Rt Hon Winston Peters
Minister of Foreign Affairs

25 May 2007
Speech Notes

NZ and emerging Asian economic integration
Speech to the Shanghai Forum,
Crowne Plaza Fudan,
Shanghai, China

President of Fudan University, Professor Wang Shenghong; Chair of the Shanghai Forum Organising Committee, Chancellor Qin Shaode; President of Jiaotong University, President Zhang Jie; distinguished guests, ladies and gentlemen.

It is a great pleasure to be invited to address the Shanghai Forum.

The organisers are to be congratulated for bringing together such a leading group of academic, business and political figures from across the region to consider the impact of increasing regionalisation and international connectedness.

East Asia does indeed face significant choices in the areas that are the Forum’s focus this year: cooperation on energy supplies, monetary and financial policies, and economic integration.

While there may be no easy answers to these issues, one thing is for certain – a collective effort is essential.

We are all aware that how we respond to these challenges will determine how the economic success story of East Asia – clearly the most important global economic development of the last 50 years – evolves over the next 50 years and beyond.

How these issues are handled is vital for New Zealand, which is reliant on a dynamic Asia Pacific region, as it is for the rest of the world.

Shanghai, China’s commercial and economic powerhouse, provides a particularly appropriate stage for this Forum. The energy and vitality in this city reflects the spirit that pervades the region.

Indeed New Zealand is pleased to have been one of the first countries to announce its involvement in World Expo 2010, an event that will highlight the pivotal role of both China and Shanghai in Asia's economic development.

In the context of all that has been achieved in East Asia in recent years, China’s re-emergence as a global economic power is without doubt a defining moment in world history.

It has set an example to the rest of us by raising the living standards of hundreds of millions of its people through concerted effort and reformist zeal.

Of course China's startling and impressive economic record, which shows no sign of abating, has been a vital engine of growth for the surrounding Asia-Pacific region and beyond.

We are all beneficiaries of what China has achieved and will achieve in the future.

Equally, we all have a shared interest in ensuring that the region’s economic development is sustained, and able to evolve to take full advantage of the linkages of the modern global economy.

This is the challenge that the Shanghai Forum has the courage to address.

The issue of Asian economic integration and cooperation, and the architecture that is emerging to support this, is one of particular relevant and important to New Zealand.

We stand on the southern edge of the Asia-Pacific rim. Our time zone heralds the beginning of the working day through East Asia.

New Zealanders can now fly direct from Auckland to Shanghai, and equally, you can all reach New Zealand with similar ease – we are now only eleven hours apart.

New Zealand’s livelihood and prosperity has always been dependent on international linkages. We are a domestic market of a little over four million people, so we must rely on international trade and investment to fuel our economy.

In past decades, New Zealand's economy was bound to the United Kingdom as a legacy of history. The UK and the European Union remain important economic partners for us, but today it is the dynamic economies of East Asia that have a particularly significant impact on our economy.

You may perhaps not be aware of the extent of New Zealand’s ties with Asia.

The wider Asia-Pacific region now accounts for 70 per cent of our imports and exports; over 60 per cent of our foreign direct investment, and it provides eight of our top ten trading partners.

To qualify this even further, six of our top ten trading partners are from East Asia, and this is also reflected in trade in services, including tourism and tertiary education.

So it is accurate to state that Asia is our present and our future.

New Zealand is absolutely committed to playing a full role in the region.

That commitment is reflected in our strong and longstanding ties with individual countries, and increasingly by actively demonstrating our worth as a sincere and valuable player in the region's institutions.

The East Asia Summit – which brings together the countries of North and South East Asia along with New Zealand, Australia and India – is particularly important for New Zealand.

It is an emerging regional body of strategic significance, and we bring to it an objective and unique perspective.

While the first Summit in Kuala Lumpur saw the grouping in its establishment phase, the outcomes of the second summit in Cebu held earlier this year were much more apparent.

Most importantly, and of direct relevance to the theme of the Shanghai Forum this year, were two agreements: the Cebu Declaration on East Asian Energy Security, and the agreement to launch a Track Two study on a Summit-wide Comprehensive Economic Partnership for East Asia.

Also of note was the welcome extended to Japan's proposal for an Economic Research Institute for ASEAN and East Asia.

The energy security declaration was strongly supported by New Zealand's Prime Minister Helen Clark, and even more so the prominent place it gave to the threat posed by climate change and the need to take concrete steps to combat it.

The New Zealand government has identified sustainability as being at the top of its agenda. It is committed to working with others to identify innovative ways in which the threat of climate change can be addressed.

So we were very pleased to have such strong recognition from Summit leaders for the need to bolster the development of renewable energy sources. This is essential to both ensure the sustainability of the region's economic growth, and to protect the environment and combat climate change.

In setting these formidable goals on energy, the Leaders’ Declaration also recognised that to achieve them we must work together.

Regional cooperation makes sense, as these problems affect us all and the technological advances that will be key to solving them can best be developed through collaborative efforts.

The agreement to study an East Asia Economic Partnership was also significant. Such a study will enhance understanding of the potential benefits of a region-wide trading bloc, and provide leaders with new options to enhance the region’s economic prosperity and cohesion.

There is little doubt that we are operating in an increasingly integrated region.

There are initiatives underway with ASEAN + 1 processes, as well as ASEAN + 3. The Economic Partnership is an additional initiative.

New Zealand strongly believes these processes, moving in parallel, can be mutually supportive and mutually reinforcing.

Indeed, the Chairman’s statement at Cebu underscored the value of the East Asia Summit by stressing it “complements other existing regional mechanisms, including the ASEAN dialogue process, the ASEAN + 3 process, the ARF, and APEC in community building efforts”.

Activities are already well under way for the third East Asia Summit in Singapore, including work in all five priority areas for cooperation. This demonstrates the excellent state of the Summit grouping, and bodes well for its future success.

Let us turn now to ASEAN – the Association of South East Asian Nations – which was the first significant effort at regional integration in Asia.

Over its 40-year history, ASEAN has moved from a difficult and divisive cold war environment to a grouping that encompasses all of the countries in South East Asia.

It has made considerable progress in achieving economic and political cooperation amongst its members, and in reaching out to its neighbours to the north and the south.

New Zealand values its long-standing status as an ASEAN dialogue partner for over 30 years. In recent years, we acceded to the ASEAN Treaty of Amity and Cooperation.

New Zealand and Australia are in the process of negotiating a Free Trade agreement with ASEAN. China, Japan and Korea are also negotiating similar agreements.

The ASEAN +3 mechanism, involving China, Japan and Korea – initiated during the Asian Financial Crisis in 1997 – has also been successful in driving deeper regional integration, particularly since the leaders' declaration of 1999. Out of this statement grew much of what we see today.

In the broader Asia-Pacific region, the most mature regional forum is APEC of which both New Zealand and China are members. It is an important grouping for all of us, as trade between APEC economies is growing at a faster rate than that between other regional fora.

It also has an impressive track record in terms of promoting a more open, transparent and prosperous region.

Since its inception, tariffs have been reduced within the APEC family from an average level of 17 per cent in 1989 to around five per cent today. That is a very significant achievement and the benefits of this increased openness are evident for us all to see.

Real GDP growth within the APEC region has increased by 46 per cent since 1989 – compared to growth in the rest of the world of 36 per cent.

More importantly, real per capita GDP growth in APEC in this period has increased an impressive 26 per cent compared to eight per cent for the rest of the world. That represents a lot less people in poverty than was previously the case.

APEC too, like the East Asia Summit, has put energy security and climate change on its agenda, and this is likely to be a key issue for Leaders when they meet this September in Sydney, Australia.

Equally – to add to the regional integration mosaic – APEC is also studying the prospects, as a long-term goal, of an Asia Pacific Free Trade Agreement; an initiative to be promoted alongside the East Asia Summit’s own economic partnership proposal.

Of equal importance is APEC’s new agenda looking increasingly at behind-the-border issues relating to structural reform.

Greater regional integration can certainly help boost connectivity and productivity, but growth in the region will continue to be driven significantly by the nature and efficiency of our respective domestic regulatory environments.

Structural reform lies at the heart of this and APEC has recently embraced a new work programme in this area, which bodes well for APEC and the region’s future.

No one needs to be told that this region’s future is bright. But the degree and speed of its ultimate achievements will depend on the success of regional efforts across the areas this Forum is focused on: a common market, energy, finance and currency.

Looking back at what has been achieved in the 40 years since ASEAN led the way towards regional cooperation, there can be no doubt that the region will make the most of the opportunities, and meet the challenges, that lie before it.

New Zealand is committed to playing a full part in those efforts, and in finding the solutions that will see the region fulfil its potential in the 21st Century.

ENDS

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