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Clark: Address to the Makati Business Club

Rt Hon Helen Clark - Prime Minister of New Zealand

Address to the Makati Business Club

Manila Philippines

Thursday 16 March 2006

I would like to thank the Makati Business Club and the Australian-New Zealand Chamber of Commerce for co-hosting this meeting today, and for the support both organisations have long given to building strong trade links between New Zealand and the Philippines.

In that respect, the current export trade from New Zealand to the Philippines is cause for celebration. The Philippines now ranks as New Zealand’s eight largest export market, and twelfth largest two-way trade partner.

At the rate at which the Philippines’ population and economy are growing, I predict that this country will continue to be a very significant market for New Zealand’s food and beverage exports, and increasingly for our service exports.

My visit this week has had two central aspects: one, to participate in the Regional Interfaith Dialogue in Cebu; and, the second, to celebrate the fortieth year of New Zealand’s diplomatic relations with the Philippines, and to look at how we might develop the relationship further.

Trade is a very important part of the relationship, but it has other dimensions too. New Zealand has been a long term development partner of the Philippines, contributing particularly to geothermal development in earlier years, and then to forestry projects.

I recall visiting the Philippines nineteen years ago as Chair of our Parliament’s Foreign Affairs and Defence Committee seeing forestry project sites in Bukidnon, Negros, and Central Luzon.

These days, and for the future, we are focusing our programme on resource management, including eco-tourism; lifting the living standards of indigenous people; the peace process in the south of the country; and on governance and capacity building.

In the latter respect, I am announcing today a US$340,000 contribution to a project developed by the FAO and the Philippines Department of Agriculture to support the Philippines capacity to detect and diagnose outbreaks of avian flu and other avian diseases which may emerge in the future.

Yesterday I was able to visit an eco-tourism project in Bohol province, where the people on Pamilacan Island have been supported to develop a dolphin watching business which gives them a sustainable livelihood. It also has the great benefit of promoting conservation of the dolphins.

New Zealand Aid has, over a long period of time, also provided scholarships for Filipinos to study in New Zealand. I was delighted to meet some of the graduates yesterday, and to see that they were all in important careers here in the Philippines.

These days, New Zealand has a large international education sector receiving many tens of thousands of students from around the world.

Many come for short term English language training, which is not of particular relevance to the Philippines where English is so widely taught and understood.

Many Filipinos, however, are looking for opportunities to undertake university and polytechnic study offshore. While the preference has been to go to the United States, given the long historical ties, increasingly there is an interest in other English-speaking countries, like New Zealand.

Our polytechnics which participated in the Commonwealth Education Fair here last year were very pleased with the reception, and a good level of interest was shown in New Zealand education seminars and roadshows last year too.

Yesterday I witnessed the signing of a strategic partnership between a major New Zealand polytechnic, UCOL, and De La Salle University College of Saint Benilde, which will see exchanges of students between their respective design programmes.

Thus what began as a development relationship many years ago now has the prospect of becoming not only a two-way education relationship, but also, we hope, a significant trade in services.

This fits well with New Zealand’s aspiration to explore new and innovative ways to enhance our trading relationship.

Currently, more than seventy per cent of our exports here are in dairy products, but we are also seeing positive growth in non-traditional exports, including in other food and beverage products – for example, meat, seafood, and horticulture.

We also have exports in sectors as diverse as manufacturing, aviation, timber products, ICT, and consultancy services.

For New Zealand exporters, the Philippines market is a good market to enter with its generally liberalised trade and low tariff structure, and with no non-tariff barriers which affect New Zealand’s major export sectors.

For the future, we will be looking to increase the branded, high volume part of our food and beverage trade; to build on the strong business relationships which already exist between New Zealand timber suppliers and Philippines furniture companies; look for more opportunities for New Zealand‘s niche ICT companies in this very technology-savvy market; and take advantage of the many other opportunities which exist for high value good and services exports.

In the official talks with President Gloria Macapagal-Arroyo two days ago, I mentioned that tremendous dynamism has been injected into New Zealand’s relationships with other East Asian economies through the negotiation of free trade agreements.

Until six years ago, our only FTA was with Australia, signed in the early 1980s. Now we have FTAs with Singapore and Thailand; the Trans Pacific FTA covering New Zealand, Singapore, Chile, and Brunei comes into effect mid year; we are close to concluding an FTA with Malaysia; and we are up to the sixth round of FTA negotiations with China. New Zealand is the first Western country to enter such negotiations with China.

In our experience, such agreements and the process of negotiating them have led to significant spin-off effects for the wider bilateral relationships, including for education, scientific, and cultural collaboration.

In all these negotiations, New Zealand has set out to develop comprehensive, high quality FTAs, which cover goods and services, investment, government procurement, competition policy, and labour and the environment.

Helping New Zealand companies develop the potential of new export markets is New Zealand Trade and Enterprise (NZTE). NZTE works closely with New Zealand companies both onshore and offshore, providing market intelligence and business up-skilling for new exporters. NZTE also provides targeted assistance to sectors and firms with potential for rapid growth.

NZTE is playing a major role in ensuring that New Zealand companies are aware of the opportunities offered by the many new FTAs.

We have also designated 2007 as New Zealand’s Export Year in order to put new energy into increasing the value of our exports.

While we have no direct FTA negotiations with the Philippines, both our counties are involved in the ASEAN-CER FTA negotiations launched in Vientiane in 2004. At the ASEAN-Australia-New Zealand Commemorative Summit there, leaders called for a comprehensive agreement to be completed in two years and fully implemented within ten. Negotiations have got underway, with a fifth round to be held in New Zealand in early April. I hope that you, as business people, will see the benefits that will accrue from improved trading conditions under a regional FTA.

New Zealand values the contact it has with the Philippines through regional organisations, including APEC with its regional focus.

APEC members represent nearly half of the world’s total trade and sixty per cent of the world economy.

Within APEC, are fourteen of New Zealand’s top twenty export markets, accounting for over seventy per cent of our exports. We greatly value the opportunity offered by APEC to work together with countries from East Asia, Latin America, North America, and the Pacific, on trade and economic issues and the broader evolving APEC agenda.

We particularly value APEC’s role in helping build momentum in the WTO’s Doha Development Round negotiations and promoting FTA best practice; and in continuing to promote the Bogor Goals of free and open trade and investment.

Trade in goods and services is the lifeblood of the New Zealand economy. We need to export profitably to maintain our capacity to import the goods and services which underpin our high standard of living.

New Zealand has long suffered from a disadvantage in terms of its trade. The products in which we are most competitive – temperate livestock products – are subject to the most extreme forms of protection internationally.

Our ability to trade profitably hinges on both maintaining current market access and improving on it. That means working to eliminate the subsidies and tariff barriers which stand in the way of getting fair returns for our export trade.

Potentially the WTO Doha Round could deliver especially big gains to our primary sectors.

But for that to happen major changes are needed to the domestic policy settings in many countries, in particular in the developed countries which are major importers of agricultural products, but also protect their own production.

As well, the G20 group of major developing countries will need to come forward with better offers on market access for non agricultural goods and on services.

New Zealand is working with its partners in the Cairns Group of agricultural exporters to eliminate subsidies and tariff barriers, and improve market access. We know that it’s vital that this Round of negotiations succeeds, and the window of opportunity for that is narrow.

We hope that the Philippines, through its membership of the G20 grouping, will also be a strong voice for better offers on non-agricultural market access and services.

New Zealand also has a proposal which would achieve additional fisheries liberalisation through sectoral negotiations which we would like the Philippines to support.

Now, a few words on the New Zealand economy. New Zealand has enjoyed good economic growth over the last six years, averaging close to 3.8 per cent per annum.

Our growth rate has exceeded the OECD average, and has been higher than that of our top three trading partners, Australia, the United States, and Japan.

Our unemployment is the lowest in the OECD at 3.6 per cent, and we have a strong demand for skilled and unskilled labour.

At present, we are in a dip in the business cycle with growth expected to bottom out at 1.7 per cent in the year to March 2007. Given that at the bottom of the last business cycle, growth went to below zero, we see this rate as a considerable achievement.

Our key economic challenge is to lift the value of our goods and services. Our strategy is to achieve growth through innovation, leading us to prioritise education and skills, including through skilled migration; science, research, and development, and the rapid commercialisation of our innovations; the roles of design and branding in creating higher value; lifting productivity and business investment; and increasing the strength of our export sectors and international collaboration.

This strategy is premised on our open and competitive economy, with both strong governance and government fiscal management.

I am sure that the relationship with the Philippines will grow in the years ahead, not only through the trade links I have focused on today, but also as New Zealand becomes more involved in the emerging regional architecture.

This year, the Philippines becomes the chair of ASEAN, and as such will chair the second East Asia Summit. New Zealand regards this ASEAN-driven initiative as highly significant, and sees its potential to develop over time into a broader East Asian Community. We were pleased to take part in the first summit in Kuala Lumpur last December, and I look forward to returning to Cebu for the next summit this December.

Thank you for the interest you have shown in the relationship with New Zealand by your attendance today, and for the contribution many of those present are making to the New Zealand-Philippines partnership.

ENDS

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