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Address to APEC Business Advisory Council

Wednesday 18 August

Rt Hon Helen Clark Prime Minister- Address to APEC Business Advisory Council Meeting Hilton Hotel Auckland

It is an honour for New Zealand to be hosting this meeting of the APEC Business Advisory Council, and for me to welcome all participants to this meeting in Auckland.

I fully appreciate the important role ABAC plays in the work of APEC. You identify for leaders, ministers, and senior officials what the key issues are from a business perspective, and you help ensure that APEC focuses on practical initiatives and does not subside into being just another annual talkfest !

A strong and effective APEC is very important to New Zealand, as the region dominates our trade flows. If we count the European Union as one market, then nine of our top ten markets are to be found among APEC’s members. Altogether, APEC accounts for more than seventy per cent of New Zealand’s two-way trade. It is also the source of a similar proportion of foreign direct investment in New Zealand, and of the visitors we receive each year.

The networks and relationships New Zealand has been able to build through APEC are linking us better with our own neighbourhood. They also complement other initiatives we are taking to develop and strengthen our relationships in the region, such as through our Seriously Asia and Latin American Strategies.

The central mission of APEC matters to New Zealand too. As APEC Leaders put it at their first meeting in 1993, they came together in pursuit of stability, security, and prosperity for all the peoples of the region.

New Zealand as a nation is a staunch multilateralist. We believe that sustainable stability, security, and prosperity can only be achieved for us all through collective action.

ABAC is meeting in New Zealand at a time when our economy’s growth path is stronger and more sustainable than it has been for many decades.

Council members will be aware that over the past twenty years New Zealand developed a very open economy. The adjustment to that was not easy, and the debate about what was done, and how, dominated our politics for many years.

Our government’s strategy has been to identify where we can add value to the economic growth process, and to form the partnerships and make the key investments which will take New Zealand forward.

We emphasise growth through innovation, which leads us to prioritise education, skills training, and skills-based migration into New Zealand; research and development; and other policy initiatives to support the growth of higher value industry sectors and companies.

It is also important to us that the rewards of growth are spread out across the community, both through reducing unemployment and through rising living standards. Research tells us that New Zealanders want the benefits which come from economic growth, but they also want the quality of life and the quality of the environment for which our country is renowned to be maintained and enhanced.

The New Zealand economy has emerged as one of the best performers in the OECD, both in terms of growth rates and in lowering unemployment. Economic growth came in at 3.6 per cent for the year to March, and the rate for the March quarter was 2.3 per cent. Unemployment stands at four per cent – second only to Korea in the OECD.

New Zealand has over these past twenty years largely pulled itself up by its own bootstraps. The Uruguay Round of GATT has helped in a small way, but it’s to the Doha Round of the WTO that we look for fundamental changes in the world trade rules which discriminate against agricultural exporters like New Zealand.

It seems entirely appropriate to us therefore that one of the key areas of ABAC’s attention this year, as for APEC governments, is support for the WTO Doha Development Agenda. For New Zealand as a global trader, the WTO Round is and must be our top trade policy priority. We share ABAC’s sense of impatience about getting concrete results from the negotiations.

The recent agreement on frameworks in Geneva was a welcome and much needed shot in the arm for the Doha Round. The negotiators took historic steps forward, particularly in the difficult area of agriculture. APEC Trade Ministers, meeting in Pucon, sent a strong message to Geneva, both by endorsing the elimination of agricultural export subsidies by an agreed date, and by backing negotiations on trade facilitation. This helped build consensus in Geneva two and a half weeks ago.

We now need to build on the momentum created, and aim for an early and ambitious conclusion of the Round. That will require commitment from each member government involved. Ongoing encouragement from APEC and its member economies will be an important part of the process.

In ABAC’s draft report to APEC Leaders, you have also focused on the extent of progress being made by member economies towards realising the Bogor Goals. Those goals are now ten years old. An initial review of progress towards them was undertaken during New Zealand’s year as APEC Chair in 1999. Next year in Korea there will be a further stock-take of progress. That so-called ‘mid-term review’ will be just five years short of the 2010 date by which APEC’s industrialised economies committed to having achieved free and open trade and investment.

Following ABAC’s own review last year, there is clearly a degree of frustration among you as business leaders about the uneven pace of progress towards the Bogor Goals. The New Zealand Government shares that frustration.

In the goods area APEC has made generally good progress since 1994 in moving towards the elimination of tariffs. That, however, cannot disguise the fact that among APEC’s industrialised economies which share the 2010 commitment, pockets of very high tariff protection remain in areas of export interest to other APEC economies, such as agriculture.

The question is how best to encourage progress towards the elimination of these remaining barriers. Mr Somerville, through President Lagos, has informed us that ABAC is actively considering a range of options which could accelerate the freeing up of trade and investment in the region. Those options range from steps to bring more binding commitments to achieving the Bogor Goals, to an examination of the desirability and impact of a Free Trade Agreement of the Asia-Pacific (FTAAP) in which all APEC economies could participate.

At this time the New Zealand Government is inclined to see APEC’s ‘voluntary’ approach as a strength rather than a problem, and is not convinced that binding legal instruments are required. It is important, though, that member economies do seriously consider any and all ideas on how they might best deliver on the promises which were voluntarily made to each other.

In New Zealand’s case, further progress has been made on tariff reduction. By 2009 we will have no tariff higher than ten per cent. On average, around 95 per cent of imports into New Zealand by value enter tariff free. Like many other nations, we have looked for ways to open markets for our exporters more rapidly than has proved possible through the WTO, through the negotiation of bilateral Free Trade Agreements (FTAs) – or, Closer Economic Partnerships as we generally call them.

New Zealand has had a comprehensive FTA with Australia for more than twenty years, and with Singapore for almost four years. Negotiations are presently taking place bilaterally with Thailand, and trilaterally with Chile and Singapore. Brunei has been taking an interest in this latter three-way negotiation.

This year New Zealand and China signed a Trade and Economic Framework Agreement, pursuant to which the two countries are on course to begin FTA negotiations next year.

Now new life is being breathed into the AFTA–CER FTA proposals, and discussions presently going on could see negotiations launched between ASEAN and Australia and New Zealand later this year. We have an ongoing interest in entering negotiations with the United States, particularly now that its FTA with Australia has been ratified.

New Zealand has also undertaken studies on FTAs with Korea and Mexico, and we have indicated our preparedness to negotiate comprehensive agreements with others.

New Zealand is just one of many APEC economies pursuing FTAs. Work done by Chile suggests that taking into account FTAs already in place, and those under negotiation or serious study, APEC economies could soon be party to eighty FTAs, thirty-three of them within the APEC region.

Like ABAC, the New Zealand Government thinks it is important that there is a policy response from APEC to this phenomenon. We are therefore pleased that APEC officials will be working on a set of ‘best practice’ guidelines for the consideration of Ministers and Leaders.

In our view, such guidelines should be directed at how FTAs might best serve as a way of advancing towards the Bogor Goals, and not of compromising them. We agree with ABAC that consistency with APEC’s Osaka Action Agenda principles should be a key foundation of such guidelines.

With so many APEC economies engaged in a plethora of criss-crossing preferential arrangements, business is understandably concerned that differing rules and approaches could increase the costs of doing business throughout the region. It is timely therefore for ABAC to give consideration to how an FTA for the Asia Pacific region might work. While such an idea may not be acted on by Leaders in the short term, it could gain traction as the likely outcome of the Doha Round becomes clearer and as the 2010 date for the Bogor Goals comes closer.

While it isn’t possible in the limited time available today to cover all elements of ABAC’s or APEC’s agendas, I do want to comment on the development of APEC’s security agenda.

Security has been a delicate issue to address in APEC, and New Zealand, for one, would not want to see the organisation’s trade and economic focus weakened.

We recognise, however that security is interlinked with trade, investment, sustainable growth, and prosperity. We do need to be mindful of the costs to business and society of securing the movement of goods and people, but we must also be mindful of the cost of not doing so. A careful balance needs to be struck.

ABAC’s focus this year, “Bridging the Pacific: Coping with the Challenges of Globalisation”, resonates with New Zealand.

For us, APEC offers unique opportunities to link with economies and societies around the Pacific Rim. And, like all APEC economies, New Zealand must rise to meet the challenges of globalisation. APEC’s capacity building activities are designed to help member economies take advantage of global trade and investment opportunities. It is good to see ABAC also paying close attention to this element of APEC’s work.

This year Chile is guiding the APEC process under the banner “One Community, Our Future”. As Chile and ABAC clearly recognise, the sense of community among APEC economies can only be built through delivery on the promises made to each other. ABAC has kept governments focused on those commitments freely entered into, as you should.

Thank you once again for the opportunity to address you today. I wish you a successful conference, an enjoyable stay in New Zealand, and I look forward to receiving your recommendations when they are presented to Leaders in Santiago in November.


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