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Speech to Mexican Council of International Affairs

Rt Hon John Key
Prime Minister
5 March 2013 Speech

Speech to Mexican Council of International Affairs
Mexican Business Council for Foreign Trade, Investment and Technology

Mexico City, Mexico

Ladies and Gentlemen, it’s a pleasure to be here in Mexico. I’ve been here once before and have wanted to come back for some time, so it’s great to be here in this vibrant and energetic city.

I’m looking forward to my first meeting with President Peña Nieto later today.

And I’m pleased to be leading a delegation of some of New Zealand’s most innovative businesses, which are keen to strengthen their ties with their counterparts here.

This visit comes when New Zealand and Mexico are marking 40 years of diplomatic relations.

It’s a good time to reflect on what we have achieved together, and to focus on what we can do more of in the future.

There is certainly plenty of room to grow our already broad relationship, given our history of close cooperation in trade and multi-lateral issues.

We share similar views in many areas, from the big foreign policy challenges confronting us at the UN, through to our excellent relationship at the World Trade Organisation in Geneva, and the OECD in Paris.

We in New Zealand also welcome your leadership in this region, and through forums like the G20 and APEC.

Your joining the Trans Pacific Partnership negotiations last year was enthusiastically received by New Zealand, and we were pleased to host you at the last round of negotiations in Auckland in December.

I want to talk more about the trade relationship shortly, particularly the Trans Pacific Partnership negotiations.

But first I want to tell you a bit about New Zealand.

We are a small country of 4.4 million people. We are far away from major markets. Our closest neighbour and biggest trading partner, Australia, is about a three-hour flight away.

So we are always looking outward – to new markets and new opportunities. Our geographic location and small population means our economic prosperity relies on taking what we do best to the rest of the world.

An example of that is agriculture. New Zealand is now the world’s largest exporter of dairy products. Our country exports 95 per cent of its dairy production, and we are now world-leading innovators in this field.

We have a liberal, free market economy, which stems from reforms started around 25 years ago.

We realised back in the 1980s that we couldn’t grow with a closed economy supported by subsidies. Reforms from the mid-1980s to the mid-1990s were wide-ranging, and set New Zealand on a pathway to play to our strengths and compete with the rest of the world.

We continue to focus on economic reform. One of my Government’s priorities during this term in office is to grow a more competitive and productive economy.

New Zealand’s future lies in export-oriented growth – where we are competing with other exporters on a level playing field.

That is why we are committed to top-quality, ambitious, comprehensive free trade agreements.
We are also a great country to invest in, to form business partnerships or to expand operations in.

The World Bank ranks New Zealand third on its ‘Ease of Doing Business’ survey, after Singapore and Hong Kong, while Forbes places us at number one. We are also first equal on Transparency International’s index for measuring countries’ absence of corruption.

New Zealand was the first country in the world to adopt inflation targeting. We have excellent institutions, and a stable banking system.

We have a highly educated population, backed up by an excellent education system with world-recognised qualifications. We’re a country with great universities, with strengths in courses covering agriculture, geology and a number of science disciplines.

We are becoming a destination favoured by adventurous, determined and bright young Latin Americans wanting a high-quality education at a hugely competitive price, relative to other English-speaking countries.

We are also a sports-loving nation and we are home to the world champion rugby team, the All Blacks.

Can I just add that New Zealand is a great place to visit – for the scenery, beaches, skiing or just simply as a safe and friendly place to relax.

We’re becoming a popular destination for Mexican families, and couples on their honeymoon.

I am also told that young Mexicans snap up Working Holiday visas to New Zealand within an hour of applications opening, and I am pleased they are keen to experience life on this side of the Pacific.

So New Zealand has a lot to offer and share with the rest of the world.

We also have much to learn.

Mexico is a country I would like to see more New Zealanders become familiar with.

That is why I’m travelling with a delegation of business leaders, who are keen to make new connections and strengthen existing relationships. Some of the companies represented already do business in Mexico, and many do business in other Latin American countries.

They come from a range of industries, from dairy production, horticulture, agri-tech, education, renewable energy and highly specialised technology - like the design and manufacture of communications equipment for military requirements.

They have come with me because they see the enormous opportunities Mexico has to offer, and they want our two countries to forge stronger economic links.

You have so many advantages that you can’t fail to move forward.

You’re situated in a perfect space in the world, with privileged access over the northern border.

You’re benefiting from the growing integration of North American economies, and you’re also a major exporter of manufactured products.

You also have a young, dynamic population.

Although New Zealand and Mexico are countries on the Pacific Ocean, we have until recently each had a greater focus on other neighbours.

New Zealand has dramatically built up its links with Asia.

In 2008 we became the first developed country to sign a free trade agreement with China. It’s now our second-largest export market, behind Australia but ahead of the United States of America.

New Zealand now exports more than 10 times the value of product to China every day than we did in the whole of 1972.

Mexico has reaped the benefits of closer ties in the Americas – NAFTA has been hugely positive. We need look no further than to compare the level of integration in North American economies before the 1990s, and now.

New Zealand and Mexico have, however, retained strong bilateral trade ties for some time.

Fonterra, the dairy exporter travelling with me, has had in its various forms a relationship with Mexico for over 50 years, for example.

You’ve been our largest trading partner in Latin America for over 20 years. We exported over US$230 million dollars’ worth of goods to Mexico in 2012, with the vast bulk of that being dairy and meat products.

New Zealand imported over US$200 million dollars’ worth of goods from you, and most of that comprised different types of machinery and vehicles.

For some time, New Zealand and Mexico have been talking about a bilateral free trade agreement but, for various reasons, we were never able to move to the next step.

The Trans Pacific Partnership now provides our countries with the opportunity to negotiate a broad, high-quality multi-lateral agreement together with nine other economies.

The expansion of TPP to include both of the US’s NAFTA partners is hugely significant, and adds considerable economic weight to what was already an impressive trade grouping.

New Zealand was one of the founding countries of what has become the TPP negotiations.

In 2005, Chile, Brunei and Singapore negotiated what was known as ‘P4’ – or the Trans Pacific Strategic Economic Partnership Agreement.

Further negotiations began to include more countries – the United States, Australia, Peru, Viet Nam and Malaysia.

We are now 11 economies, representing US $21 trillion in GDP and 600 million consumers.

Leaders have set a clear vision for negotiations to be concluded by October. It’s ambitious, but we are all focused on locking in a high-quality, comprehensive agreement.

For New Zealand and Mexico, the benefits could be enormous.

We have already seen just how liberating the removal of tariffs on key items can be.

In 2011, Mexico lifted a 20 per cent tariff on New Zealand kiwifruit, saving our growers around US$800,000 a year and making our high-quality fruit cheaper for Mexican consumers.

A successful TPP can bring new opportunities.

I see it as opening up more than just the increased flow of goods between our countries.

Many of the New Zealand companies with me today want to be involved in this region for the long-term, and make substantial investments.

Because of your special relationship with the US and Canada, more specialised manufacturers have taken the opportunity to invest in Mexico.

For example, Avohealth is working with a Mexican partner to build a plant to extract avocado oil for export.

Fisher & Paykel Healthcare invested US$15 million in a manufacturing facility in Tijuana in 2010, and the company is currently in the process of commissioning an additional manufacturing unit in Tijuana.

So our interest is to invest, not solely to export. With dairy demand growing around the world, particularly in the Asia-Pacific region, safe and efficient production will be vital.

Working together, with New Zealand practices and technology, and Mexican land and location, we can capitalise on this opportunity.

That potential for greater collaboration goes both ways.

New Zealand is also an attractive investment option for Mexican companies, especially those looking for a business-friendly hub from which to base operations into Asia.

We have a network of free trade agreements with Asian countries, plus daily flights and regular shipping connections to major Asian cities.

We have large resident populations from many countries in Asia, and cultural and economic ties with a variety of cities there.

And, as I said earlier, we are a business-friendly country, which welcomes overseas investment and collaboration.

So we’re a sensible choice for Mexico as it looks to grow its engagement with Asia ahead of a successful conclusion to TPP negotiations.

Ladies and Gentlemen.

New Zealand and Mexico, from our opposite sides of the Pacific Ocean, share a 40-year history of diplomatic relations.

Over that time our relationship has deepened, despite the distance between our homes.

But now’s the right time to do even more with one another, to build on what we do have, because there is much to gain.

We’re ambitious, energetic and outward-looking nations. We want our businesses to succeed at home, and within the rest of the world, by being the best in their fields.

I hope today’s event brings Mexican and New Zealand business people together, to explore possibilities, and to collaborate and cooperate.

And I hope many of you here today see the value in New Zealand as a business partner, and come to see for yourself what our country has to offer you.

Thank you.


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