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John Key

29 July, 2013

Speech to Kiwi Chamber Seoul, South Korea

It’s great to be back here in Seoul.  This is my third visit to Korea in four-and-a-half years as Prime Minister.  This is because we value the importance of the Korea relationship for New Zealand and for Korea’s rapidly expanding role in the world.

On this occasion we have a large contingent of New Zealand veterans and their supporters here for the 60th anniversary of the armistice which took place over the weekend.  Over 6,000 New Zealand army and navy personnel took part in the Korean war, in which 45 New Zealanders lost their lives.

New Zealand has a tradition of honouring our war veterans and I am immensely proud to have this opportunity to accompany them back to Korea for the commemorations. 

The veterans were quite literally the pioneers of our relationship with Korea.  They were here long before the first diplomats, businesspeople or teachers.  Their contribution is still hugely appreciated by the Korean government and people. 

The New Zealand-Korea Year of Friendship in 2012 highlighted our historic ties, shared values and cooperation.  In putting Korea before a New Zealand audience we had invaluable help from Psy and Gangnam Style.  It is a mark of how far we have come that we now have thousands of young New Zealanders emulating Psy’s dancing style.

I had the pleasure of meeting President Park during this visit.  Her election marks a milestone for Korea and I was able to extend New Zealand’s best wishes for her leadership and ambitions for this country.

And I am delighted at the connections she holds to New Zealand.  She was part of the delegation which her father led to New Zealand in 1968 – the first ever by a Korean leader – which really got the bilateral relationship going.  She visited again in 2008 as a guest of government and I have now invited her to make an official visit in her new capacity in the near future. 

President Park and I are able to draw much satisfaction from a bilateral relationship that is close and strong and which has deepened significantly in recent years.

There are frequent high level political contacts between our two countries.  We enjoy strong people linkages, including significant numbers of visiting tourists and students.  There is also important collaboration in areas such as film production, science and technology, defence, and the environment.

New Zealand and Korea also cooperate closely on regional security issues.  In this regard, I applaud President Park’s aspiration for peace and stability on the peninsula, including her efforts to reach out to North Korea. 

We are conscious that North Korea can be an uncertain neighbour for South Koreans and for expats here in Seoul.  New Zealand has made clear our views.  We reject North Korea’s provocations.  We call on them to commit firmly to abandon nuclear weapons and to engage constructively with the international community.

Bilateral Economic Relationship

Turning to our bilateral economic relationship, the trade figures show the value of the relationship to both countries.  Korea remains comfortably our fifth largest export market and trade is highly complementary.

While the trade relationship has grown, we can do better and growing trade and business ties with Korea remains an important goal.

In this regard, I appreciated the opportunity to discuss with President Park the way forward in our two countries’ negotiations on a free trade agreement.  There is still work to do, but the arguments in favour of an FTA are strong.

An FTA can help both our countries to achieve economic growth and prosperity, since greater levels of trade and cooperation will make us stronger and more efficient. 

We both want to promote growth opportunities for small and medium sized enterprises, and removing tariffs and other barriers to trade is a great way to improve margins and spark new business.

Investment is crucial for successful business growth.  A Korea/New Zealand FTA would help create the right environment for businesses to flourish, commercialise their products and go global.  We have an example of that in Zespri kiwifruit, which is now produced here in Korea thanks to commercial collaboration with New Zealand. 

An FTA can facilitate innovation and creativity by bringing our two countries closer together in research and development.  Already, we know the value to be gained when New Zealand and Korean know-how is work together.

The FTA will also assist Korea to address the challenges associated with food and resource security.  It is worth recalling that New Zealand and Korea do not compete in most sensitive agricultural sectors like rice, and many of our products compete primarily with other imported products, so we do not see ourselves as a threat to Korean farmers.

I have mentioned some of the potential benefits of concluding an FTA, but we also need to be alert to the urgency of our work.

I am mindful that New Zealand has completed agreements with China, ASEAN, Hong Kong and most recently Chinese Taipei, and Japan has just joined TPP negotiations.  Korea too has completed a range of major FTAs and is negotiating others.  We need to get our deal done to ensure that the bilateral trade relationship keeps pace with the trade relationships we have with other countries.

There is also the risk of growing disadvantage.  While the current two-way trade figures seem healthy, we know that New Zealand firms are hurting as they are gradually disadvantaged by Korea’s preferential trading arrangements with existing FTA partners.

No relationship, no matter how strong, can afford to stand still.  If we want to take the relationship forward, and reap the benefits I’ve just outlined, then concluding the FTA is an important step.  It is win-win for both our countries. 

New Zealand

I also want to take some time to talk about developments in New Zealand, and particularly on the economy.

The Government has been concentrating on four key issues. Briefly, these are:

  • getting the Government’s books in order following the recession, the global financial crisis and the Canterbury earthquakes – we are on track to post a budget surplus in 2014/15 and to keep net government debt under 30 per cent of GDP
  • building a more productive and competitive economy, through a whole range of measures, including tax reform, planning reform, addressing housing supply constraints, and introducing 90-day trial periods for new workers
  • delivering better public services within tight financial constraints
  • and supporting the rebuilding of Christchurch, which is the biggest economic project in the history of New Zealand.

That focus is paying off.

The New Zealand economy has come out of the recession and the global financial crisis in good shape, especially when you compare it with our peers around the world.

In the year to March, the New Zealand economy grew 2.4 per cent, which was the sixth-highest growth rate in the OECD.

Wages have been increasing and inflation is low. In the last year, for example, weekly wages grew 2.5 per cent on average, and inflation was only 0.9 per cent.

The unemployment rate is a bit higher than anyone would like – it has been between 6 and 7 per cent for the last three years – but a net 50,000 new jobs have been created over the last two years and the outlook is improving all the time.

Forecasts are for annual growth of between 2 and 3 per cent over the next few years, and that includes the impact of the nationwide drought we experienced earlier this year.

Low interest rates, increased activity from the Canterbury rebuild, and strong commodity export prices will all contribute to growth.

Business confidence is at a three-year high.

Growing numbers of Asian consumers are demanding the goods and services New Zealand produces.

And the New Zealand economy is expected to grow more strongly over the next two years than many other developed countries, including the United States, Canada, the United Kingdom, Japan and the Euro area.

So New Zealand is well placed to take advantage of the opportunities that lie ahead of us.

Thanks for being here today and thank you for the work you do to further strengthen the Korea New Zealand relationship.

You are doing a great job.