Hon Phil Goff
Minister of Trade

17 July 2006
Media statement

Goff – NZ Institute Report Valuable Contribution to Economic Debate

Trade Minister Phil Goff has welcomed the New Zealand Institute Report 'The Flight of the Kiwi' as a valuable contribution to discussion on New Zealand's international economic engagement and competitiveness.

"The report is particularly useful in the context of the Government's current deliberations on economic transformation and Export year 2007," he said.

"David Skilling's report concurs with the Government's view that we must grow more globally competitive exporters as the main vehicle for facilitating New Zealand's economic transformation.

"The challenge is to overcome the twin obstacles of distance from markets and the relatively small size of both our economy and our firms.

"The Government agrees with the broad proposals the Report puts forward to
- Improve corporate strategy around international expansion
- Focus on firms which can achieve sustained international engagement and provide high level economic returns
- Develop high quality presence in international markets
- Integrate New Zealand firms into international people to people networks
- Attract Foreign Direct Investment and highly skilled people to New Zealand.

"However there are some areas where our views would diverge from those of the Report's authors", Phil Goff said.

"I would disagree with the suggestion that we put too much emphasis on the trade negotiations as against trade promotion.

"That is not sustained by the facts.

"The average annual cost for the last ten years of the Government's core multilateral and bilateral trade negotiations effort is actually quite modest – roughly ten million dollars.

"The benefits in return have been substantial. The WTO Uruguay Round alone as benefited New Zealand by around $900 billion a year (roughly 1% of GDP) and if successful the Doha Round could provide a similar dividend.

"Expenditure on trade promotion is much greater – roughly $180 million a year through NZTE on market development and trade promotion, and $100 million on domestic capability building.

"Moreover, a substantial part of MFAT's offshore work actively, daily and directly supports New Zealand businesses through trade facilitation intervention to overcome non-tariff barriers, supplying market intelligence and building valuable cultural and personal links.

"The Government does not simply rely on trade negotiations alone. Those negotiations are important to help open doors. But New Zealand companies then have to be motivated, ready and able to go through the door, with the encouragement and assistance of the Government.

The Report's analysis also needs to better reflect the importance of services which now make up 28% of New Zealand exports.

No mention is made of education export services for example, which returns New Zealand more than $1billion a year, and little is said of tourism, worth $17 billion a year.

"The Government would disagree with the Report's call to abandon NZTE's onshore capacity building efforts, which we believe are an essential part of preparing firms for international engagement.

"Nor would we see much value in revising Government structures in relation to global engagement which is proposed without adequate supporting arguments.

"We nevertheless welcome the contribution and analysis provided by the Report as a whole and the constructive engagement by Dr Skilling and the Institute with the Government and its agencies", Mr Goff said.

ENDS

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