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Mexican Foreign Trade Organisation - PM Speech

Rt Hon Helen Clark
Prime Minister

ADDRESS TO

Mexican Foreign Trade Organisation
(COMCE)
Business lunch

Salon Veracruz
Camino Real Hotel
Mexico City

2 pm, Tuesday, 13 November 2001

(9 am NZT, Wednesday, 14 November 2001)

Mr Fernando Gutierrez, President of the Asia/Oceania Section of COMCE
Ladies and Gentlemen.

My thanks go to the Mexican Foreign Trade Council for hosting our lunch today. You have provided our New Zealand government and business delegation with a good opportunity to engage with the Mexican business community. I also thank all those who have come today for your interest in trade with New Zealand.

The senior delegation of New Zealand business leaders which has accompanied me here represents many of the New Zealand business sectors which are already trading with Mexico, and some others which I hope soon will be . I would like to introduce them to you. I very much hope that all of us, New Zealanders and Mexicans, will find new opportunities for business, and new ideas for cooperation, through the contacts we make here today.

My speech today will cover developments in the New Zealand economy and the trade relationship between our two countries.
Overall, and particularly in view of the economic slowdown which is affecting most of the world, New Zealand’s economy is stable and prosperous. Annual growth this year to June was a pleasing 3.5%, inflation remains very low, and unemployment at 5.2% is at its lowest level for 13 years. Our balance of payments, often a problem in the past, now stands at 4% of GDP, its lowest level in eight years. Our annual trade balance came into surplus in July for the first time in six years. Our dollar, at around 42 cents US, is very export-friendly. Forecasts suggest that over the next year we should continue to outperform our key trading partners.

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New Zealand operates an open economy. Our tariffs are low or non-existent, with 95% of imports by value coming in tariff free. Exports play a significant part of our economy, contributing about one-third of our GDP. My government is very active in promoting export-led growth. Because we are a small nation without economy of scale for production in many areas, there is also considerable scope for exporters to New Zealand to meet our needs. We already buy machinery from Mexico, and craft work, especially ceramics, is very popular.

Between New Zealand and Mexico lies the large Pacific Ocean. But at least on an ocean there are no extra borders to cross, no corners to turn, and no traffic lights! Sea links between New Zealand and Latin America have improved. Maersk Sealand has recently introduced an Oceania/Americas shipping service direct to Panama, with regular Mexico connections.

Two-way trade between New Zealand and Mexico is booming. It has virtually doubled in value in the 12 months to June, and is now worth close to 300 million US dollars a year.

Some 60% of New Zealand’s exports are sourced from our primary sector – from farming, forestry, horticulture and fisheries. Some good growing seasons, reasonable commodity prices, and the export-friendly dollar have seen the dairy and meat industries do very well in the last two years. Dairying in particular is a growth industry. It has just been reformed into a giant cooperative, combining processing and marketing functions. The new company, Fonterra, through its joint venture with Nestle, expects to be an even bigger player in Latin America in the future. Its marketing predecessor, the New Zealand Dairy Board, has been active in Mexico for many years. A Mexican brand, Noche Buena Cheese, is owned by New Zealand’s cooperative dairy industry. Dairy products are easily the biggest item in New Zealand’s trade with Mexico.

Besides the well-known dairy, meat and wool industries, New Zealand has well-developed forestry, fishing, fruit, and wine industries. We export kiwifruit, and, occasionally, apples, to Mexico. I am delighted that we have two representatives of the New Zealand fisheries industry with us today, Shane Jones and Gary Monk, and I hope that business will develop further in that sector. We also export breeding cattle to Mexico. The New Zealand agritech industry is a pioneer in developing high-yielding cattle breeds for both temperate and tropical conditions. We are also helping develop Mexico’s own livestock industry. Allan Freeth who is here today with the delegation represents Wrightson's, a regular exporter of livestock to Mexico. The New Zealand breeds are already proving their worth on Mexican farms.

Other export sectors which are very important to New Zealand include education and tourism. Both of them hold great promise for our relations with Mexico. New Zealand’s competitive advantage in education lies in the English language, in high and consistent academic standards, and in a friendly and secure environment in which to study. In knowledge areas, like animal husbandry and temperate-zone forestry for instance, New Zealand is an acknowledged world leader, but across the board we offer education to the highest international standard. We welcome foreign students and receive a great many of them.

Our tourism sector has experienced double digit annual growth over the past two years. There are many reasons to travel to New Zealand. Our scenery is outstanding, we have amazing adventure tourism and eco-tourism; our culture is dynamic; our wine trails are extensive; and, important now, we are a safe place to be. Only a few thousand of our almost two million visitors a year come from Mexico. We would like to grow that number. We are only 12 hours flying time from Los Angeles on a direct flight. If we ever get a direct air service between Auckland and Mexico City, the total travel time will be much the same as the travel time between here and Europe.

New Zealand’s economy is undergoing a dramatic change, as it must. Developed country standards of living cannot be maintained by exporting raw materials. A new economy is being built by applying knowledge, innovation, and smart marketing to the produce of our primary sectors, and by building sophisticated new service industries and more manufacturing. The prosperous economies of the 21st century will be driven by highly educated and skilled people, by science, research and technology, by innovation, productivity, and entrepreneurial skill. We in New Zealand and you in Mexico are seeking to earn our living in an increasingly competitive, globalised, and high tech world. Our government is determined that New Zealand will succeed in that world.

New Zealand is proud to have a growing number of successful high-technology companies serving niche markets in different parts of the world. In the last 20 months, for example, MAS Technology, based in New Zealand, has exported components for cellular telephones to Mexico to the value of 18 million US dollars. Glidepath’s chief executive, Neil Sayer, is with our delegation. They export sophisticated baggage handling equipment and systems for airports. Glidepath enjoys good relations with Aero Mexico, and has already done business in Monterrey.

Through companies like these and through the overall drive to take New Zealand upmarket, we are confident of New Zealand’s economic success in the 21st century. On OECD indicators, New Zealand ranks very well for participation in higher education, for employment, and for connection to the internet. These are all essential prerequisites to economic success.

New Zealand will succeed because we have a skilled workforce, a sophisticated infrastructure, a strong commitment to government/business/community partnerships, and because we are a secure and stable place to live and invest in. On the quality of life indicators we register as culturally dynamic and socially inclusive, and having a great physical environment for recreation and leisure.

Mexico has its own competitive advantages. Geography is one of them. You are next door to the USA, and have a Free Trade Agreement with the US and Canada. You also have a strong manufacturing base. There are good opportunities for Mexican exports to New Zealand, for joint ventures and partnerships, and for investment. Sectors of high growth potential for investors in New Zealand include biotechnology, information and communications technology, food processing, and wood processing.

New Zealand’s main commercial presence in Mexico is our newly-named diary cooperative group, FONTERRA, to which I referred earlier. While the name is new, the group has been operating successfully in Mexico for many years. It has recently expanded in Mexico with purchases of two local companies, and has formed a strategic alliance with Nestle for joint activities in the Americas. FONTERRA and its local subsidiaries have a world-wide reputation for excellence and innovation in dairy technology. I commend the group to you as a potential commercial partner in dairy products and food technology. FONTERRA’s Deputy Chairman Greg Gent is with us today.

Finally, I would like to look ahead to next year, when Mexico will be the host for APEC. APEC links the economies of the Pacific Basin together to advance our mutual prosperity, and through that, the elimination of poverty. New Zealand was a founder member of APEC, and values it highly. Just three weeks ago I attended the APEC Leaders’ Summit in Shanghai, where I met President Fox for the first time. It was a meeting that confirmed our shared interests and outlook and our determination to work together.

We look to Mexico next year to take forward the initiatives outlined in APEC‘s Shanghai Accord. Member countries have made many commitments to each other to open up their trade, but progress has not been fast. Through the proposed pathfinder approach, those who want to move faster will be able to join up with other APEC members to do so. Mexico can give leadership in identifying areas where member countries can move ahead, and also help ensure that members do stick to the commitments they have made to open up their markets in the past.
New Zealand is active in the World Trade Organisation too. Indeed a New Zealander heads the organisation. In Qatar, the WTO Ministerial Meeting has been attempting to launch a new round of trade negotiations. Much depends on the results of these efforts. A successful round would do much to stimulate confidence in the world economy in the post 11 September environment. All our economies depend on people having the confidence to invest and consume. It is imperative for us all that we create the conditions for strong confidence to return.

Thank you once again to the Mexican Foreign Trade Council for hosting us today. I hope the presence of our delegation will increase your interest in our country as a place to do business with, travel to, and educate your children in.

ENDS

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