The British New Zealand Trade CouncilPrime Minister
You could be forgiven, over the past 15 months, for thinking that New Zealand's interests start and finish with the Asia Pacific Basin. Seventy percent of our exports go to this region.
But New Zealand's economic relationship with Europe and the United Kingdom is also very important. Nineteen percent of our exports find their way to these markets.
Undoubtedly the Asian downturn has affected New Zealand's economy. Their crisis has become our recession in the first half of this year. Their recovery will help our return to sustainable growth.
The Asian doldrums have also underlined two reasons why we are weathering the storm better than we might otherwise have done. Firstly, our domestic economic reforms have helped New Zealand through the biggest external hit on our economy since the 1970's oil shocks. Our robust banking system, efficient infrastructure, flexible labour market, and floating exchange rates, and hard work and determination by New Zealanders, have kept us competitive.
We need to stick at that task, because others are not standing still.
In the year ahead, Government will continue to progress policies that foster and reward innovation, effort and enterprise.
We will continue to deliver a more liberal environment for business to do business.
We are delivering reduced costs for business by introducing choice into ACC and electricity supply, reducing motor vehicle tariffs and reviewing the Resource Management Act.
The second major factor in keeping us afloat has been the depth and diversification of our exports.
Yes, it is important that thirty-three percent of our exports are sold in East Asia, and that seventy percent are traded with the Asia Pacific basin.
But we don't have all our eggs in one basket. Now, more than ever, we need to reaffirm the importance of the "other" thirty percent of our trade and in particular the pivotal role that two-way trade and investment with the United Kingdom, and the rest of the European Union, plays in New Zealand's economy.
Last year, our exports to the European Union, at $3.4 billion, exceeded those to all the Americas, were twice our exports to South East Asia, and twice those to China.
And the relationship runs both ways. We source twenty percent of our imports from Europe.
Be it in machine goods, motor vehicles, consumer durables, or electronics, New Zealanders exercise their choice, every day, to buy the best that Europe offers. They are able to do so because we have an open economy.
A generation of New Zealanders have grown up with accounts of exhaustive negotiations on butter and lamb access to something called "the EEC", rushed Ministerial visits to Brussels, and legends about the Common Agricultural Policy.
These were times that New Zealand's trading aspirations focused narrowly on Britain and Europe.
Today, New Zealand continues to work away, in Europe, and elsewhere, to gain the best possible access for our exports. We also continue to seek to persuade others to reduce subsidies.
We are making progress.
We shouldn't let history, or different approaches to agricultural policy blind us to the real opportunities that exist to sell in Europe, to discerning European consumers, at the world's best prices. vNew Zealand must see the new Europe as the world's largest and most successful customs and currency union, an economic and political powerhouse which combines shared sovereignty with national diversity, a world trend-setter in taste, style and consumer power.
We should also appreciate that the constraints on New Zealand's exports to Europe are as much the limits imposed by our small size and inability to supply market demand as they are any EU trade barrier. vNew Zealand is a long-standing producer of food for the British consumer.
That is not to ignore the fact that we produce an increasingly wide range of manufactured goods for them too.
But the big foreign exchange earner in the UK remains food, closely followed by wool and wine.
British consumers are faced with a choice of products which is wide and intensely competitive. Those consumers are very discerning both with respect to price as well as to quality.
This is not the commodity market which New Zealand once had almost to itself.
In Britain, as elsewhere in Europe, we have the task of continually developing New Zealand's reputation as a producer of high quality foods and beverages. From this we reap the rewards.
Without subsidies and despite the tyranny of distance, our primary producers, processors, and exporters are competing successfully.
For New Zealand, the British market is a valuable and easily accessible international showcase for the best of what we sell to the world.
Wine is but one example.
Britain is an open and innovative market and it is no accident that this is where New Zealand first established itself as a serious wine producer and where today New Zealand wines win many international awards.
Sheepmeat is another case in point. In just ten years our trade has been transformed from frozen carcasses to one increasingly dominated by cuts, chilled lamb, and consumer packs all backed by quality assurance. It has been a remarkable achievement in meeting and guiding market trends of which the New Zealand industry can be proud.
On the other side of the trade ledger, a similar approach is taken by British and other European exporters.
Products which are internationally competitive both in price and quality will find their way to the New Zealand market.
New Zealand's imports from Britain are no longer dominated by traditional products like motor vehicles.
Instead there is an enormous variety of product covering the full range of manufactures.
I note that amongst the many technologically advanced imports from Britain a major import remains books and magazines, emphasising again the interests we have in common.
A look at our non-merchandise trade further confirms the distance we have come from the straightforward, even simple, commodity relationship we once had with Britain.
We all know that New Zealand visitors to Britain, some on their great "OE", are a significant link in the relationship. It's less well known, however, that British visitors tourists are a major market for New Zealand tourism industry.
Last year, visitor arrivals from Britain ranked fourth, after Australia, the US and Japan.
Of the 149,000 arrivals from Britain last year over half were tourists as opposed to relatives visiting families or business visitors.
This is a major development both for tourism as well as for our bilateral economic relationship.
British investment and migration helped build New Zealand.
Many of the industries which British investment established here now form the basis of the new competitive New Zealand economy.
We want to build on those links. That's why increased trade, investment and immigration are included among the strategic priorities which the Government released last week.
I will be visiting Britain and Germany at the end of January and will be seeking every opportunity to expand New Zealand's opportunities in trade with these countries. There is much to talk about.
My discussions with Prime Minister Blair, Chancellor Schroeder, their Ministers and industry leaders in Britain and Germany will provide an opportunity to review, and deepen our bilateral and economic relationships with two of the major members of the European Union.
Opportunities to lift New Zealand's profile as a destination and partner for tourism, investment and trade will also be at the top of my agenda.
Our role as Chair of APEC in 1999 will provide a context to discuss how the European Union and APEC can work together to pursue new broad-based multilateral trade negotiations under the auspices of the World Trade Organisation.
Issues around the strengthening and reform of the international financial system will be discussed as we look for common ground between APEC, the major G7 economies, and the new European monetary system.
New Zealand has done much in the last decade to enhance its international reputation.
I intend to see my Government continue to advance programmes and policies that will allow New Zealanders to blossom and to see that we acquit ourselves well in the world. The party I lead intends to allow New Zealand to capitalise on every opportunity to ride out the economic downturn and return us to growth and prosperity.
I also intend to draw the contrast of what my party can offer in terms of independence, security, prosperity and growth compared with the negative, dependency, 'we know best' approach of the left in New Zealand politics.
It will be a keen fought contest about the future of our country.
1999 is going to be "New Zealand's year" as we take up the opportunities and challenges for the Millennium, the America's Cup, chairing APEC and the many other events which are planned here over the coming twelve months.
My coming trips to Britain and Germany will provide an opportunity to further all of those agendas.
I commend the British and European Trade Councils for the work you do here in New Zealand and wish you every success in this work over the coming year.