Smith Speech to Latin America/NZ Business Council
Embargoed Until Delivery
An Address by
Hon Lockwood Smith PhD
Minister for International Trade
Building a Bridge Across the Pacific
Latin America / New Zealand
Level 20, Telstra Business Centre
25 August 1999
Ezequiel Trumper, and friends of the Latin American – New Zealand Business Council.
Thanks for the opportunity to be here today. It’s certainly timely that I’m here just a month after leading an extremely interesting and rewarding trade mission through Argentina, Brazil, Peru and Chile.
The trade mission to South America reflected the increasing focus of our Government on supporting the private sector’s efforts to establish business relationships with South America, and having seen the opportunities first hand, I’m convinced that our attention is warranted.
Overall, New Zealand’s interest in the region is relatively recent, but it is by no means a new phenomenon. My predecessor Philip Burdon visited in 1993, and in 1996, we launched our Focus Latin America programme. What’s more, Chile is our biggest investment destination outside Australia.
I’m emphasising this because some commentators have suggested that we’ve only turned to South America because of the Asian Crisis.
Let me be clear on this point. Our efforts and our interest in Asia has not, and will not wane.
Geographically, commercially and historically, New Zealand’s interests are inextricably linked to the Asian region. We maintain good relationships with economies throughout Asia, and it remains a huge priority for New Zealand’s trade and foreign policy.
The rationale for Focus Latin America was different – in fact, the programme forms part of our ongoing efforts to develop a diversified range of relationships.
As a trading nation, it’s crucial that New Zealand follows this approach.
In the 1970s, we learnt the hard way the dangers of reliance on a single market, such as the UK.
New Zealand has since come of age and taken its place in the world, and our political and economic relationships are now broader than at any other time in our history.
Our efforts in South America then, are additional to our efforts in Asia.
But there’s also a strong element of complementarity in these relationships.
As the world evolves into a truly global marketplace, the relationships between South America and Asia are going to increase, and New Zealand provides the ideal linkage between the two economic blocs.
The South Polar air route, pioneered by Aerolineas, demonstrates New Zealand’s value as the bridge across the Pacific between Latin America and Asia.
Today, it’s just as easy to get to Buenos Aires as it is to go to Singapore. Even more significantly, it’s just as easy for a business-person in Singapore to get to B.A. through New Zealand, and vice-versa.
Many at both ends of this bridge have yet to recognise the full potential this new opportunity provides.
But I’m optimistic that in the future, we’ll be able to bring this linkage, and New Zealand’s place within it, to fruition through the development of new, exciting and mutually rewarding trade and investment relationships.
New relationships are not formed overnight however, and our recent trade mission to South America was an important step in the Government’s deliberate strategy to develop stronger relationships there.
At this stage of the relationship, it’s important that we, and by that I mean both Government and the private sector, build New Zealand’s visible identity in South America.
And we shouldn’t kid ourselves.
All of the cities – and I repeat the cities – we visited on our recent trade mission had a population greater than New Zealand’s, and it’s not easy for a country of our size, which can’t support embassies all over the world, to build this constituency.
Today I want to talk a little about the recent trade mission, and give you an insight into how the Government sees the development of New Zealand’s relationship with South America, and how you, as business-people, fit into our vision.
As I said earlier, the trade mission was a rewarding and successful experience.
There’s something quite special about being involved with a group of Kiwis travelling abroad to develop new business relationships. The team was able to bounce ideas off one another, and the group dynamics meant that enthusiasm ran high throughout the whole trip.
Of the twenty exporters who signed up for the mission, all but three were first time exporters to the region who, on the strength of TradeNZ market research, had established that a familiarisation visit to South America might be worthwhile.
Since returning to New Zealand, all participants have reported positive contacts, and in many cases, encouraging leads to follow up in South America.
It would of course be optimistic to expect substantive business to follow on immediately from the first visit to countries where personal relationships are an important part of conducting business.
But I understand that the level of interest is higher than had been expected, and TradeNZ and the companies are now developing individual marketing programmes to ensure the momentum is not lost.
The significant level of interest in this mission from new exporters is a good indication of the changing patterns of our relationships with South America.
For much of the past twenty years, dairy products have dominated our trade with South America. While this trade and the Dairy Board’s investments in Santiago and Sao Paulo mean that dairy exports remains important to us, as these Southern Cone economies have adopted more open economic policies, we’re seeing the development of new opportunities for a whole range of New Zealand companies.
Chile, for example, is now our second most important investment destination, second only to Australia, and it’s been identified by both the Manufacturers’ Federation and TradeNZ as a growth market for high-tech products and services.
Investment in forestry is spilling over the Andes into Argentina and Brazil.
In Argentina suppliers of meat and forestry technology and services are finding niche markets for similar production systems and processes to those developed for New Zealand conditions.
Educational links too provide another avenue for introducing New Zealand technology and production systems. And it’s an ideal export business for New Zealand. With our existing infrastructure, we can deliver English language training and tertiary qualifications, either in New Zealand, or through new technologies, directly in South America.
There’s also opportunities for our schools and education professionals to market their expertise – in education methods, curriculum development, and more.
And our relationship is developing in other ways.
Initiatives such as the recent trade mission, the work of TradeNZ and the New Zealand Tourism Board, and the individual relationships developed by many of you here with families and companies in South America add value in another way – they create a more favourable climate for educational exchange, language and cultural studies.
Spanish is now one of the more popular foreign languages in our high schools. Latin dancing and Spanish language evening classes are booked out.
The programme our National Symphony Orchestra broadcast last Saturday week featured an entire section of Brasilian and Argentine classical works.
The International Festival of the Arts in Wellington next year expects a significant line up of Latin artists. Locally here in Auckland you boast the highly regarded “Kantuta” from Chile, Peru and Bolivia.
Last year, we had two Latin American Presidential State Visits to New Zealand (Argentina and Peru). Chile’s then President visited a couple of years back, and the Presidents of Chile, Peru and Mexico will all be in Auckland again for the APEC Leaders’ Meeting in September.
By the beginning of this year we had as many Latin embassies resident in Wellington as European. And almost nightly we now see Maricio Olmedo Perez, a young New Zealander of Latin American origin, on our televisions.
The Latin American connection is clearly on a roll.
At the government level, New Zealand is keen to develop these linkages further.
With shared Cairns Group membership, Argentina, Brasil, Chile and Uruguay are some of our best allies in the battle to open markets for agricultural trade around the world. And we want to build on that relationship.
And I believe that there’s scope to develop broader, and more meaningful trade relationships with South America.
It’s no secret that New Zealand believes the best access security for our exporters is an open free trade system guaranteed by the rules of the WTO. Partners who share these ambitions for the WTO are therefore especially important to us.
But in order to accelerate the open trade agenda we are also prepared to explore all options for bilateral or regional free trade arrangements consistent with WTO principles.
Through APEC, our friends in Chile and Peru are now committed to the Bogor Goals of free and open trade and investment by 2010 and 2020.
However, our friends over the Andes in the Mercosur Community fall outside the APEC “footprint”, and I’m convinced that in the medium term, New Zealand must be looking to these economies to supplement and accelerate global trade liberalisation on either a bilateral or subregional basis.
So, in addition to the official calls designed to raise the profile of the mission itself, I also talked to my Cairns Group counterparts, the Ministers of Agriculture – and to Ministers of Foreign Affairs, Industry and the Economy to find out more about their trade policy priorities and economic reform programmes.
I’m not unrealistic about the time-frame for the development of new relationships in South America, particularly beyond our APEC partners.
In the short term, many of these countries already have full trade policy agendas with regional integration, and the prospect of developing Free Trade Agreements with the American Continent or the EU.
Clearly, we won’t develop free trade agreements overnight, but what I can say is that no-one said that closer links were a silly idea.
There is interest in expanding trade relationships, and although it’s early days, I’m confident that some of the ideas we explored will take root.
And we mustn’t allow apparent obstacles to prevent us from exploring all possibilities. Fainthearted Ministers could never have got CER off the ground 30 years ago.
But in order to make these opportunities bear fruit, we in New Zealand have to accept that our focus can’t be limited to the trade relationship.
In Latin America, equal significance is placed on political and cultural relationships, and it’s this recognition that underpins my Government’s approach to South America – we have deliberately set out to develop a broader and stronger understanding of their countries, their people, and the issues that are important to them.
Since Don McKinnon’s visit to the region last year, the Prime Minister has visited Chile, Peru and Mexico.
The Ministers of Science and Transport, and of Tourism and Sport visited Chile, Brasil and Argentina with business delegations last year.
The Minister for the Environment, Simon Upton, has visited Argentina and Brasil on environmental and Antarctic issues.
My colleague John Luxton returned just last week from a six nation tour including Uruguay and Venezuela which aimed to build understanding with his agriculture, fisheries and forestry counterparts.
We’ve opened an embassy in Buenos Aires and a Consulate General in Sao Paulo. We hope to open an embassy in Brasilia as soon as we can overcome the current economic and budget constraints.
We’ve signed air services agreements with Brasil, Argentina, Chile and Mexico. We are negotiating with Peru. Last year we upgraded to an “open skies” air services arrangement with Chile and we have recently responded to an invitation to begin talks on a similar upgrade with Argentina.
We’ve concluded reciprocal visa waiver agreements with Chile, Uruguay and Argentina, and we’re considering an offer from Brasil for business and visitor visa facilitation.
While I was in Santiago I signed an Investment Promotion and Protection Agreement with Chile, and when I’m in Buenos Aires for a Cairns Group meeting at the end of this week, I hope to advance a similar agreement with Argentina.
Along with our CER partner, Australia, we have signed a voluntary Investment Declaration with all four Mercosur members.
And there are a whole range of other initiatives that demonstrate New Zealand’s commitment to building our relationship with our friends in South America.
But how, you might ask, does all this benefit business?
Quite simply, increased contact builds better understanding. It means that we’ll be more comfortable doing business with each other, and better bilateral relationships mean that you’re less likely to face problems in the process of going about your business.
Increased flight services mean that we’ll see more tourists, and you’ll have better access for supplying perishable goods, spares, and technical support.
You’ll have more flexibility to choose when to visit South America, and how long you’ll stay.
Visa waivers reduce the cost of visiting markets, and investment arrangements provide a more predictable environment and clear rules for treatment of your investments in South American economies.
In short, stronger Government relations mean that you should face less barriers to doing business in South America. It means that you, as business-people from New Zealand, will have a profile in the eyes of Latin American politicians, officials and business organisations you encounter as you seek to develop markets for your products and services.
But I also have a challenge for you – Governments don’t exist in a vacuum.
New Zealand’s experience with CER has taught us that progress is not only reliant upon political leadership with vision. It also requires the active, vigorous support of the business constituency, and that’s where you can and must help.
We need to know what your priorities are, and we need you to build linkages with trade, economic and producer interests in your target markets so that Governments are also hearing what a good idea it is to be doing business with New Zealand.
As I shared with you earlier, I have a vision for New Zealand’s future relationship with South America. Eventually, I see Asia and South America developing a strong trade relationship, with New Zealand and CER as its bridge.
It’s not a pipe-dream. The East Asia Latin American Forum is having its inaugural meeting shortly, and New Zealand and Australia are involved.
At the start of the new millennium, let’s make it happen.
Together, let’s build that trade and investment bridge across the Pacific Ocean. You can now fly it without stopping. What trade and investment follows is up to us.