31 March, 2009
Speech to ASEAN-Australia-New Zealand Free Trade Agreement Seminars
Good morning. I am pleased that so many of you this morning have chosen to attend this Seminar on the ASEAN/Australia/New Zealand Free Trade Agreement - or AANZFTA.
A few weeks ago I was joined by a smaller group of senior New Zealand business representatives in Hua Hin Thailand, for the signing of the AANZFTA.
I am grateful that these senior business representatives made the effort to travel to this small town in Thailand for the signing of this Agreement.
I also appreciate that they understood the significance of this event for New Zealand.
Although AANZFTA has not been surrounded by the same media profile as the FTA we signed with China last year, it is an extremely important Agreement for New Zealand - in both an immediate trade sense, and in the context of our strategic positioning in South East Asia.
Vangelis Vitalis, our lead negotiator for this FTA and his inter-agency team of officials have negotiated a comprehensive, high quality FTA with the 12 member countries of ASEAN.
The difficulty of successfully negotiating an FTA simultaneously with the ten very diverse members of ASEAN should not be underestimated.
I would like to acknowledge the efforts of Vangelis Vitalis, Martin Harvey and the officials that contributed to this excellent outcome.
You will hear from Vangelis about AANZFTA in great detail today, so I won't dwell on the detail of the Agreement it in my comments.
I would like instead to focus on why the FTA is important to New Zealand, and some of the new opportunities it will create for New Zealand businesses.
Two self evident, but critical truths are at the foundation of why the Government viewed AANZFTA as a trade policy priority.
First, that New Zealand is dependent on trade for our economic well-being and prosperity.
Second, that Asia is a critical region, in trade and broader terms, to New Zealand.
We are an export-driven and dependent economy. New OECD data suggests that a 10% increase in trade is associated with a four percent rise in per capita income.
And now - as we find ourselves in the midst of the greatest economic crisis since the Great Depression of the 1930s - gaining and maintaining access to valuable and dynamic export markets is more critical to New Zealand firms than ever.
Significantly improving market access for New Zealand firms through a progressive trade agenda - including through FTAs such as AANZFTA - ensures that we continue to stimulate economic growth, and help safeguard the jobs of the many thousands of New Zealanders who work in, or support, export-oriented industries.
This reality is recognised by both the Government and the Opposition. AANZFTA itself was the culmination of the efforts of previous Governments going back a decade.
Its foundation stone was the Agreement between New Zealand and Singapore on a Closer Economic Partnership (CEP), commenced in 1999, which had as its principal objective the establishment of a strategic bridge between the Australia and New Zealand Closer Economic Relations Trade Agreement (CER) and ASEAN.
That was taken forward by a CER/ASEAN Task Force on which New Zealand was represented by Sir William Birch, to look into the feasibility of a combined FTA.
The formal negotiation was initiated and completed during the previous Government's watch.
I acknowledge both of the previous Ministers of Trade, Mr Sutton and Mr Goff for their contributions to that negotiation, and I would like to thank the current Opposition Spokesperson on Trade, Maryan Street for travelling to Thailand as part of my delegation for the signing events.
But it is not just the actions of political parties that are necessary to ensure that New Zealand benefits from the opportunities that AANZFTA presents New Zealand.
If we are to maximise these benefits in a way that secures the economic development objectives of improving market access for New Zealand exporters in South East Asia, stimulating economic growth and prosperity and ultimately raising the living standards of New Zealanders, then we must approach AANZFTA in a truly "NZ Inc" manner.
AANZFTA, like all of our FTAs, was fundamentally about negotiating an environment that makes it easier, more profitable and more predictable for New Zealand businesses to enter markets, and then do business in those markets.
Negotiating FTAs is a role for Government and up until now, with AANZFTA, it has been the Government - working with businesses - that has taken the lead.
From this point on, it will be the business community - working with Government - that has to capitalise on the opportunities that our negotiators have secured through their negotiating efforts, and to transform these into gains for your business, for the economy, and ultimately for New Zealand.
We now approach the implementation phase of AANZFTA. In this critical phase the agreement moves from the realm of officials negotiating over a table - into the world of companies doing business.
That brings me to the second key point underlying the priority that we attached to AANZFTA - the importance of the ASEAN region to our business community, and to New Zealand's economic, and broader, well-being moving forward.
The ASEAN economies together represent total trade with the rest of the world of over US$1,400 billion.
As a market of more than 566 million people, ASEAN is an increasingly important destination for New Zealand goods, service suppliers and outward investment.
Indeed, ASEAN has now become New Zealand's third largest export market for merchandise goods - worth NZ$4.6 billion in the year to June 2008.
Our trade has grown at a staggering 24% per year over the past three years, with seven of the ASEAN member countries now featuring in New Zealand's list of top 30 bilateral trading partners.
AANZFTA represents the first time ASEAN has negotiated a comprehensive FTA as part of a "single undertaking", i.e. spanning goods, services, investment, as well as the other subjects covered in a modern FTA such as intellectual property and competition policy.
In the area of goods exports, the outcome we have secured is a very good one.
Within twelve years 99% of New Zealand's current trade with Indonesia, Malaysia, the Philippines and Viet Nam will be duty free.
For New Zealand businesses operating in these markets this is a major advancement in terms of their market access into these major and growing markets.
But AANZFTA does more than simply address tariff lines for merchandise trade.
One of its key strengths is its comprehensiveness, in that it covers services, investment and other areas.
It is important to note that this is the first time that ASEAN has agreed to negotiate a free trade agreement as a so-called "single undertaking", whereby goods, services, investment and other areas covered in a modern FTA - such as intellectual property and competition policy - are included.
For New Zealand exporters in the services sector, AANZFTA also represents real gains.
For example, the ASEAN countries have made new "GATS-Plus" commitments - meaning that they go further than those currently agreed to under the WTO General Agreement in Trade in Services - in New Zealand's priority service sectors, including education services.
New Zealand investors and their investments will benefit from new and additional protections for their investments into the region including through the potential for recourse to binding investor-state arbitration procedures.
The Agreement includes a robust and transparent dispute settlement framework to resolve any trade-related disputes that may arise between New Zealand and its ASEAN partners.
In addition to the AANZFTA Agreement, New Zealand has also concluded legally binding agreements on trade and labour and trade and environment with the Philippines.
These outcomes build existing instruments on these issues with other ASEAN Partners - Thailand, Brunei and Singapore - and ongoing processes with Indonesia and Malaysia, where the negotiation of a bilateral FTA includes discussions on labour and environment instruments.
As businesses, you will probably be focused most immediately on the immediate commercial benefits from this Agreement, which is understandable.
It is also important, however, to understand the strategic importance of AANZFTA, as this has a direct bearing on New Zealand's future bearing in the Asia-Pacific region.
The AANZFTA Agreement represents an important ‘building block' in the growing East Asia trade and economic architecture and underscores our strategic commitment to greater regional integration.
New Zealand needs to continue to be an integral part of a more highly integrated set of trade and economic arrangements in East Asia.
It is also strongly in our interests to do what we can to ensure that that Asia-Pacific regional economic integration remains open and outward looking.
By concluding AANZFTA, we remain well positioned to play a proactive role in further regional integration initiatives, such as a possible Closer Economic Partnership for East Asia (CEPEA), a free trade area that would potentially encompass the ten members of ASEAN and New Zealand, Australia, India, South Korea, China and Japan.
In a broader sense, AANZFTA is an integral part of our regional trade policy agenda.
Overall, our top trade priority remains a successful conclusion of the multilateral WTO Doha Round.
For a small, export-reliant country like New Zealand, the rules-based multilateral system is the only mechanism that allows us to address global trade barriers - such as agriculture subsidies - on a global basis.
However, driven partially by the reality that a Doha outcome will not deliver all the market access gains we would like and, secondly, our defensive concern that competitors might gain an advantage by beating us to their own bilateral deals, we are also progressing an ambitious bilateral and regional trade agenda.
It is not by accident that much of our focus in this regard has been on the Asia-Pacific.
You all know that we concluded a major FTA with China last year - its first and still only - FTA with as developed economy.
We are currently negotiating a bilateral agreement with Malaysia and have recently announced the resumption of our negotiations with Hong Kong
A few weeks ago during the visit to New Zealand of the Korean President Lee Myung-bak, the Prime Minister and the President jointly announced the launch of negotiations with our sixth largest export market, South Korea - a long term goal of New Zealand's that we have been working towards since 1999.
In late February during my first visit to India as Trade Minister my Indian counterpart Kamal Nath and I announced the conclusion of the joint study to investigate prospects for an FTA between New Zealand and India.
More broadly, a key focus for us, of course, is the commencement of the Trans-Pacific Partnership negotiations that will extend the P4 Agreement beyond the current four Parties, to include - among other important trading partners - the United States. This agreement, alongside other plurilateral negotiations that we are working on such as that with the Gulf Cooperation Council or "GCC" will see New Zealand's trade interests well represented in key export markets with real potential for growth.
In conclusion then, the free trade agreement we have negotiated with ASEAN through AANZFTA has secured an outcome that achieves significant new commercial opportunities for New Zealand business.
The key, now, is for business to take the lead, working with Government agencies such as New Zealand Trade and Enterprise and the Ministry of Foreign Affairs and Trade, to realise the opportunities created. By doing so we will ensure that more New Zealand businesses can operate successfully in South East Asia.
By doing so, "NZ Inc" will contribute directly to New Zealand's economic wellbeing - something which is particularly relevant during this economic crisis.
This seminar - in some ways - marks the beginning of this process.
I am pleased so many New Zealand businesses are here today, and I look forward to celebrating your successes in the region moving forward.