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EU Relationship New Challenges and Opportunities

Rt Hon Helen Clark Prime Minister

The New Zealand – EU Relationship New Challenges and Opportunities

Address to The European Policy Centre

8.00am (Belgium time) 6.00pm (New Zealand time)

Thursday 24 April 2003
It is a pleasure to be in Brussels as New Zealand Prime Minister at this critical time in the development of the European Union.

The enlargement of the Union to a membership of 25 is an ambitious project, and the ambition to enlarge does not end there.

This is a time for all the EU’s close friends and partners to re-examine relationships with the Union, to contemplate how enlargement affects them, and to consider whether we could expand the two way benefits of the relationship between us and the EU.

To New Zealand, the relationship with the Union is of paramount importance.

History, heritage, and culture link most of our people to the nations of Europe. From this continent, people spread out in recent centuries to settle in far away places. They could go no further than New Zealand, nestled in the antipodes, 12,000 miles away. Our forebears in New Zealand signed an historic treaty with the indigenous people, and set about building a new nation. That nation is developed, prosperous, democratic, and inclusive; all characteristics which are shared with the nations of the European Union.

New Zealand’s interest in the fate of Europe has seen us involved not only in the two world wars fought on European soil in the twentieth century, but also in more recent years in peace keeping in the Balkans.

We have supported the growth of the European Union because we see it as an enormously important force for peace and prosperity on what was formerly a troubled continent.

Adjustment to Britain’s entry to the European Union was traumatic for the New Zealand economy, but, recognising the inevitable, we devoted our energies to securing the best arrangements we could to protect our agricultural trade.

For the long term, access to the larger European Union market was bound to open up more opportunities for New Zealand exports, as in practice it has. Now, as the Union enlarges further, so even more opportunity opens up for a trading nation like New Zealand which is well accustomed to working with the EU.

The European Union today is New Zealand’s second largest export market, second only to Australia with which we have had a free trade agreement for twenty years. While there is still a strong primary produce component to our export profile here, we are also increasing our trade in services and technology with Europe. The EU is also our second largest source of investment and technology.

New Zealand’s relationship with the EU has long had a very heavy emphasis on trade. Given that we are a small, export-oriented, trading nation, that is not surprising. But there are a range of other relationships on which we should build to our mutual benefit.

A few days ago I discussed some of the possibilities with EU External Relations Commissioner Chris Patten in New Zealand. We agreed, for example, that we could do much more to strengthen education and science and technology co-operation between New Zealand and the EU. Our Minister of Science will come to Brussels with a science delegation in June to progress that.

New Zealand, like the EU, sees its future prosperity being linked to the extent to which it can apply new knowledge and technology to all aspects of its economy and society. The innovation focus of the EU’s Lisbon Strategy is similar to New Zealand’s Growth and Innovation Framework, which aims to lift our economy up market and lessen its commodity dependence. New Zealand has world-class education and research institutions, but historically has not been adept at capturing the innovation they develop for our own advancement. Now we are very focused on doing just that, and on forming the international alliances and joint ventures which will make that possible.

Like the nations of the EU, New Zealand needs a highly educated and skilled workforce to drive its economic and social development. Aging populations in western societies are increasing the labour market pressures and skills shortages. We live in a global labour market where skilled people are highly mobile. New Zealand is out recruiting skilled migrants for its labour force needs, and Europe is an important source of those migrants.

Currently we have strong net inward migration, driven by economic, security, and lifestyle factors. New Zealand’s economy grew by 4.4 per cent in the year to December, and unemployment at 4.9 per cent is at its lowest level in almost fifteen years. In today’s insecure world, New Zealand’s distance from the world’s troublespots is a drawcard for migrants, as are its open spaces and natural heritage combined with the cosmopolitanism of its major cities.

The 21st century flows of people between Europe and New Zealand help keep our links fresh and up to date. Last year New Zealand welcomed 400,000 visitors from Europe, and 107,000 New Zealanders came on short-term visits to Europe.

Included in that flow are significant numbers of young people covered by the extensive working holiday arrangements which New Zealand has with European nations. This week we have signed a working holiday agreement with Belgium for the first time.

One cloud on the horizon of this movement of peoples is the looming implementation of the Schengen common border agreement. Without modification, it would override New Zealand’s present three month visa waiver agreements with individual nations in the Schengen area, and replace them with one three month visa for the whole area. As you will appreciate, visa waivers providing for visa free travel for over three years being overridden by one three month visa is a drastic curtailment of New Zealanders’ ability to travel freely in Europe. Other developed nations are also affected. We remain hopeful that improved arrangements can be made to our mutual benefit. First world travellers do bring substantial economic benefits to Europe, as many a tourist region would be quick to attest.

There is considerable potential for the EU and New Zealand to deepen policy dialogue and engagement between us in many areas of mutual interest.

Our economies and societies face the same challenges of ensuring success in a globalised world. We act on common principles based on democracy, the rule of law, and strong support for human rights.

In the international arena, we both know the value of working multilaterally and co-operatively. New Zealand as a small nation depends on the international rule of law. In a world where might was right, we would stand to be the loser – and so would every other small nation.

Within the EU, nations are working across the boundaries of nation states in pursuit of a vision of a united Europe. That gives the EU the moral authority and the platform from which to work internationally for a rules based world order which can tackle the many problems which require global solutions

In many areas, New Zealand and the EU have developed very similar approaches. Across sustainable development, the Kyoto Protocol, the International Criminal Court, the path to peace between Israel and the Palestinians, and on disarmament and human rights issues in general, we have so much in common. In these areas, as in the development of economic and social policy, we follow closely how Europe is thinking. Our common value base makes what happens in Europe an important reference point for us in New Zealand. We may be far away geographically, but we are close in spirit and values.

Our geographical location also makes us of interest to Europe in other ways. New Zealand has close associations with the nations of the South Pacific, with which Europe too is a major development partner. It makes sense for us to co-ordinate our development efforts in the region, to avoid overlap and duplication, and to ensure the best outcomes for the region.

Events in the South Pacific seldom generate headlines in Europe, but can be traumatic nonetheless. In recent years some of the island nations have suffered a number of serious crises. There have been coups and political violence; civil wars and ethnic conflict; money laundering and poor governance.

In responding to these crises, New Zealand is sensitive to doing so as a regional partner and not as a neocolonial power. Our own colonial legacy in the South Pacific had its particularly ugly moments, and with respect to Samoa I offered a formal apology for those events last year on the fortieth anniversary of Samoan independence. An admission that wrong had been done was for us an important part of the long term reconciliation process.

The new international security environment brings fresh challenges to small South Pacific states. The burden of compliance with new requirements for clear and transparent financial systems and with United Nations Security Council resolutions designed to counter terrorism is heavy. Getting the legislative and administrative frameworks in place strains the resources of small countries with populations as low as 1800. Yet passport fraud and money laundering are the tools of trade for terrorist organisations, and they will exploit weak links where they exist.

Building capacity in these areas, and boosting good governance, has become a key issue for the Pacific Island Forum which brings New Zealand and Australia together with the Pacific Island nations. This year’s Forum Leaders’ meeting will be hosted by New Zealand, and we are looking forward to welcoming EU representation at the post-Forum Dialogue.

I suspect that the EU’s development assistance budget for the Pacific will, like New Zealand’s, be looking beyond more conventional forms of support to how to support well governed nations being able to meet the full range of their international responsibilities.

A deeper policy dialogue between New Zealand and the EU should also take account of the new depth in relationships between nations around the Asia Pacific rim.

While it is true to say that Europe and New Zealand are roughly equidistant from East Asia, the reality is that we relate in quite different ways to that region.

New Zealand sees itself as very much a part of the Asia-Pacific, and has played a full part in the regional organisations which have developed there. From the outset of ASEAN we have been a dialogue partner, and we have been a participant in the ASEAN Regional Forum which provides the setting for regional security discussions also involving China, the two Koreas, the United States, and Japan.

The most dynamic development though has been the formation of APEC and the increased interaction it has made possible between leaders, ministers, officials, business, and other sectors right around the Pacific Rim. Formed to promote economic co-operation, it has nevertheless acted as an umbrella for co-operation on science and technology, the environment, and for bringing women and young people together. Membership of APEC has given New Zealand greatly increased contact with a region which has enormous economic power and a significant proportion of the world’s population.

International events in the past two years have forced APEC to diverge from its economic agenda to embrace discussion on security issues. Clearly the two are related. Economic prosperity does not occur in a vacuum. International terrorism has the capacity to slow world growth dramatically as we saw in the aftermath of September 11. And the world economy went on hold while there was uncertainty over the resolution of the Iraq crisis.

What New Zealand can bring to the table in dialogue with Europe are unique perspectives and insights gained from high level and continuous interaction with Asia Pacific leaders. Just as the EU’s heads of government, ministers, and officials interact frequently, so do those of the Asia Pacific Rim, albeit in a looser organisational context. What is remarkable is that this has been achieved in our region with its huge diversity of ethnicities, religions, forms of government, and states of development. If such a region can find common cause, there is reason to be optimistic about the 21st century.

As good international citizens, New Zealand and the EU both look to foster international growth and development which is inclusive and spreads the benefits within countries and across national boundaries. The nations of Europe have worked especially hard to support developing nations and to bridge the North-South divide.

Never has that been more critical. In my view, a world where wealth and opportunity is so poorly distributed across nations provides a context for the bitterness, envy, resentment and hate which drives international terrorism. We bequeath a grim future to our children if we do not tackle the fundamental causes of our insecurity.

It goes without saying that international terrorism cannot be defeated by military means alone. If it is not to be a permanent feature of the international scene, holding back growth and development, then we need new levels of engagement between North and South, and especially between the Islamic and Western worlds.

Over the past two and a half years there have been a number of high level international meetings and initiatives dealing with aspects of the growth and development agenda. They have included the United Nations Millennium Summit; the Monterrey International Conference on Financing for Development; the WTO’s Doha Conference initiating the new Round of trade negotiations; the FAO’s World Food Summit; the New Partnership for Africa’s Development supported by the G8; and the World Summit for Sustainable Development. All have set clear goals and objectives.

These meetings and initiatives have all benefited from the direct engagement of leaders and ministers, similar to the process of engagement we have experienced with APEC. Over time an international resolve has built up to address the global challenges of growth and development. It is critical that this momentum is maintained, and that multilateralism is not derailed by the way in which the Iraq crisis has played out.

It is especially important that the ripple effects from the Iraq crisis do not destroy the multilateral understanding which saw the WTO’s Doha Development Round launched. That launch came as the international community resolved to pull together after the terrorist attacks of 11 September. Agreement on the launch of the new Round injected new confidence into the global economy.

Now that economy needs a new injection of confidence. Global growth prospects aren’t helped by a Round which stumbles and misses deadlines. While agriculture remains a sensitive issue for the EU, the reality is that there won’t be a successful Round without progress on agriculture. Nor will there be a successful Round without clear gains for developing countries.

Development assistance on its own won’t bridge the North-South divide which concerns both New Zealand and the EU. It has to be accompanied by fair trade rules across sectors. Yet in year 2000 OECD countries spent six times as much on agricultural support as was spent on the total flow of aid to the developing world. In New Zealand’s view the denial of fair trade undercuts development.

Of course it is true that New Zealand stands to benefit from progress on agriculture in the Doha Round – and we would benefit more than any other developed country. For us, agriculture is a key industry and it has long been discriminated against in world trade rules. Export subsidies for non-agricultural goods have been prohibited since the beginning of the GATT in the late 1940s, but are still permitted in agriculture. The global average agricultural tariff is 62 per cent, and much agricultural trade is still limited by import quotas. Conversely, the global average tariff on industrial products is four per cent, and import quotas for such products have essentially been abolished.

The nations of the EU as major industrial exporters have benefited for more than half a century from rules development and trade liberalisation in those areas where they have comparative advantage. What New Zealand seeks are the same trade benefits for agricultural producers, and we believe the Doha Round has an explicit mandate to negotiate to that end.

My assessment is that multilateralism in general has been scarred by events of the last few months, but that it is needed now more than ever. It would be helped by a renewed commitment to success in the Doha Round, and it will be helped by maximum international engagement with the restoration of sovereignty in Iraq.

All people of goodwill want to move rapidly to rebuild relationships put under strain by the differences over Iraq. For the EU, that has two dimensions: the first is how Europe resumes, its quest for a common foreign and security policy, and the second lies in the shape of the relationship between the EU and the United States. For New Zealand, a close friend and partner of both the EU and the US, and, like both, also democratic, developed and Western, it is to be hoped that the differences which have seen old friends at odds can quickly be overcome. The combined force of a strong and united Europe, with a United States which values multilateralism, would make a powerful contribution to a peaceful and prosperous 21st century, just as it did in the second half of the last century..

My visit here this week signals New Zealand’s strong interest in its relationship with the enlarging European Union. Our interests are broad-ranging, encompassing the economic, educational, scientific and technological; public policy dialogue; and engagement on the major international political and security issues. We value and wish to enhance the longstanding people-to-people, historical, and cultural links.

The enlargement places more pressure on the diplomatic and representational resources of a small nation of only four million people living 12,000 miles away from Europe. But the significance of the relationship compels us to meet the challenge of doing more.

For that reason, I am announcing this week that New Zealand will be opening an embassy in Poland, its first ever in Eastern Europe. We will work hard to reach the same level of understandings and relationships with the new Member States as we have with the current fifteen. Malta and Cyprus we know through our Commonwealth connection. Now we will reach out to the new East European and Baltic member states. Our trade minister will lead a delegation to Eastern Europe next month.

In summary, New Zealand is fully aware of the significance of the impending historic enlargement of Europe. We applaud the contribution to world stability which an expanded, democratic, and prosperous EU brings.

Dealing with an enlarged EU will be more complex, including here in Brussels. It is possible that the EU may become more self-absorbed during the transition, and that we will need to work harder to stay on the EU’s radar screen.

We will meet these challenges because for us the EU is such a significant partner. In turn, we urge the EU in its expansion to continue to look outwards, and to embrace the partnerships which likeminded nations like New Zealand offer, linked as we are by common value systems, similar democratic institutions, and a shared sense of purpose in building a more inclusive, tolerant and prosperous world.

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