John Key at Japan New Zealand Business Council Conference
Rt Hon John Key
8 November 2012
Speech to Japan New Zealand Business Council Conference
Konnichiwa. Good afternoon.
It’s a pleasure to be here at your conference.
I want to thank the members of the Japan New Zealand Business Council – on both sides of the Pacific – for all the good work you do in developing trade relations, and in helping our countries get to know each other even better.
In particular I want to acknowledge Ryu Yano, the Chair of the Japan side of the Council, and Chair of Sumitomo Forestry, who has done so much for New Zealand-Japan relations over many years.
I understand Yano-san has attended almost all of these annual gatherings since the mid-1970s, which shows how committed he is to the Japan-New Zealand relationship.
He richly deserves the honours he has received this year – an honorary MNZM from New Zealand, and the Japanese Medal of Honour with Blue Ribbon.
Ladies and Gentlemen, this year, as you know, we are celebrating the 60th anniversary of diplomatic relations between New Zealand and Japan.
That is why I made a special visit to Japan in September on my way home from the APEC Leaders’ Meeting in Vladivostock.
Prime Minister Noda and I had a good opportunity to reflect on the warmth of our countries’ relationship over six decades.
And we had the opportunity to talk about the future, and the potential for Japan and New Zealand to do much more together.
Part of that is political – our governments will continue to work together in a number of areas.
But much more is at a private level – through increased trade, investment and business partnerships, both here, in Japan, and together in other countries.
That is why the work you do through the Business Council is so important.
While I was in Japan I was also privileged to go to Tohoku to attend a memorial service to commemorate the victims of the devastating earthquake and tsunami that struck in March last year.
I took with me 11 school children from the Christchurch area, who themselves had experienced a great natural disaster, less than a month before Japan’s.
We went to pay our respects to the people of Japan who had suffered so badly, to reflect on their loss, but also to see the work that has been undertaken in Sendai as they attempt to restore their community after such an enormous disaster.
And we went there to show that there is great hope in the future through our young people. They will be the future of both our countries.
At all levels, New Zealand’s relationship with Japan is one of our strongest and warmest.
I have felt that warmth whenever I have gone to Japan, whether as Prime Minister or earlier as a private citizen.
And I hope our Japanese friends feel the same when they come to New Zealand.
Japan is one of our most important trading partners.
It’s our fourth-largest trading partner and our fourth-largest source of foreign investment.
Japanese investment has been very beneficial for New Zealand over a number of decades. It has played a vital role, for example, in developing the forestry and fishing industries.
Japanese investors have been here for the long term, have been good employers and good corporate citizens.
At a political level, New Zealand and Japan share democratic values and have a joint commitment to peace and prosperity in the Asia-Pacific region.
Defence and security ties between Japan and New Zealand have developed significantly over recent years.
And we welcome the contribution Japan makes in the Pacific, and across the world, as a major aid donor.
But I think, more than anything, there is a remarkable level of friendship and understanding between everyday New Zealanders and Japanese.
Almost every city in New Zealand has a sister city in Japan, as do many smaller towns and regions.
Our schools continue to produce a large number of Japanese language speakers and Japan enthusiasts.
Many high-school students go on exchanges to Japan, as do Japanese students to New Zealand.
Those are experiences that stay in people’s minds for the rest of their lives.
And tourism, of course, has brought many Japanese and New Zealanders to each other’s country.
New Zealanders also feel a special connection to Japan as a fellow rugby nation.
Japanese and New Zealand players regularly compete against each other, and I note that the Japanese halfback Tanaka was last week named in the Highlanders squad for next year’s Super 15.
We look forward, of course, to Japan's hosting of the Rugby World Cup in 2019.
We in New Zealand have found that hosting the tournament correlates strongly with winning it, so I wish the Japanese team all the best.
The point I am making is that our two countries have a very warm relationship.
And it is a relationship that is of huge importance to New Zealand.
I want to talk in a bit more detail now about our trade relationship.
As I said before, Japan has, since the early 1960s, been one of New Zealand’s most important trading partners.
New Zealand is a net food exporter, while Japan is the world’s largest net food importer. Our two economies therefore have a natural fit.
New Zealand exports of meat, dairy products, fish, fruit and vegetables have been entering the Japanese market for many years, often through well-established relationships between New Zealand and Japanese firms.
The Japanese market sets very high standards for food, and New Zealand products enjoy the trust and satisfaction of Japanese consumers.
For our part, New Zealand has been a very receptive market for Japanese products, including electronics, vehicles and industrial goods.
And New Zealand is increasingly becoming a partner with Japan in the development of deeper business relationships.
But no relationship, no matter how strong, can afford to stand still.
Twenty years ago, our two-way trade with Japan was around ten times greater than our two-way trade with China.
Last year it was half our trade with China.
Part of that change is a story about China’s impressive growth as it continues to develop.
But it’s equally a story about trade access and openness.
Since 2008, when we signed a free trade agreement with China, our exports to that country have trebled.
In terms of imports, China has now overtaken Australia as New Zealand’s biggest source of imported goods.
On the back of our free trade agreement, trade with China is booming.
Within the Asia-Pacific region, we also have long-standing free trade agreements with Australia and Singapore, and more recent FTAs with Thailand, ASEAN, Malaysia and Hong Kong.
We are in negotiations with South Korea, Russia, India, and with a number of countries, including the United States, through the Trans-Pacific Partnership.
I recognise that New Zealand on its own is not a major market for Japan. We are only a small country.
But my point is that there is a raft of activity on free trade around the Asia-Pacific region that Japan risks missing out on.
That’s obviously a matter for Japan itself to determine, bearing in mind its own domestic issues.
But for New Zealand’s part, we would welcome the opportunity to expand our trade relationship with Japan.
We like doing business with Japan and I believe that is reciprocated.
The success of the Japan New Zealand Business Council is proof of that.
And on my recent visits to Japan, the feedback I’ve had from business community is that they are very supportive of a free trade agreement with New Zealand, either bilaterally or as part of the TPP.
The main hurdle to progressing an FTA with Japan – under whatever auspices – is undoubtedly a sensitivity around agriculture.
But I am confident that with good faith and flexibility the issues of concern to Japan could be properly discussed and resolved.
The New Zealand and Japanese economies are highly complementary, which benefits consumers, and our businesses have shown they can work together for the benefit of both economies.
Our agricultural sectors are also largely complementary.
We don’t produce rice. Nor do we export significant quantities of sugar, barley, wheat or pork, which are sensitive agricultural products for Japan.
New Zealand products such as grass-fed beef fill a specific need in Japan, where most beef is grain-fed, rather than competing directly with Japanese producers.
New Zealand and Japan are also in different hemispheres, meaning New Zealand producers can supply Japanese consumers during the off-season in Japan.
And closer cooperation between our agricultural industries has the potential to bring benefits to Japanese farmers.
This is at a time when the Japanese farming sector is facing pressures to improve its efficiency, and is looking to build its own high-quality exports to affluent consumers across the region.
Most importantly, Japanese consumers demand safe, stable supplies of food, which New Zealand producers are renowned for providing.
So I consider that New Zealand’s agriculture is an opportunity for Japan, rather than a threat.
More broadly, I know that there has been a lot of discussion in Japan about whether it could potentially join the TPP, just as Canada and Mexico have done recently.
I have been very encouraged by Japan’s interest.
Regional trade agreements require a huge commitment, but they have an equally big pay-off.
Trade liberalisation makes economies more flexible and efficient, and therefore stronger.
That is hugely important in the current global environment, where countries are wanting to lift economic performance and grow jobs, but have few options for doing so.
And the Asia-Pacific region is where most of the world’s growth is going to come from in the foreseeable future.
So TPP is a very exciting prospect although, like any free trade negotiation, it is not without its challenges.
As I’ve previously said, New Zealand supports Japan’s interest in joining the negotiations when it is ready to do so, and able to commit to the same high level of ambition shared by the existing 11 TPP participants.
I want to conclude by saying that New Zealand, the Asia-Pacific region and the world all need a strong Japan.
It is the world’s third-largest economy – highly skilled, technologically sophisticated and capital intensive.
We want to do as much business as we can with Japan.
We want to keep up the important links our people have with each other.
And we want to continue the extensive history of cooperation our two countries have across a wide range of areas.
We think we can build an even closer relationship between New Zealand and Japan, we are very committed to it, and we want to see it go from strength to strength.
Institutions like the Japan New Zealand Business Council will play a very important role in that.
So I wish you all the best for your conference.