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Hon Jim Sutton - CEOs Club of Vision Manawatu


Hon Jim Sutton
Speech Notes
21 July 2005

CEOs Club of Vision Manawatu meeting, Palmerston North


Ladies and Gentlemen, thank you for the invitation to speak today.

In about two months' time, we as a nation have a big choice ahead of us: we elect a government to lead us. That choice will have huge ramifications for our future.

As a minister in the Labour-Progressive Government, I am proud of what this Government has achieved over the past six years. We have worked to encourage a nation that has pride in its culture and traditions, a nation where there are opportunities for growth, where innovation and education are prized.

My portfolios ? particularly those of agriculture, biosecurity, and trade negotiations ? are not particularly high profile. Perhaps that's because of the generally good news nature of those areas?

It's unfortunate in some ways, because primary industry is the backbone of our economy, providing more than two-thirds of our merchandise goods exports ? and trade negotiations are vital to this.

Without market access, we cannot specialize in those things we are particularly good at. Without specialization, we cannot achieve world clase levels of productivity. Without world class levels of productivity, we could not afford our world class quality of life.

Some of my fellow MPs just don't get it.

There are some politicians who think that we have access to international markets as of right. That's dead wrong ? our access is a privilege, and it's one we have to fight hard to maintain.

The international trade system is not fair, in many important respects.

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

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

Even many otherwise free-trading countries will stop at nothing to avoid exposing their farm businesses to anything resembling fair competition. Consumers and taxpayers are routinely fleeced, to maintain farming practices which have been obsolete for decades.

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 over 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 a binding disputes resolution process as well, along with 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, 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 exclude many of our products. Not just apples either.

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. The WTO and its rules-based trading system is very important to small nations such as ourselves. On our own, we can't bully big countries to trade properly ? we need that disputes system, the rule of law.

We've used it successfully to combat unjustified tariff increases on our lamb exports to the United States, an illegal milk export subsidy scheme in Canada, and if the new import health standard for apples is as shonky and unscientific as the last one proposed by Canberra, we're hopeful it will enable our apples to be exported to Australia.

As well as primary industry providing much of our merchandise exports, it's also a key part of international trade negotiations.

In recent times, we have taken to appointing agricultural leaders as special diplomats to help bring an "ordinary farmer" perspective to discussions at international forums, and to build bridges of understanding with farming communities around the world. We call this role the "Special Agricultural Trade Envoy".

Today, I'd like to announce the appointment of a new person to that role, someone that many of you in the lower North Island region will know: Alistair Polson.

The Special Agricultural Trade Envoy has had an important role to play in promoting New Zealand's efforts to reform international agricultural trade. The concept of "farming without subsidies" is associated with New Zealand and globally understood to a significant extent through the good work of Brian Chamberlin and subsequent Special Agricultural Trade Envoys.

Alistair Polson comes into the role at a particularly important time.

Promoting New Zealand's interests in farm trade is never easy. But with the WTO agriculture negotiations entering the critical phase we need to ensure we get alongside key farm lobbies and policy makers overseas. Alistair Polson has excellent credentials for this role.

He will lobby overseas farmers and farm groups, attend conferences, deliver speeches and encourage foreign media to report New Zealand perspectives. He will also target consumers, taxpayers and environmentalists.

The position is a long-standing one. Previous envoys include Malcolm Bailey and Graham Fraser.

Mr Polson, from Wanganui, is highly regarded and experienced in the agriculture sector both in New Zealand and overseas.

Ladies and Gentlemen: The WTO negotiations are the top trade priority for this Government, because the biggest gains can be made there.

But we also have a Plan B: bilateral and other trade agreements.

On Monday, I signed 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, Malaysia, and the 10 member economies of ASEAN. We are the first developed economy to open negotiations with China ? a deal potentially two to three times more valuable to New Zealand than a similar one with the United States, according to an Otago University academic.

It's no coincidence that we've managed to do this in six years of Government, while the previous administration only started one and completed none in nine years of Government.

As a Government, our foreign policy ? and our trade policy ? is all about reaching out, forming partnerships, and working for win-win relationships ? incidentally, much the same as our work with industry sectors and regions here in New Zealand. And that approach is bearing fruit both here and abroad.

We have a clear vision of ourselves as part of a thriving, dynamic Asia-Pacific region.

Monday's signing ceremony was part of that ? the building of bridges across the Pacific to Chile, one of the most important seaboard nations of South America, and up to Asia, to Singapore and Brunei, significant players in Asia.

It's a vision that embraces not only trade in goods, but also the trade in services, part of the people-to-people links that New Zealand is so good at.

I think Business NZ head Phil O'Reilly was right when he said that the Trans-Pacific Strategic Closer Economic Partnership deal shows New Zealand extending its influence in significant new markets, and is notable in including liberalised trade in services. New Zealand's agricultural, technical and other expertise will find new markets as a result.

Services is the fastest growing part of our export economy.

As well as forging relationships with new markets, we are not neglecting our traditional allies. We continue to lobby for a trade agreement with the United States, and we work continually to improve and deepen the CER agreement with Australia, the world's most mature and comprehensive trade agreement.

However, for me personally as trade minister, I must say I find the prospects of a trade agreement with China to be the most exciting.

China is already our fourth largest trading relationship in goods. Our exports to China have trebled over the past 10 years to now stand at NZ$1.58 billion. Plus maybe another billion in services. China has become incredibly important to us in the services area also. Chinese account for almost half the number of overseas students studying in New Zealand, and China is our 6th largest source of overseas visitors. Imports have grown rapidly also over this period and now stand at just over $3 billion. As around much of the world, competition with China has stimulated productivity and innovation in our manufacturing sector, helping to keep down costs and raise standards of living.

China remains our largest market for wool - but wool has now been overtaken by dairy products as our major export item to China. The range of other products exported to China has grown enormously, and in many of these areas we are barely scratching the surface of the potential.

It is because of this obvious potential that the Government is giving such priority to the relationship with China.

I have made numerous visits to China, visiting many different regions ? most recently to Dalian, as part of the WTO negotiations.

The scale of the country and the dynamism of its economy are astounding. The Prime Minister and other New Zealand Ministers have also visited in recent years. These visits have been reciprocated with Chinese official visits here.

It was an agreement between Prime Minister Helen Clark and China's President Hu Jintao ? in one of his first overseas trips since becoming President ? that kicked off our negotiations of a trade agreement with China when he was here two years ago. Since then, we have moved quickly, and have completed three rounds of preliminary negotiations.

There is still a long way to go, however, before we see a result.

This is clearly an exciting prospect which I am convinced will on balance be of great benefit to New Zealand.

This progress would not have been possible without the support and active cooperation that we have received from the business community and other organisations such as the CTU. The Government expects the consultations to be ongoing, and to continue throughout the negotiation process.

The Government is also aware that there are some manufacturers and others who have concerns about the implications of such a trade agreement for themselves.

I can assure those with concerns that full attention is being given to these.

There are some who think we are wrong to negotiate a trade deal with China, because of fears it would devastate our economy when "they" get open access to our market.

But I would like to point out that we are a relatively open economy. The gate has already been opened, by ourselves and for our own benefit. We cannot protect our economy from the effects of Chinese growth by blocking a trade agreement. Rather, we need to work to get our exporters as much open access to the Chinese market as we can negotiate, so that they have the opportunities to share in that growth.

Of course, not all concerns are on our side. Some Chinese farmers are expressing concern about the possibility of increased competition from New Zealand. We are analysing these concerns carefully also. With only 2.5 per cent of the world's dairy production and no way to get fresh milk to China, I can assure China, and Chinese farmers, that we should not be considered a threat. Rather we play a role in China, which is complementary to their domestic production.

In the dairy area, for example, a combination of domestic milk production and complementary imports from countries such as New Zealand will be needed to satisfy the burgeoning demand for dairy products in China. One can see the impact of improving nutrition in the performance of Chinese Olympic athletes ? and the height of the office worker on the streets of Chinese cities!

While the prospect of an FTA with China is an exciting one, this Government's trade Plan A is still the WTO's Doha round of multilateral negotiations. It is only through this that New Zealand's Number One goal of eliminating export subsidies on agriculture can be a real prospect.

Ladies and Gentlemen: 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.

ENDS

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