NZ DOES WELL AT APECInternational Trade
New Zealand has done extremely well out of the recent Asia Pacific Economic Cooperation (APEC) summit in Vancouver. We put a lot of hard work into getting our APEC partners to accept a New Zealand-sponsored proposal for early liberalisation in two of our key export sectors, fishing and forestry. The deal means more jobs and a stronger economy for New Zealanders as trade barriers in these and another seven sectors are phased out from 1999.
With fish and forest products exports to the APEC region worth $3 billion last year, achieving early free trade for these sectors was a real coup. It was believed we would be lucky if we got just one of those sectors accepted. Now both of these industries are set to reap the benefits of accelerated liberalisation. Previously, the target was to completely free up trade within APEC by 2010 for developed economies and 2020 for developing economies. The new deal means all tariffs on fish are due to go by 2005, while all non-tariff measures such as quotas and subsidies are due to be removed by 2007. Scrapping subsidies for fishing will mean less incentive to overfish -- this will enhance the sustainability of global fisheries resources.
Tariffs on forest products are due to be removed by 2004 at this stage. The removal of tariffs and other trade barriers will open up new export opportunities, which will in turn help create the jobs and the stronger economy I mentioned earlier.
It's still too early to say exactly how much the APEC deal will benefit the New Zealand export sector in dollar terms. But going by current trade levels, the deal means a $70 million cut to the tariffs placed on New Zealand's fish and forest products within APEC.
We expect the overall benefits to be substantially higher -- in the hundreds of millions of dollars a year range -- in terms of the value of removed trade barriers and extra sales.
Naturally the economic difficulties which have beset parts of Asia are a concern for exporters who may worry those difficulties could interfere with the anticipated benefits of the deal. But, at the very least, early liberalisation means the detrimental effects of any problems in Asia should be lessened.
And there are three other major benefits stemming from the APEC deal.
It's been agreed that another six sectors on top of the nine I mentioned earlier will also be liberalised quicker than the 2010/2020 deadlines.
How to do this will be considered next year. The six sectors include food. We'd be delighted if this could include as broad a range of food products as possible as it would open up a whole range of new opportunities for our key agricultural sector.
The APEC deal will also act as a catalyst for global liberalisation of these sectors through the World Trade Organisation (WTO).
This has happened before. Last year a number of APEC members endorsed the idea of liberalising the information technology (IT) sector, paving the way for a WTO agreement to eliminate tariffs on IT products.
If the same could be achieved for forestry and fish products next year it would mean a world first agreement for full trade liberalisation of primary product sectors.
That could assist in the work on the liberalisation of agricultural trade that I will be pursuing through the WTO in negotiations scheduled for the end of 1999. Our arguments at those WTO talks would be far stronger if APEC has already agreed to liberalise food trade.
The APEC deal could also help our plans for a Free Trade Agreement with the United States. The US Congress supports liberalisation in these sectors but the president does not have fast-track negotiating authority to pursue progress.
That means the APEC agreement may persuade Congress to give him such authority. The US administration has made it clear it needs fast-track authority before advancing a free trade deal with New Zealand.
New Zealand wants to advance the free trade cause in a forthright and urgent manner. Make no mistake, freeing up international trade for our key export sectors, such as fishing, forestry and agriculture, is one of this government's key economic objectives. Freer trade will help us create even more jobs, more wealth and rising living standards for all New Zealanders.