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Sutton: Horticulture Export Authority Speech

19 July 2005

Hon Jim Sutton: Horticulture Export Authority report launch, Wellington

Chairman Brian Lynch, chief executive Janet Skilton, Ladies and Gentlemen, thank you for the invitation to speak today.

Your report is sobering reading.

It's a timely reminder that the international trade system is not fair, in many important respects.

Till the international trading system is truly comprehensive, and is based on rules fair to all traders, then we are going to run into problems.

Agricultural trade has the most tariffs, subsidies, quotas, and other barriers to trade of all the international markets.

It's because of that unfairness, that the WTO multilateral negotiations are so important to us.

It's a variation on the three R's:

· it is about Returns ? the world economy stand to gain most from maximizing productivity and efficiency through multilateral trade liberalisation;

· it is about Rules ? to govern global trade;

· and it is about Resolution ? the ability for large and small alike to seek fairness through enforcement of those rules.

We have to remember that while the WTO and its predecessor the GATT are about 50 years old, it was only in the last round of multilateral negotiations ? the Uruguay Round completed in 1994 ? that rules for agricultural trade were included for the first time. That round also created the binding disputes resolution process as well, along with the rules on the application of SPS measures.

The way things stand now, access for our products into other countries' markets is a privilege, not a right. We get it on sufferance. In some cases, we have it only because generations of our young men fought, shed blood, and died on foreign soils and those countries felt at the time we were negotiating access that they still owed us something for that. But those feelings fade over time.

Even from our closest friends and neighbours, people with whom we have the most mature and comprehensive trade agreement in the world, want to bar our products.

There was no formal dispute settlement process provided in the CER trade agreement, and there have been a few times recently where I have regretted that.

There is a multilateral system to resolve some sorts of disputes between trading nations, and we are using that.

Last month, we took the unprecedented step of listing a complaint against Australia at the World Trade Organisation's quarantine (SPS) committee. The New Zealand statement was very clear, and delivered a strong message. It was supported by other countries as well, including from the two heavy hitters the United States and the European Union.

It was timed to coincide with the WTO implementation panel ruling on Japan apples, which helpfully demolished the legal pretext for almost all the barriers to trade in apples, trotted out by Australia in their earlier aborted import risk assessment.

WTO members, including Australia, were left in no doubt about New Zealand's frustration with this 84 year-old dispute and the seriousness of our intentions to resolve it.

The significance of this step clearly registered with other WTO members ? this is the first time we have placed an issue of concern with Australia on the agenda of any WTO committee, and only the fourth time we have raised an issue under this category in the SPS committee.

The apple concerns will now remain on the SPS agenda till resolved.

If a mutually acceptable solution cannot be reached, further options for resolving this long-standing issue cannot be ruled out.

I know this does not go far enough for some apple growers, but I can assure you, even if we were to kick over the table in the Cairns Group and boycott CER consultations, as some have advocated, that would not sell a single apple into Australia.

Australia tell us they are working through their quarantine process to design an import health standard for our apples and this should be available soon. We are keeping the pressure on them and they will be held to their word, and the word of their Prime Minister, that the issue will be resolved on the basis of science.

The World Trade Organisation negotiations are this Government's top trade priority.

At the moment, it's looking a bit grim.

Last week, I went to Dalian, China to attend what they call "a mini-ministerial", a meeting roughly representative of the WTO membership, which tries to thrash out solutions that might be acceptable to the whole 148-economy membership.

It's one of the last such mini-ministerial meetings before the full ministerial meeting in Hong Kong in December.

Unfortunately, it was not one of the more successful mini-ministerials. And we're running out of time to find solutions. I am by nature an optimistic person ? you have to be to be a trade minister ? so I am hopeful that solutions can be found. As some longtime trade commentators observe, trade rounds need a crisis to force some members to focus appropriately.

And there's also plan B ? our bilateral and other trade agreements. Yesterday, I signed the successfully concluded "trans-Pacific strategic closer economic partnership" agreement with the ambassadors of Singapore and Chile. Brunei will be signing next month.

This is the third successful trade agreement signed by the Labour-Progressive Government. We have another three in negotiation at the moment ? with China, ASEAN, and Malaysia.

This Government is committed to ensuring your interests are able to be realized.

Ladies and Gentlemen: as this report highlights, tariffs and other trade barriers are costing our horticulture industry a lot. But the future is not all grim.

We are making progress with bilateral trade agreements that have real gains for the fruit and vegetable export industry, such as the agreement with Thailand.

And bilaterally, we are able to make way against some barriers ? for example, we have negotiated a six month delay in the implementation of a proposed screening system in Thailand that would have impacted on our exports there. I'm confident that within the next six months that issue will be resolved satisfactorily.

In fact, the horticulture sector is a big winner from the Thai CEP, and I am advised that already extra trade is occurring.

And we've managed to convince Japan to cut back the fumigation system they had in place, which was costing our industry up to $10 million a year.

So there are gains being made. They may be piecemeal compared to a successful, but to organic kiwifruit producers getting their product onto the Japanese market with fumigation and loss of organic status may be the difference between boom and bust.

As Agriculture Minister and Trade Negotiations Minister, I can assure you this Government has raised the energy input into trade facilitation to unprecedented levels, and will continue to do everything it can to ensure that you have access to vital international markets.

Thank you.


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