Australia New Zealand Economic Relations

  • Dr Lockwood Smith
International Trade

New Zealand: Ladies and Gentlemen thanks very much for coming along this afternoon and our apologies for keeping you waiting a little bit. We're just trying to get copies of our joint ministerial statement for you and we'll have copies of that down for you very shortly. But we might as well get going because I see machines are rolling here.

Could I first introduce, although he needs no introduction to you I'm sure, the Australian Deputy Prime Minister and Minister for Trade the Honourable Tim Fischer - a great friend of mine and a great friend of New Zealand. Tim it is a real privilege to have you here in New Zealand.

We've had very constructive CER consultations today. We've been reflecting [on the fact] its the 15th year of course since CER was established. And its interestingly to reflect that our bilateral trade over that period has increased by 275% - 275% increase in bilateral trade largely facilitated by this tremendous CER agreement between our two countries. In fact of course Australia is now New Zealand's largest export market and it wasn't before CER. And New Zealand believe it or not for a small country is Australia's 4th largest market and I believe your largest market for elaborately transformed manufactured goods. So it's been a very, very significant development, CER.

And we're both pleased to announce this afternoon that the Australian Prime Minister, Prime Minister Howard, has accepted New Zealand Prime Minister Shipley's invitation to visit New Zealand from 20-22 February next year for the purpose of carrying forward high level dialogue between our two governments early in New Zealand's year as chair of APEC. So that's another measure of the very significant relationship between our two countries that we're working so closely as New Zealand chairs APEC next year.

I think our 15th year in CER has been marked by great development this year and that's been the trans-Tasman Mutual Recognition Arrangement. And what that means is that anything that can be sold legally in one country can be sold in the other country without having to meet further standards or conformance requirements. That's going to have a very significant benefit [for] the business relationship between our two countries. It came into effect on 1 May this year, and in some States in Australia the legislation still has to be passed to bring it into full effect, but its going to be a very, very significant development during our 15th anniversary of CER.

Obviously there have been some bilateral issues that have been irritants to some extent between our two countries. One has been the issue of access to the Australian local quota content for broadcasting in Australia. And in New Zealand here have referred to his as Project Blue Sky. Today we have noted that on Project Blue Sky that a mutually satisfactory solution is imminent to this problem and we are very appreciative of the work that the Australian government has put into making sure that under CER New Zealand gets access as required under CER to the local content quota for broadcasting in Australia.

An issue that has been a very vexed issue between our two countries in recent times has been quarantine issues, or sanitary and phytosanitary issues as they are known under World Trade Organisation parlance. And we've agreed that there is to be benefits from New Zealand and Australia spending more time in actually working together on these SPS or quarantine issues and we Ministers have actually expressed our support for more regular meetings between our respective quarantine authorities in both New Zealand and Australia to make sure that in the future problems in this area don't become the irritant that perhaps has happened over recent times with respect to things like apples and salmon, and tomatoes coming back the other way from Australia.

We have of course spent some time today addressing the vexed issue of apple access to Australia and we have committed ourselves to identifying a process for the timely resolution of the outstanding SPS issues in this area. And I am very grateful that my friend and colleague Honourable Tim Fischer has agreed to us finding a process to achieve a timely resolution to this problem. That doesn't mean automatic access for New Zealand apples. It means that there is further work to be done to see how we overcome the vexatious issues that have up until now prevented us from being able to achieve access to the Australian market. So it has been a very significant amount of progress made there today.

Obviously we've discussed the relationship between CER and our international developments and both New Zealand and Australia are firmly committed to the development of a comprehensive multilateral Round to kick of the World Trade Organisation from the end of next year. We are both members of a group of countries called the Friends of the Round and again we are committed to working together at the WTO to achieving a good outcome with respect to a comprehensive Round of multilateral trade negotiations commencing from the WTO Trade Ministers' Meeting next year.

I think what's very special about that commitment between New Zealand and Australia is our CER agreement is probably an exemplar of the very best free trade agreement in the world today. I think there are no other free trade agreements that are as basically sound as the CER agreement and we want to see the CER agreement used perhaps as an exemplar, as a model, to expand the concept of trade liberalisation around the world. And its something I think that is great that we have a model and exemplar that can be built on as we seek to gain the benefits for the people of the world in opening markets, liberalising trade around the world. So you can see its been a very significant day of discussions today with I think very positive outcomes and I invite my good friend and colleague Honourable Tim Fischer to share his comments on today's discussions with you.

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: Thank you Lockwood and thank you for your facilitation of these important consultations at the end of a hectic 1998. Like all good marriages CER needs refurbishment from time to time - revamping, revitalisation - and today's talks have been about that at the end of the 15th anniversary year. There will always be bumps along the way. We sought to find a pathway forward; resolution of those bumps referred to and the SPS comments made by Minister Smith over such things as apples, salmon, tomatoes and the like.

But [the meeting was] also to rejoice in the fact that the CER has created extra jobs - a win/win situation - on both sides of the Tasman. My message to people on both sides of the Tasman: You are the winners out of all of the CER deliberations over the 15 years and out of the practical outcomes which sees extra volume in the two-way trade and in the investment and by degrees in tourism flowing of the goodness of the relationship between Australia and New Zealand facilitated by CER.

I am delighted that Prime Ministers Jenny Shipley and John Howard will meet here in New Zealand at the start of your APEC chair year. This will be a very challenging year for New Zealand. The work must be pushed forward as we build towards the possibility of a Millennium Round - which Australia and New Zealand support - [in] the World Trade Organisation. We need to keep the momentum driving forward in the APEC context and the CER is a very good example of practical cooperation and is a good model as Lockwood has said.

I note with interest the comments about the Xena factor between our two economies, in as much as there has been a ruling made in regard to the Blue Sky Project and we're complying with a High Court ruling and Minister Smith has commented on that. Technically that magnificent - or otherwise, depending on your choice in television programmes - production is not actually a local content New Zealand programme, or even a local content Australian programme - maybe it will be one day - but as Xena draws focus from a certain category of audience from Canberra to Canada and beyond I would simply say that we have reached a happy agreement on that aspect and we've stood some strong buffeting on that aspect on our side of the Tasman.

The only other comment I would make is that it is a case the pressure is always on to backslide, as we found in Kuala Lumpur at the APEC meetings and find at other meetings around the world, but that would be absolutely the wrong way for the world to go - for APEC to go - notwithstanding the economic difficulties faced by many of the economies of the world. As I said on NZBC this morning we will work through this period, and we will do it a whole lot faster and better if we maintain market access and further improve on market access throughout the APEC economies and throughout the WTO members. What caused the world depression in the early 30's to drag on all those extra years was the switch back and u-turn towards, a fortress mentality, trade wars, massive tariffication such as has been applied too often over the course of the 20th century. It would be absolutely the wrong way to go and our talks today have reiterated that. So I am delighted to answer any questions in conjunction with my ministerial colleague and opposite number from the New Zealand government.

David Barber, National Business Review: Ministers, what further work can be done on apples that hasn't been done over the last 76 years?

Dr the Hon Lockwood Smith, Minister for International Trade, New Zealand: I think the critical issue there is [that] up until now New Zealand has made an application for access to Australia for apples, and Australia has assessed the disease risks associated with that application for open access to the Australian market, and the decision has been based on that risk assessment analysis that the risks for open access to the Australian market are too high. So what I think is perhaps worth pursuing now is whether there is any way of managing those risks at all in a way that can help bring the risks down to a level that becomes acceptable to Australia. And we've got to do work on that to see if there is any way forward to achieve that. And we've agreed that that must be done expeditiously, that this is not simply a delaying mechanism. The risk assessment has now just been done, the findings have been released, and we've both agreed that there is a need to look at how we can move from this position as quickly as possible.

Barry Soper, Independent Radio News: What risk level is acceptable to Australia, Mr Fischer?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: These are matters which should be determined on the science, and it is for those with that expertise to come forward. The Federal Cabinet since the

elections has reaffirmed that these are matters which should not be, in any way, shape or form, back door protection but should be determined on the exactitude of the science and expeditiously without delay. I must say while all this is going on, lest you think otherwise, hot smoked salmon is coming from New Zealand to Australia, various forms of value added and processed apple is coming from New Zealand to Australia. The nub issue here is in respect of fresh apple or for that matter uncooked chilled salmon and frozen salmon. We commit, and I reiterate that commitment, to process these matters on the science. It is actually [as much] in the interests of Australian farmers, including marine and aquaculture farmers, as it is in the interests of New Zealanders that these be processed on the science. Right now there are Tasmanian oysters going into the Tokyo market for the first time ever because the Japanese government, after due inquiry, accepted on the science there was no risk for that particular market by the advent of that particular trade which commenced just two years ago. So those who would prosecute a different attitude on this I think are wrong. But we are entitled do it on the science. We commit to that in the communique.

Leigh Pearson, Television New Zealand: So, Mr Fischer, can I just ask you to explain? Would you be satisfied by having orchard by orchard approval for apples for export?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: I don't know that that would be practical. It is not in my portfolio as a detailed jurisdiction, but there are related concepts used elsewhere which relate to what's called area management. These are matters which are something to be facilitated by I hope an early working visit by the new Federal Minister for Agriculture who comes to New Zealand I hope early in the new year to meet with both Minister Luxton and Minister Lockwood Smith.

Leigh Pearson, Television New Zealand: Could you give us an appreciation of what you mean by a "timely resolution" and "worked on expeditiously"? In months, weeks, years? Can you tell us?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: Months rather than years. Months I guess in practical terms rather than in the next fortnight, which will see both our countries go and watch a lot of cricket and go to beaches after a long hard year in Australian politics. Many of us are looking forward to that, although I have to work the first three weeks of January as I will be acting PM.

Leigh Pearson, Television New Zealand: So you expect it to be resolved next year?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: I believe the matter should be further dealt with and processed in the course of 1999 - called on the science - and it would be a reasonable expectation, that time frame.

Leigh Pearson, Television New Zealand: So fresh apples and chilled salmon should be in the supermarkets by the end of next year?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: Well that has to be determined by the process, and by the further process, and that process to this stage has allowed a lot of other related product in, but not the two that you nominate [for] more work to be done.

Dr the Hon Lockwood Smith, Minister for International Trade, New Zealand: I think the key thing today is that we have committed ourselves to a process for taking this issue forward and as the Minister has said we are talking about months not years. And that's a big step forward because up until now where we have had this risk assessment going on and the result of that has been negative and its great so quickly after receiving that report to be committed now to a process for finding a resolution to this problem.

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: Could I just mention one other thing. I should remind that we are now 14 days of that introduction of the euro currency. 1 January 1999: euro legal tender for non cash exchanges, will become operational in Europe. 1 January 2002: euro and national currencies will be fully legal tender for cash and non cash exchange. And 1 July 2002: the mighty French franc [and] the other key currency units of Europe will cease to be legal tender and there will then only be the euro. So we are just 14 days from the next big step in that time table. In the communique you will note that we have said we will be monitoring that very closely.

There are contractual implications for exporters to Europe which we alert our exporters [in] both Australia and New Zealand to. It has almost crept up on the world and particularly the Southern Hemisphere that we are on the cusp of the biggest single change in international world exchange since Bretton Woods and it all happens in a few days time. I don't have any particular concern. In some ways it may well be advantageous to Australia and New Zealand that this euro is proceeding. It will make more transparent some aspects of the Common Agriculture Policy - that would be a good thing. It could also lead to more discerning investment flows from Europe in the direction of Australia and New Zealand.

Barry Soper, Independent Radio News: Mr Fischer, why did you not support Mike Moore for the WTO job?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: The Australian Government nomination is in favour of Dr Supachai. That was a carefully concluded process, internal to the Australian Government. It was based on a lot of contact that we have with Thailand especially over the years and the work of Dr Supachai. I want to emphasise that I accept that there is a credential attaching to Mike Moore which does in many ways make him a very prospective candidate for the position of Director General, and I have absolutely no intention of saying other than I wish him well in the process. Our first nomination is Dr Supachai. That is the Australian Government position. It was not without some difficulty in reaching that

conclusion because I accept the experience of Mike Moore as a former trade minister does give him credential for the position. This is something which will be further dealt with in Geneva. The consultations are continuing over the Christmas period. I do hope that it might be settled absolutely within the first quarter of next year. If it was to be that Mr Moore succeeded in becoming Director General then Australia would work happily with him. I was very pleased to shake his hand and wish him luck again this day on the margins of your chamber. But Dr Supachai I would assess is in the lead as we speak, but equally the gap is closing with at least two of the other candidates including Mr Moore.

Barry Soper, Independent Radio News: Why is Dr Supachai a better man for the job?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: I am not going to go into absolute detail as to why we reached our conclusion, but you must accept that as Mr Moore has great previous ministerial experience in the area of trade negotiations so has Dr Supachai. You must accept that the management of the Asian economic crisis by Thailand has been a cut above the average, and Dr Supachai has made his contribution to that. There is also another connotation which is spoken of but is an informal one and that is [that] it having been the turn of the developed nations to have Renato Ruggiero as the first DG, this now should rotate to a developing nation and then come back the other way. I don't think that's a mandatory thing and I repeat it was a close call - one I conveyed with great courtesy to New Zealand interlocutors and I deliberately stayed with a particular undertaking on timing in respect of that. But equally the Australian Government position is as I have stated. We will have to wait and see what unfolds in Geneva.

Stephen Parker, Television Three: What impact do you think there will be on the trade relationship, and the defence industry, from New Zealand's decision not to purchase a third frigate?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: Well I think there is a lot more depth in our relationship than frigates or apples or tomatoes and it is something where I welcome the increased defence equipment commitment paralleling that decision. I, like Admiral Barry, believe that the Australian frigate is a joint venture project. It is a top quality product and I hope that it might commend itself further down the track. But, to answer your question, I do not believe that it will cause great injury or any injury to the overall bilateral relationship. We are not going to agree on everything, but equally there is now a lot of purposefulness about CER, the spirit of CER, and the relationship between Australia and New Zealand the result of which is not one person on either side of the Tasman in these times of economic difficultly is suggesting that we should reimpose tariffs or bring back anti-dumping and that is because CER has so successfully moved the debate on in an exciting way. I might add that Australia with +5% economic growth is in an upward cycle, helped by a budget in surplus, and a different timing cycle to New Zealand I allow. But that in turn I think is going to help this region although this next year will still be tight and tough for both our economies. It will be helped greatly if China, and USA California remain positive.

David Barber, National Business Review: Dr Smith it appears from the communique that you were unable to persuade Mr Fischer to remove some of Australia's inscriptions on the services protocol?

Dr the Hon Lockwood Smith, Minister for International Trade, New Zealand: On the contrary. Where abouts in the statement does that appear?

David Barber, National Business Review: It says "we noted our commitment to removing the remaining services inscriptions where and when this becomes possible". That doesn't indicate there's any agreement.

Dr the Hon Lockwood Smith, Minister for International Trade, New Zealand: That's obviously an oversight today. Mr Fischer announced Australia was removing three of the inscriptions on the services protocol and reducing the impact of a further two inscriptions. New Zealand of course had already announced previously that of our three remaining inscriptions we had removed the postal services inscription, so we only have two inscriptions left there now. And Australia had eight or nine, and it was announced today [that] three of them are being removed and a further two minimised. So I think [that's] very positive.

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: Subject to ministerial consultation we are going to formalise by letter the three. We are not able to do it as a done deal today, that is why it is not in the communique. The three were airport services, health insurance services, and workers' compensation. The airport services will free up quite quickly and allow the spirit of the one aviation market and other arrangements to proceed. It's no great difficulty, but there is a process - which was delayed by the Australian Federal Election on 3 October - which just has to be completed following the Cabinet reshuffle and I expect to be writing to Lockwood formally very quickly in the new year to take out three more.

Leigh Pearson, Television New Zealand: Just getting back to the apples, this process you are going to have, you mentioned quarantine officials meeting. Is that the process or what is the process?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: It's a couple of things. But [they] will obviously include expediting a meeting at agency level between NZ MAF and AQIS and ANZFA.

Dr the Hon Lockwood Smith, Minister for International Trade, New Zealand: We want to get that process underway as quickly as possible next year. In fact I think we agreed to an understanding that that first get together would happen before the end of February. And this is a big step forward to agree to looking at finding a way to overcome the problems that the risk assessment has thrown up.

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: Right. Thanks very much. Happy Christmas to all of you on both sides.

Dr the Hon Lockwood Smith, Minister for International Trade, New Zealand: Thanks very much Tim.

Leigh Pearson, Television New Zealand: Mr Fischer, do you have any comments on the attack on Iraq?

The Hon Tim Fischer, Deputy Prime Minister & Minister for Trade, Australia: Both our Prime Ministers have made statements in Wellington and Canberra today. Australia is in full support of the steps that have been taken by the USA and Great Britain. It is sad that the circumstance has been reached where this has been necessary and made necessary and the agreement signified by Baghdad about a month ago clearly has not been honoured. I have nothing further to add.

Dr the Hon Lockwood Smith, Minister for International Trade, New Zealand: Thank you people; thank you all very much.