Closing Session, Joint Taiwan-New Zealand Business Councils: New Zealand & TaiwanForeign Affairs and Trade
Park Royal Hotel, Christchurch
There may be some people around the world smugly saying "I told you so" about Asia, but we in New Zealand aren't among them. We in New Zealand see ourselves strongly as an Asia Pacific economy, and we're committed to Asia for the long-haul. We're not fair-weather friends. We believe the 21st Century will be the Asia Pacific Century. So it's very positive to see this contact between the Taiwan-New Zealand Business Councils taking place at this time. And I'm very pleased it was possible for me to come to Christchurch for your closing session.
If there were ever any doubts that the people of New Zealand and the people of Taiwan have much in common, academics from the Australian National University and Massey and Victoria universities may have put them to rest forever. New DNA research suggests that New Zealand's first settlers - the Maori people - may be related to people who lived in eastern China and Taiwan island 5,000 years ago. Who knows?
But what we do know is that the relationship between the business communities of Taiwan and New Zealand is certainly growing closer by the day. Our resource structures are complementary. We're natural trading partners. We look forward to your joining the World Trade Organisation, just as we do all economies. We're pleased to have completed our bilateral negotiations on your accession. But already our businesspeople are now selling Taiwanese people products worth nearly NZ$550 million a year. That's up from only around NZ$170 million ten years ago. And trade between our two business communities is nearly in balance with New Zealanders buying NZ$550 million from Taiwan in the year to June 1998.
I trust that our dairy products, seafood, beef and fruit are becoming staples of the Taiwanese diet, and that our forestry products are of a standard you expect. But I'm also confident our high tech specialist products, like computing machinery and communications equipment are getting the recognition they deserve. New Zealand companies, like Christchurch's Tait Electronics Ltd represented here tonight, are leading the world in their fields. I highly recommend all the New Zealand organisations represented here tonight.
As a former Minister of Education, I can also highly recommend New Zealand schools and tertiary institutions to the people of Taiwan. Nearly 1,000 Taiwanese students are studying here, and we would welcome more.
In tourism, we in New Zealand also enjoy meeting the 40,000 people from Taiwan who visit here each year. When Russian Prime Minister Sergei Kiriyenko was sacked by President Yeltsin last month, he knew that Queenstown and Rotorua were the best places in the world to take a holiday. Many Taiwanese people obviously agree with him. We're pleased to welcome them.
Earlier this year, I travelled in the opposite direction when I made a private visit to Taiwan. I recognise some of the people whom I met while I was there. It's good to see you again. I must say I was very impressed with Taiwan, as a dynamic economy. It was very valuable for our businesspeople - from an economy of just 3.5 million consumers - to be sharing ideas with businesspeople from an economy of 21 million people. As the most geographically isolated country on Earth, we consider direct face-to-face contact to be very, very important.
There are great barriers of distance between us, and some cultural differences. But I don't see them as insurmountable. Modern transport and communication systems make the geographical distance increasingly irrelevant. And organisations like the joint business council ensure our people know one another better and better.
I want to thank the joint council for its contribution to that process. Since being established in 1984, it has made a very positive contribution to trade and investment between our two economies. It's encouraged exchanges and built better understanding. It's promoted partnerships in trade. And it's identified opportunities and explained the respective trading environments. I have to say that, despite that work to date, we in New Zealand still feel we aren't as well known in Taiwan as we would like. My thanks to those who have travelled here in order that you can take back to Taiwan what I hope are good impressions of New Zealand.
Another major similarity between New Zealand and Taiwan is the way in which we have both be affected by the Asian Economic Crisis. As two APEC economies, we've both felt the ill-winds. But we've both withstood it better than many other economies in the region. Taiwan has suffered a downturn in your economy and in trade. There has been a small drop in your exports and undoubtedly there will be a further drop. But you don't have many of the structural problems of other APEC economies. There's no doubt you'll see out the difficult times.
In New Zealand, it's a similar story. Of our 10 largest export markets, 6 were in East Asia - 7 if you include Australia. And some of our key export industries have suffered huge drops in sales to key Asian markets. Our forestry industry has lost over a quarter of its exports to Japan and Korea. It's down nearly $300 million in those two markets alone.
But our economy has proven itself open enough, innovative enough and flexible enough to minimise the impact of the Asian downturn. Our provisional trade figures suggest that our exports actually increased 7.7% in the month of July 1998 compared with July 1997, before the crisis. On an annual basis, provisional figures suggest exports were up 4.2% in the year to July 1998 compared with the year to July 1997. While the value of our exports to economies like Japan, Korea, Malaysia and Thailand all dropped, we achieved big increases in the value of our exports to the United States, the Hong Kong SAR, China, Germany, Singapore, Italy and Mexico. The value of our exports to Belgium was up nearly 50%. The most recent figures on our trade volumes in the July quarter were also satisfactory. Obviously they were down on the July 1997 quarter. But we were up over 10% compared with the March '98 quarter
Like Taiwan, we are certainly not down for the count from the Asian turmoil. In fact, like Taiwan, we believe we can bounce back. We are going to suffer a small recession this year. Treasury forecasts indicate negative 0.5% growth to the year March 1999, mainly due to a contraction in the economy in the first six months of this year. But we now expect growth of 2.9% in 1999/2000 and 4% in 2000/2001. We are going to be able to maintain our Government surplus this year, although Treasury is predicting small deficits in the following two financial years. The Government is now seeking to avoid that.
I hope that bigger economies around our region look to the lessons from New Zealand's much smaller economy, and from Taiwan. That's because, if New Zealand were still operating our economic policies of the 1970s and mid-'80s, this Asian Crisis could well have been devastating to us. We ran a highly-regulated, highly-protected, highly subsidised economy. Inflation was controlled only because the Government banned price increases. Despite tax rates of up to 66%, we ran extraordinary Government deficits, peaking at over 8% of GDP. We had a highly inflexible, union-dominated labour market. We protected our economy even from competition from Australia. It failed dismally as we fell down the living standards league tables. Back then, our business sector would not have been flexible enough to respond.
We now have one of the most open and competitive economies in the world, current difficulties aside. Our independent central bank is contracted to deliver price stability. We run budget surpluses, with a low-rate, broad-base tax system. Employers and employees generally work together, not against one another. And we have got rid of almost all our subsidises and protectionism. Even our farmers are subsidised only to the tune of 3% of the value of production, and that is for public good scientific research. We have no tariff quotas and our last remaining tariffs will be abolished well before APEC's deadline for developed economies of 2010. What's more, the New Zealand businesspeople here tonight will be pleased to be assured that the Government is committed to making sound, substantial progress on improving the environment for business through microeconomic reform, like the electricity reforms, reducing compliance costs and the review of the implementation of the Resource Management Act.
It is that much more open, flexible, dynamic, innovative economy which is enabling our business sector to minimise the impact from Asia. And sound economic policy has also ensured Taiwan has suffered far less than other APEC economies.
It is important that both New Zealand and Taiwan use our contacts around the APEC region to impress upon other economies the need for economic reform. Japan, in particular, is critical to rejuvenating business confidence in Asia. Businesspeople round the APEC region have a role to play in encouraging your contacts in Japan to support its Government in revitalising its economy and reforming its banking system.
An important signal will be the APEC trade ministers' and leaders' meetings in November. APEC's credibility is at stake. In Vancouver last year, just after the Asian Crisis hit, APEC leaders showed great vision and courage in agreeing in principle to liberalisation of trade in nine sectors: energy, toys, gemstones and jewellery, chemicals, medical equipment and instruments, telecommunications, environmental goods and services, and - of greatest importance to New Zealand - forest and fish products. It was a balanced package designed to immediately benefit all APEC economies.
At the APEC trade ministers' meeting in Kuching this year, the package remained on track, despite difficulties Japan had in agreeing. Economies like Korea, Indonesia and Thailand showed tremendous courage in continuing to support the package in full. Agreement was reached, with only negotiations on flexibilities still required. It will be the November meetings which decide its ultimate fate. It is important that our two economies remain united on the package going ahead.
For the package to fail now would be to set back the APEC agenda enormously. It would call into question its ability to achieve genuine trade and investment liberalisation. But if the package can be signed and sealed it would signal that Asia is back. It would signal that APEC can be the positive force for trade liberalisation in the 21st Century that I believe it should be, and can be. It would help to boost business confidence globally. And, given that APEC represents half of world trade, it would be a powerful precedent for the rest of the world to make progress through the World Trade Organisation.
Your role as businesspeople is vital. As Philip Burdon would have explained today, the APEC Business Advisory Council has played a major role in getting the politicians to set more and more ambitious goals. Ultimately APEC exists to benefit the business sectors and the people of the region. Your advice to APEC meetings can get politicians to act, whereas without it they may not.
For well over a decade now, the New Zealand business community and the New Zealand people have seen themselves firmly as part of the Asia Pacific region. Much of our history and culture comes from Europe, but we are an Asia Pacific economy. We believe that the 21st Century will be the Asia Pacific Century, and we look forward to being part of it. The current difficulties will be put behind us. Nothing is more certain than that. And the business community of New Zealand looks forward to working with our partners from the business community of Taiwan.