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Lockwood Speech To Foreign Correspondents' Assn.

Embargoed until Delivery
An Address by

Hon Lockwood Smith PhD
New Zealand Minister for International Trade
New Zealand Minister for Tourism

NZ Inc Presentation to the Foreign Correspondents' Association

International Media Centre
60 Margaret Street
Sydney, NSW

24 August 1999
12.30 pm (NSW time)

Mr Chairman, New Zealand High Commissioner and Consul-General, George Hickton, Tony Thomas, Members of the Australasian Foreign Correspondents Association, Ladies and Gentlemen.

Thanks for the opportunity to be here in Sydney today. As a visitor to your city, the first thing I noticed this morning was the feeling that something big is about to happen here.

And of course, with the Bledisloe Cup next week and the 2000 Olympics, Sydney is an exciting place to be.

In New Zealand, Auckland has a similar feel, and, over the next couple of years, it too has its share of major events.

Later today, you'll hear from George Hickton about the branding of New Zealand and upcoming millennium attractions and Tony Thomas will brief you on preparations for the America's Cup which will be raced off Auckland over the next few months.

And in just three short weeks, Auckland will also host the Leaders from 21 economies for the big APEC Leaders' Summit which takes place on the 12th and 13th of September.

APEC will bring Bill Clinton to Auckland. John Howard is coming. So too is Jiang Zemin of China, to name just a few.

Today I want to talk to you about APEC - to explain a little bit about its work, and to discuss the challenges that New Zealand faces as Chair in 1999.

Initial credit for APEC has to go to your former Prime Minister Bob Hawke, who in 1989 established the process as an informal dialogue group.

US President Bill Clinton deserves credit for lifting it to the next level when he hosted APEC Economic Leaders at Blake Island, Seattle, in 1993.

For the first time, we had that image of all the leaders together, which lifted APEC’s status and importance.

And it was in Seattle that the leaders established APEC’s over-riding goal of “stability, security and prosperity for all”.

In 1994 in Indonesia, Leaders' established the goal of ”free and open trade and investment” for developed economies by 2010, and by 2020 for developing economies.

It’s for this goal that APEC has sometimes been described as the biggest trade policy initiative in history, including even the European Union.

Since then, APEC has become the primary focus for economic development across the Asia-Pacific region, and with the accession of Vietnam, Peru and Russia last year, APEC now has 21 member economies.

These 21 economies play a significant role in the world when you consider that they're only 21 in a world of more than 100 nations.

But APEC makes up 42% of the world's population.

57% of the world's economy.

And nearly half of global trade.

Hosting a process of this magnitude is a major exercise for any member economy.

Obviously, with the Leaders of 21 significant economies in New Zealand, security is a concern, and we have some 2000 police tasked to oversee security for the September meetings.

We're expecting up to 30 dedicated aircraft in New Zealand for the Leaders' gathering - President Clinton alone will bring up to eight aircraft for his team of 1200 officials and media from the United States.

In terms of venues, security, accommodation and transport, APEC means to New Zealand what the Olympic Games mean to Sydney - a huge logistical challenge, many months of planning, and a very intense period where the months of planning is executed over a four day period.

But APEC's not about motorcades, photo opportunities, and it's not even about politicians.

APEC is about people. It's about raising living standards and creating jobs through free and open trade and investment. It's about delivering stability, security and prosperity across the region.

In order to advance APEC's work toward these objectives, New Zealand has established three themes for APEC 1999.

The first is to expand opportunities for doing business throughout the region through trade liberalisation and facilitation.

It all sounds a bit obscure, and although APEC has its fair share of acronyms and bureaucrat-ese, it's actually all very simple.

Trade liberalisation is the process of reducing and removing barriers to trade, such as tariffs and quotas.

As part of the APEC process, each individual economy prepares an "Individual Action Plan", or IAP.

The IAP outlines what each economy will do to take it towards free trade, and other economies peer review them.

And the process works.

As an example, China has recorded in its IAP that it will cut nearly 6,000 industrial and IT tariffs to a maximum of 10.85% by 2005.

Indonesia – with its 215 million people - has cut tariffs on food items to a maximum of 5%.

There are many of these examples, and more will become public next month.

It’s all progress towards the 2010/2020 goals.

As part of the trade liberalisation work, APEC economies also develop Collective Action Plans, or CAPs, which generally make it easier, cheaper, faster and fairer to do business in the region.

A good example is government procurement.

Governments tend to purchase goods and services worth around 10 to 15% of GDP, but often they’ll only buy from local suppliers.

APEC's work means that if a Government within the region wants to procure goods or services, it will have to treat all member economies fairly.

But the APEC goals won't be fully achieved just by sorting out tariffs and quotas.

APEC also focuses on facilitating trade by cutting red tape, harmonising standards and customs regimes. Broadly speaking, trade facilitation is about making it easier to do business, and encouraging the free flow of goods, services and investment within the region.

New Zealand's second theme for APEC 1999 is to work with other economies to strengthen the functioning of markets.

The Asian Economic Crisis showed us that in order to be sustainable, economic growth requires robust financial markets.

As part of its response to the crisis, APEC is developing a "tool-kit" of policy mechanisms which will contribute to the development of sound markets across the region.

Much of this work is backed up by technical assistance to developing member economies if required.

As an example, APEC is helping Viet Nam develop its tax system.

Indonesia and Thailand are developing bankruptcy laws, with APEC assistance.

Across the region, there are 410 co-operative projects underway, and I can talk more about this programme after this session.

New Zealand's third theme for 1999 is to broaden support for and understanding of APEC.

APEC is not about politicians or bureaucrats, and in order for APEC to be effective, we need people to understand APEC and its work.

In New Zealand, we've focussed on involving a broad representation of our communities in the APEC process, and we're encouraging other member economies to do the same.

In addition, we've produced two pieces of research which demonstrate the benefits of APEC's work, and the results are impressive.

The first is an APEC study conducted by Auckland University, which examined the benefits of liberalisation for New Zealand's wine industry.

Twenty years ago the New Zealand wine industry was heavily protected by tariffs in order to encourage domestic production.

Ironicially, this resulted in production of a flood of low-quality wines. We couldn’t drink it all, and no-one wanted to buy it.

When tariffs were removed, wine producers faced a stark choice - either lift their game to meet international standards, or go out of business.

I'm pleased to say that the New Zealand industry chose to compete, and they've since proven that New Zealand can produce world class wines.

But liberalisation has delivered far more than this.

Over the past 10 years, the value of New Zealand's wine exports increased from $26 million to over $117 million.

Total production has risen by around fifty percent, and exports have risen from 2.7 percent of production to 29.1 percent today.

Consumers have a broader selection of quality wines from New Zealand at very competitive prices.

The industry provides permanent employment for 4000 people, and seasonal employment for 1000 more - up significantly from the days when the wine industry was heavily protected by tariffs and other barriers to trade. And the growth is continuing.

Another study conducted by the independant Institute of Economic Research shows the benefits for consumers of trade liberalisation in New Zealand.

The study looked at four different sectors of household spending, and found that across the board, trade liberalisation has greatly reduced the cost of cars, clothing, footwear and household appliances.

What's more, consumers will continue to gain additional benefits over the next 10 years. The study finds that overall, trade liberalisation means that the average household in New Zealand was $1,140 better off in 1998, and by 2010, that same household will be $2,180 better off.

I've asked that each of you be given a copy of these studies today, and I'd be happy to discuss them in more detail after lunch today.

In summary, Auckland will be the place to be in September 1999.

Hosting APEC 1999 will raise awareness of New Zealand overseas, and there will be plenty of photo opportunities for the media who attend the meetings in Auckland.

But APEC is not about any of that.

It’s about making it easier to do business across the region.

It's about creating jobs across the region.

It's about ensuring that all of us - in Dunedin, Perth, Bangkok and Lima - enjoy a better standard of living.

Thanks again for the opportunity to talk to you briefly today, and I look forward to discussing APEC's work with you in more detail this afternoon.

ENDS

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