Jim Sutton Speech To Meat NZ
27 March 2002
Meat NZ AGM Wellington
Chairman Jeff Grant, chief executive Neil Taylor, ladies and gentlemen: a month ago, I had the privilege of being at Totara Estate for the 120th anniversary of New Zealand's first frozen meat exports.
I congratulate Meat NZ on contributing to the preservation of our history.
As I said at that occasion, it commemorates a truly historic occasion. One that made our country great. It was a timely reminder, coming in the same week as the Prime Minister launched the Innovation Strategy.
The refrigeration of meat for export was the innovation leap that provided the base for what our country has become. Today, we're looking for a similar leap in innovation.
I am confident with the proven innovative energy in your industry that you will continue to prosper, and will lead the way for other sectors in New Zealand industry.
Part of that innovation will involve making sure your industry has the appropriate structures for the future. I don't want to get bogged down in working out what those are?. That's something for you to do. I would like to say that I will take a close interest in this, and that my door will be open to industry representatives as this develops.
The Labour Party's policy is to facilitate industry reform, where it is supported by the majority of industry participants, fair to minority players, and in the national interest.
Your industry, if it wants, will be given the same consideration as the dairy, kiwifruit, pipfruit, and hops industries have had in completing their restructuring already this parliamentary term.
The wool industry has been working through its restructuring, and I think we will all welcome that coming to a resolution. There is still a way to go there yet, though, and I encourage all woolgrowers to ensure they participate in the decision-making process in their industry. As I've said to many groups lately, the trade negotiations portfolio has been taking up most of my time this parliamentary term.
More than 80 per cent of all meat produced in New Zealand is grown for export. That makes international trade important for everyone in this room, and critical for the wellbeing of our nation.
Sometimes it can seem a bit esoteric ? I know it did for me when I started as Minister for Trade Negotiations.
It can seem that there is nothing to it but officials and politicians attending meetings around the world with nothing ever resulting from them. What was it they used to joke that GATT stood for? A General Agreement to Talk and Talk.
However, international trade is not all about talk ? it's about action.
I'm delighted to be able to demonstrate to you today some real, tangible benefits that have resulted from trade liberalisation.
The Foreign Affairs and Trade Ministry has been working on this research for some time, and today I can hold up this report, which sets out some trade benefits from the Uruguay Round, with a particular focus on tariff reduction.
This MFAT report evaluates the gains to New Zealand from the Uruguay Round by comparing the tariffs actually paid on our exports in the calendar year 2000 to the duties that would have been payable at pre-Uruguay Round rates. It is therefore a partial one-year snapshot of a single component of Uruguay Round gains to New Zealand.
Only those countries who were founding members of the World Trade Organisation in 1995 have been considered in this analysis.
The subset of "duty-free" destinations (Australia, Singapore, and Hong Kong) and economies which joined the WTO later have been excluded.
Tariff data, especially that for pre-Uruguay Round tariff levels, have been hard to find for some export destinations, so MFAT warns that the totals given may well under-estimate the true totals.
Now that all those caveats are out of the way ? the report!
The report found that duties paid on $17.06 billion of New Zealand exports to WTO founding nations were $525 million lower in 2000 than they might otherwise have been, because of the Uruguay Round commitments which had come into force.
Of those gains, $397 million of duty savings applies to agricultural exports.
Those agricultural gains are concentrated in the meat and dairy sectors, with $191 million and $131 million respectively.
Overall, there were significant gains from duty reductions in the meat sector, of $191 million on sales to GATT members of $3.35 billion during 2000.
The majority of those gains came from two markets: the European Union and the United States.
The first of these was through secured access into the European Union, where the Uruguay Round delivered an estimated $90 million in duties saved. This was largely the result of enhanced access at zero tariff rates for sheepmeat.
New Zealand's sheepmeat access to the European Union prior to the end of the Uruguay Round was limited by a voluntary export restraint to 205,600 tonnes carcass weight equivalent with an applied tariff of zero. This was replaced by a tariff quota of 225,000 tonnes with the tariff bound at zero ? that is, an extra 19,400 tonnes at zero.
When Finland, Sweden, and Austria joined the EU, an additional 1700 tonnes was acquired on the basis of historical trade with those countries, also at the zero in-quota tariff, taking the TRQ to 226,700 tonnes. In the past three December years, exports have been at quota levels.
The gains from the Uruguay Round have resulted from the enhanced and secured access at bound rates of zero, and the gains on the extra 21,100 tonnes of sheepmeat access at zero duty. Based on the assumption that these extra exports would otherwise have paid a 20 per cent tariff plus a trade-weighted average of 1521 euros per tonne tariff, MFAT assesses the gains at $75 million for the 2000 year.
Lower beef tariffs in Europe are estimated to have saved us $10.3 million, and the elimination of the 3 per cent tariff on venison is estimated to have saved us $3.85 million.
The second market where there were big gains was the United States beef market, which delivered gains of $70 million.
As a result of the Uruguay Round, New Zealand gained permanent access of 213,402 tonnes of frozen beef. This was 28,570 tonnes above the most recent pre-Uruguay Round access in 1994.
There were also significant gains in other markets.
Changes to the beef tariff in Japan saved us about $11.2 million in 2000. Korean beef tariff changes saved us $1.3 million in 2000. Canadian beef tariff changes saved us $1.8 million in 2000.
While all of these are good news, it doesn't mean it's time to have a cup of tea and slow down the trade liberalisation work.
The MFAT report found that duties paid on our $17.06 billion of exports to WTO founding members were $525 million lower in 2000 because of the Uruguay Round than they would have otherwise been. However, those exports still attracted tariffs of $884 million, so there is still considerable scope to push for further reductions in access barriers to our exports.
Sometimes just when we think we've made good progress winding back some of the more recognisable types of barriers, such as tariffs, we're confronted with more complex, but no less effective, barriers lurking behind the border.
Unfortunately there will always be situations where domestic groups exploit political means to try and defend their interests - take the US steel industry as one recent, high profile example! Protectionism takes many forms, and so the work of trade negotiations must go on.
Now, we have just started our ninth multilateral round, known as the Doha Development Agenda, after the successful launch at the WTO ministerial meeting in Doha, Qatar, last November. We succeeded in getting language in the negotiating text talking about phasing out agricultural subsidies and trade barriers, and New Zealand officials will work hard with the officials of other countries to ensure that we have real gains in that area.
It is my hope that the real, tangible gains of the Doha Round will be much greater than those achieved in the Uruguay Round.
Ladies and Gentlemen: I know that, as people who produce 80 per cent plus of all your outputs for export, you well understand how important market access, rules, and international trade is for you and our nation.
It helps when we can point to gains such as those from the Uruguay Round shown in both the MAF preliminary figures released earlier this week which indicated that each and every sheep, beef, and dairy farmer earned an average of more than $11,500 extra in 2000 solely because of gains from the Uruguay Round.
Now the MFAT report, which looks at different aspects of the same agreement, shows that savings of $525 million were made by exporters in 2000.
The MAF and MFAT figures cannot be added together to give a single estimate of the gains from the Uruguay Round as some of the material overlaps and would be double-counted. I hope to have the two integrated later this year.
However, as Uruguay Round decisions are being implemented progressively, it is reasonable to estimate that total gains to New Zealand agriculture since the conclusion of that round have already exceeded $1 billion and that the value of those gains is increasing each year. Trade is dynamic, and where it becomes easier, it tends to increase.
There are also other benefits from the Uruguay Round that are harder to quantify, such as the introduction of a binding disputes settlement process. This is vital for small countries such as New Zealand, where we don't have the muscle to push big economic powers around. The WTO can and has provided the muscle to enforce international trade rules.
Ladies and Gentlemen: I've stood up here long enough, proclaiming the good news about trade liberalization.
But it is good news, and it is worth talking about. Sometimes we can all assume that everyone understands the issues, but that's not necessarily so.
I think it's vitally important that groups such as yourselves get together to discuss and debate the issues around trade. One of the big problems of our time is that people do not have enough discussions of this kind ? or rather that only one side of such a debate is being heard.
I firmly believe that trade is essential to the future wellbeing of New Zealand, and I am prepared to justify the Labour party's adherence to a belief in the importance of trade liberalization to our citizens.
My challenge is for you to get out there and to express your views as well. The forces of protectionism ? like rust ? never sleep. We can't expect to maintain market access for our goods, let alone get further market access, if we don't vigorously explain why that's important ? for all of our citizens and consumers.