealand is currently enjoying the benefits from the last round of world trade negotiations, the Uruguay Round. I believe we will gain even more substantially from this one, if we can get it underway in Qatar.

It's important for you all to be involved. The Government has made public the Cabinet papers setting out the WTO negotiating position. They're on MFAT's website. The draft text of the proposed Doha agreement has been made public, and we've put that on the website too.

The Government wants to hear from you about what our citizens want from a possible new round of trade talks.

I'm here to listen, as well. I and my team welcome any questions you have tonight.

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