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Sutton Speech: Wellington Chamber of Commerce

Hon Jim Sutton Speech

28 September 2004

Wellington Chamber of Commerce meeting

Wellington

Ladies and Gentlemen, thank you for the opportunity to speak today. It's a pleasure to be here.

As we all know, New Zealand is a small country, a long, long way from anywhere else. These days, that has its advantages, but for our exporters, it can seem a limiting factor.

There's that example that gets used a lot: if you drew a circle with a radius of 2200 kilometres centred on Helsinki (chosen because Finland has similar population statistics to New Zealand), that circle would encompass 39 nations with a population of about 300 million. A similar circle centred on Wellington encompasses a vast stretch of ocean, our 4 million population, a few seabirds, and not a lot else.

So that makes exporting from New Zealand more of a challenge.

It's easy to get a bit dispirited about that tyranny of distance; and when you add to that tariffs, quotas, and other barriers to trade, it makes it harder to feel optimistic about our chances. Or so the more pessimistic amongst us might feel - I'm a trade minister, so it's my job to be optimistic.

In the almost five years I've been doing this job, I have met some incredible exporters and watched some excellent work done overseas. It gives me good reason to be optimistic about the future of our country, especially because the living standards of all of us are dependent on how well we export.

Developments in the international trading arena give me cause for optimism too.

It's worth remembering that while we are a small country, we are an innovative one ? something this Government is working to enhance.

The Closer Economic Relations trade agreement between New Zealand and Australia is 20 years old ? one of the most mature trade agreements in the world, and definitely one of the most comprehensive.

There's still a lot more to be done under CER, and there are some gaps in the original agreement ? just lately, I'd have been more happy if it had a formal disputes resolution process, but it is an agreement worth celebrating.

It's an unusual agreement, because it was one of the first.

Perhaps it was a response to the formation of the European Union, or the Association of South-East Asian Nations.

The formation of such blocs can be a significant stimulus for trade agreements!

New Zealand and Singapore are quite open about the strategic nature of our Closer Economic Partnership trade agreement.

As Mike Moore put it at the Gateway to China summit: three years ago we were looking at blocs in Asia, and it was an Asia without Caucasians. Now that's changed. And it is a significant change.

For us here in New Zealand, those sorts of trade agreements the bilateral, regional, and plurilateral are always going to be Plan B. Plan A the Government's highest trade priority is the WTO negotiations, the Doha Development Agenda round.

I'd like to talk a little about latest developments in the WTO negotiations the July frameworks package we agreed in Geneva recently. What it was like in the negotiations themselves. And what it was that produced a successful outcome.

Members of the WTO were seeking agreement on how to structure the negotiations over the next year or two. And to lock in a number of key political decisions particularly the EU's commitment to end export subsidies for agriculture.

It might sound relatively simple. But we failed to get agreement at Cancun, Mexico this time last year.

Success in July involved careful preparation over many months, building agreement among a few key players, and taking that agreement to a wider grouping, building consensus again and so on.

There's a WTO principle that "nothing is agreed until it's all agreed". So even though the signs were reasonably good that we would get to a satisfactory outcome certainly better than before Cancun there was no guarantee of success until the very end.

The final stages involved two weeks of negotiations, with Ministers on the ground in the second week.

The key group for the WTO negotiations proper is an informal grouping known as the "Green Room". You start small, and then "multilateralise" the outcomes throughout the 147 members of the WTO.

This time the Green Room involved around 20 WTO Members. I was there with our Chief Trade Negotiator. Tim Groser, New Zealand's Ambassador was also there as Chair of the Agriculture Negotiations Agriculture being the key to this Round.

We're in the Green Room for a number of reasons and not because of our economic or trade might. We don't represent a regional grouping of WTO Members ? as the Africans, or Caribbeans, or ASEAN.

We're there because we are constructive, and sensible we bring ideas, and we help to build consensus. We're an active delegation in the WTO, across the board. We keep having to burnish these credentials, though, because as the organisation grows others keep jostling for a place in this "inner circle".

We need to be there because we have interests we cannot rely on others to defend. And the key to making a difference is to actually be in there where it counts.

The final session, where the deal was basically done, was the result of a marathon effort, with the negotiators on the go for anything up to 36 hours, which commenced at the conclusion of a regular working day. And it truly resembled a marathon it was hot and sweaty, people were tired, hungry, frazzled, and in some cases angry. In that environment you need stamina. At 4 in the morning a few may have had their mouths open, but their eyes were closed. That said, it was the only place to be.

A number of times it looked certain to fall apart but some key interventions helped keep it all together.

And in contrast to the Ministerial at Cancun last September we got there in the end.

We did so because of the perseverance of the individuals concerned in the Green Room. Because of the personal commitment of the EU negotiator, Pascal Lamy (who incidentally has just visited New Zealand) and his US counterpart Bob Zoellick. And because of wide recognition that the WTO as an organisation couldn't have another failure on its hands.

What is remarkable is that we actually got a pretty good result, certainly better than on offer at Cancun. It was met with a mixture of relief and satisfaction and all the commentary I have seen from fellow ministers has been positive about the result and the way it was achieved.

It'll take some fairly heavy negotiations over the next year or so to bring home the gains from that Geneva agreement, but I can assure you we'll be in at the coalface to achieve that.

I said before that bilateral, regional and plurilateral trade agreements were our Plan B and the WTO was Plan A.

Well, Plan B is looking quite good at the moment too.

Our negotiators are about to begin shortly the third round of negotiations with Thailand. We are still aiming for completion by the APEC Leaders meeting in Chile in November this year, although that is a tough deadline to meet. This negotiation presents some very difficult issues.

Earlier this month, we hosted the latest round of Pacific Three negotiations with Chile and Singapore, after a break in the process from late last year. We are aiming to conclude negotiations by April next year.

I attended an ASEAN meeting in Jakarta at the beginning of this month, and economic ministers there have endorsed a recommendation for leaders to initiate a trade agreement between the ASEAN countries and Australia and New Zealand in November. I am extremely pleased with this as it's something New Zealand has been working patiently and persistently towards for several years now.

While I was in Jakarta, I also reached agreement with the veteran trade minister Rafidah Aziz that New Zealand and Malaysia would undertake parallel studies with a view to deciding on the merits of a bilateral trade agreement negotiation next year. Those of you familiar with the history of this relationship will appreciate my sense of satisfaction. Previous remarks about perseverance apply in spades.

On China, we are presently undertaking a joint study, which we hope to complete by mid-November. Both sides are still aiming to start negotiations in the new year.

Even closer to home, we have the prospects of negotiations with our Pacific Island neighbours. The Pacific Agreement on Closer Economic Relations ( PACER) contains a provision under which we and Australia can enter into consultations leading to negotiations for a trade agreement, to match similar moves with other partners.

We are continuing to work with Mexico on a bilateral agreement, and talks with Hong Kong are still pending. Other partners are in the wings. For example, we have a delegation about to go Egypt, which is interested in ensuring a competitive market in dairy supplies for their 70 million people, once the European Union is obliged to stop subsidizing their surplus exports.

The United States is obviously top of our list of other possibilities. We have made clear our strong interest in negotiations on a trade agreement, and are continuing work to build our constituency in the US. But we recognise that any decisions on the part of the US Administration will have to await the elections in November.

Ladies and Gentlemen: bilateral agreements are extremely useful. Sometimes, they can bring swift improvements in trade access especially if you measure their progress against that of the WTO negotiations.

But the multilateral system is extremely important. It introduces the rule of law, not a privilege given out by grace or favour something vital for small countries such as ourselves or for least developed countries.

As Mike Moore says, rule of law is the definition of civilisation.

He tells the story of sitting in his office at the WTO, when a mate from one of the Balkan countries comes rushing in to tell him they're taking a neighbouring country to the WTO disputes panel this was such good news, he said.

Mike was a bit doubtful about that, but as his mate says: "it's much better than the way we normally settle our disputes".

The WTO disputes system is like a fuse box in your house, Mike says. If too much electricity goes through, the system fuses, but it can handle it, the house doesn't burn down.

So to recap on why is the multilateral system important - I'll give you a variation on the "three Rs":

· it is about Returns the world economy stand to gain most from genuine progress in multilateral trade liberalisation;

· it is about Rules establishing and sustaining a rules based system to govern global trade;

· and it is about Resolution the ability for large and small alike to defend their interests through enforcement of those rules.

Keeping all this in mind, why is the WTO system so important for New Zealand?

Basically because there is no other trading nation like us. We are a developed country. But we are small and a long way away from anyone else. And we happen to be best at producing things that are heavily protected all over the world. For these reasons a successful conclusion to the Doha Round is New Zealand's top trade priority.

If we can get an agreement between the WTO's 147 members, it will be of the most benefit to us, far and away more valuable than any other single trade agreement could be.

Ladies and Gentlemen: this Government does not believe it is "either-or" in international trade.

We don't have to make a choice between a multilateral trade agreement at the WTO, and bilateral and regional trade agreements elsewhere. We can have them both, but we do need to be focused on the main prize.

ENDS

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