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The New Zealand / Turkish Economic Relationship

Hon Phil Goff
Minister of Trade

15 December 2006

Speech Notes

The New Zealand / Turkish Economic Relationship
Address to Istanbul Business Forum, 11 December 2006

It is a pleasure to join you at the Istanbul Business Forum this morning, to discuss the New Zealand/Turkish economic relationship.

When I look at the New Zealand/Turkısh relationship, two features stand out. The first, of course, is our shared experiences in Gallipoli. The second is the challenge both countries face in adjusting to, and meeting, the challenges of globalisation.

91 years ago, Turkish and New Zealand soldiers faced each other as foes on the battlefields of Gallipoli. It was a seminal event for both countries.

Over 2,700 New Zealand troops were killed at Gallipoli, and nearly 5,000 wounded – a huge loss for a country of just under one million people at the time.

And, while the Turkish army triumphed - against significant odds – it was at horrific cost. Turkish losses were over 250,000 killed and wounded by the end of the campaign.

For New Zealand our experience at Gallipoli led to a fierce determination to control our destiny as an independent nation.

For Turkey, it marked the beginning of the path to modern nationhood.

The story may have ended in 1915, if it were it not for New Zealanders' deep commitment to remembering, and marking, the sacrifice at Gallipoli that all New Zealanders feel deeply; and if it were it not for the generous, open-hearted way in which Ataturk and the Turkish people responded to that commitment.

For many years, New Zealanders have been travelling to Turkey to visit the memorials to the fallen New Zealand soldiers that Turkey hosts at the magnificent Gallipoli Peace Park.

We commemorate our dead alongside our Turkish brothers and sisters because, as Attaturk said, there is no difference now between the Johnies and the Mehmets, they are all Turkey’s sons where they lie, side by side.

Ataturk, himself a commander in the battle, drew inspiration from Gallipoli. He also realised that to survive and compete Turkey had to change - to develop the institutions and outlook that would enable it to meet the challenge of the outside world.

The opportunity for a closer relationship has also developed at the political level, between New Zealand ministers visiting Gallipoli and their Turkish counterparts and has also encouraged a better awareness of what each country has to offer the other, and a determination to see that potential exploited.

In 1990, in recognition of the potential in the bilateral relationship, we established a Joint Commission for Economic and Technical Cooperation. That was followed a few years later by the opening of the Turkish embassy in Wellington and the New Zealand embassy in Ankara.

Economic ties between Turkey and New Zealand have developed gradually. New Zealand’s agricultural production fed Turkey’s processing industries, especially in textiles.

In 1995, Turkey was New Zealand’s 20th largest export market and bilateral trade was worth $150 million. Hides and skins dominated the trade, followed by wool.

In the late 90s, however, that trade fell away because of the Turkish financial and economic crisis, and changes in Eastern Europe. Bilateral trade has recently recovered to earlier levels, dominated now by Turkish commercial vehicles.

Last year, the New Zealand Prime Minister Helen Clark visited Turkey. This was followed at the end of the year by an historic visit to New Zealand by Prime Minister Erdogan, at the head of a large business delegation coordinated by DEIK and TOBB.

From these visits, both leaders identified the potential to take the bilateral relationship to a new level, including and not least, the trade in goods and services.

Prime Minister Erdogan was struck, in particular, by the strength of New Zealand’s agricultural sector; our high-quality and cost-competitive education opportunities for overseas students; and our technological expertise in areas like seismic engineering, all of which respond to pressing needs felt by Turkey today.

This year, the volume of ministerial contacts has been maintained, with visits to New Zealand by Turkey’s Agriculture and Education ministers.

Agriculture

From our perspective there are several sectors that provide a ready basis for an expansion in our economic relationship.

New Zealand is a world-class agricultural producer and is the biggest exporter of dairy products in the world. Our environmental standards are high and our sector operates in full market conditions, without production subsidies or other forms of protection.

This makes our agricultural producers sensitive to changes in the global market, which in turn helps ensure that our products reflect consumer tastes and global quality standards. Our experiences in this area could be of interest to Turkey as it looks to reform its agricultural sector.

I know, for example, that Turkey is keen to promote foreign investment in Turkish state-owned farms. Major New Zealand agricultural companies such as Fonterra in the dairy sector have successfully developed collaborative joint ventures in a number of countries.

Similar joint ventures could be used to market products to countries surrounding Turkey. We certainly see the potential for investment of money, expertise and technology in Turkish agriculture and agricultural processing as an entry point to Turkey’s region.

Education

Education is another sector that has potential for enhanced cooperation. Some two million Turkish students take university entrance examinations each year.

Due, however, to capacity constraints not all these students can study in Turkey’s universities. As many as 70,000 Turkish students head overseas to pursue tertiary studies every year.

New Zealand’s eight state-owned universities offer excellent opportunities. Our academic standards are rigorous. Our qualifications are well regarded and are internationally recognised.

A recent Australian Education International Research Study compared New Zealand with Australia, UK, Canada, and the US and concluded that New Zealand had the lowest cost of living of the five countries surveyed, and overall the lowest tuition fees.

From this year, the New Zealand Government has instituted a policy that enables international PhD students to pay the same fees as New Zealand domestic students. Some Turkish post-graduate students are now studying in New Zealand, but we want to see more.

Turkey's new international postgraduate scholarship scheme will allow up to 1000 Turkish students to study abroad each year.

We were pleased that up to 100 places in this scheme have been allocated to New Zealand for study in forestry, agriculture and science.

Seismic Engineering

New Zealand, like Turkey, is prone to earthquakes. Developing expertise to enhance the safety of our buildings and other structures has been an important priority.
We therefore have much in the way of expertise to offer to mitigate the risks posed by seismic activity in Turkey.
Since 2003 New Zealand company Beca, a member of the Earthquake Engineering NZ cluster (EENZ) has been involved in seismic retrofitting design for sensitive buildings in Turkey.
Beca was successful in winning, as lead partner with Turkish consulting engineers Prota, a contract for a World Bank feasibility study for strengthening apartment buildings in Bakirkoy (Istanbul).
The study was a prelude to the Istanbul Seismic Risk Mitigation and Emergency Preparedness Project that from this year will see over 640 buildings, including schools and hospitals retrofitted. This is an excellent example of how we can pool our skills to the benefit of both countries. We hope there will be further opportunities for this kind of cooperation.
Other Measures

Our Prime Ministers have also recognised that we can help improve the environment for business cooperation through a range of bilateral measures.

Minimising disincentives to cross-border trade and investment is an important step towards promoting greater investment and accordingly we have agreed to begin negotiations next year towards an agreement to avoid double taxation.
Both governments agree that improved air services can make it easier for business, tourism and other people-to-people communications links to develop.
Yesterday saw the announcement that Turkish Airlines would join the Star Alliance, of which Air New Zealand was a founding member.
This development should lead to enhanced connections between Turkey and New Zealand – and our respective regions.
Tomorrow I intend to discuss the opportunity for a bilateral air services agreement with my ministerial counterpart in Ankara.
Working Holiday Schemes are another useful tool for building relationships. They give young people an opportunity of a self-supporting extended holiday. As such, we have found them invaluable in developing knowledge and familiarity between New Zealanders and other peoples' and cultures.
We’ve been in discussions with Turkey this year for putting in place such a scheme and I’m pleased that negotiations look likely to be concluded soon.
There would be a great many more products we could offer Turkey if we did not face significant barriers in getting them into the Turkish market: our dairy and meat exporters face tariffs of up to 235% on their products.
Turkey enjoys good access to the New Zealand market with its low tariff structure. New Zealand’s imports from Turkey in the year to June 2006 were worth $99 million. There is, in my view, scope to improve this aspect of the relationship also.

New Zealand applauds, and fully supports, Turkey's bid for accession to the EU.

We have done so consistently in our six monthly foreign policy consultations with the EU and our Prime Minister did so explicitly in her discussions with Angela Merkel last month.

The economic reforms being undertaken by Turkey as part of its EU accession process are bringing benefits in terms of business growth, trade and investment.

And New Zealand hopes that progressive reform of the agricultural sector will open up new opportunities in the Turkish market for products New Zealand is particularly good at producing.

While half of Turkey’s trade is with countries beyond the EU, Turkey still needs to look for wider trading opportunities. New Zealand offers prospects in this regard.

Tomorrow, at the Joint Trade and Economic Commission meeting, I intend to discuss further ways in which we can enhance economic cooperation. I am proposing a stock-take of the bilateral trade and economic relationship undertaken to look at ways of increasing the economic links between our two countries.

We’ve sought the assistance of the Turkish private sector, to provide a commercial perspective on where the best opportunities lie. We hope that will be completed next year.

I understand there are plans underway for a delegation of Turkish officials to visit New Zealand next year to promote investment opportunities in Turkey. This will provide a useful opportunity for our businesses to hear more about the options available. We welcome such engagement.

Thank you for the chance to meet with you today. I look forward to hearing from you, and your questions and comments.

ENDS

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