• Dr Lockwood Smith
International Trade

Wellington Town Hall

Thanks Don.

National has great confidence in the ability of New Zealanders to take on the world and win.

That underpins our trade policy.

But the biggest impediments to our exporters are trade barriers.

Over the past nine years, we've been working to break them down.

This year, we're more committed than ever, and 1999 gives us our best opportunity ever to make progress.

Our political opponents want to turn back the clock. But the evidence that trade liberalisation works is overwhelming.

OECD research shows that those countries more open to trade and investment have, over the past decade, achieved twice the economic growth of those that are not.

In New Zealand, the results are equally compelling.

An APEC study shows New Zealand's wine industry has flourished since the removal of protection.

Rather than producing cheap plonk, our industry now produces world class, high-value product.

And that means more jobs for more New Zealanders - fifty percent more in the wine industry since the move to free trade.

Trade liberalisation also puts more money into the pockets of our New Zealand families.

The New Zealand Institute of Economic Research has studied the effects of trade liberalisation on the prices we pay in our shops.

In just four sectors - cars, household appliances, clothing and footwear - trade liberalisation has given a three-person household an additional $22 per week.

By 2010, the gains could be as high as $42 a week for every family.

Add cheaper petrol, tax cuts and an additional 250,000 jobs, and the facts speak for themselves.

But our opponents don't believe in New Zealand or New Zealanders.

They don't believe in our ability to market better products, at a good price to the rest of the world.

They want to reintroduce trade barriers, and cower behind them.

That would be hugely wrong, and CER, our free trade agreement with Australia, shows why.

Back in 1982 when CER was being negotiated by the National Government, many predicted disaster.

Even Sir Roger Douglas questioned whether we could cope.

But Roger was wrong.

In the last ten years, New Zealand's manufactured exports to Australia have almost doubled to over half a billion dollars.

And that's all 1988 dollars. There's no inflation effect there.

Dairy products and food have more than doubled.

Clothing exports are nearly 10 times higher.

Footwear is three times higher.

Across the board the value of our exports to Australia have increased by 57 percent - and that's in real terms.

Our exporters have shown that free trade does work for New Zealand - that we can compete and win; that we don't need to cower behind tariffs as our political opponents would have us do.

Imagine how well we could do if we had global free trade.

But we've got work to do.

Even with Australia - our closest and most open trading partner - there are small but highly irritating niggles.



Air services.

Elsewhere, restrictions are much worse.

The United States puts up barriers against our exporters.

Trade restrictions in the EU are legendary.

All across the world, we face many barriers to our trade.

If we can break these down, the potential to deliver better jobs and prosperity for all New Zealanders is really exciting.

APEC is crucial.

APEC's goals were set down at the Leaders' Summit in Bogor, up in Indonesia, in 1994.

They're simple but inspiring: free and open trade across the region by 2010 for developed economies, and 2020 for developing economies.

And we're making progress towards them.

But earlier this year, Helen Clark let New Zealand down, as we chair APEC and as we do all we can to get Mike Moore into the WTO job.

Helen Clark told the media that "the free trade drive has run out of steam at APEC ... the question is what does APEC do now?", she said.

Helen was wrong.

Just last week, in Auckland, I chaired the APEC Trade Ministers' Meeting, and the results were significant.

Fourteen of the 21 member economies announced further tariff cuts towards the 2010/2020 free trade goals.

Seventeen of the 21 notified improvements to competition policy and moves to deregulate.

And, most significantly, Ministers agreed that the WTO should launch in December this year negotiations to liberalise trade in industrial products - including forestry and fish products - at the same time as it launches negotiations to liberalise trade in agriculture and services.

That was a major move from a forum representing half of world trade, and half the world's population.

And what's more, APEC Ministers agreed the negotiations should be completed in three years, ensuring quick wins for consumers and exporters alike.

APEC's linkage to the World Trade Organisation is vital.

The WTO is the global free trade forum, and its central to National's trade policy.

With 134 member countries, it encompasses over 80 percent of world trade.

It's strength is that it has clear rules and a "world court" to enforce them.

And those rules - and that "judiciary" - apply to all members.

It means a little guy like New Zealand can take on a big guy like the EU. And if we're on the right side of the science and the law, as we were on the recent dispute over access for our spreadable butter, the little guy, New Zealand, can win.

In the last Round - the tortuous Uruguay Round - we made gains that next year mean our exporters will be about 370 million dollars better off.

But this time, we are fighting to see:

? The end of policies that allow countries to use taxpayers money to undercut the world price;
? We want Big cuts in tariffs, including zero tariffs on forest products;
? We want to see zero tariffs on fish products;
? We want open access for New Zealand exports; and
? The end of policies that cause things like butter mountains and wine lakes;

These are challenging goals.

But the prizes are huge - better jobs for hundreds of thousands of New Zealanders, and higher pay packets.

We need wins like our APEC success last week to pull this off. Clark and Anderton can't do it.

But there's an even bigger picture.

Protectionism contributed to the 1930s Depression that, in turn, contributed to the most horrific war in human history.

Millions of people suffered on an unimagineable scale.

But we've learnt from that.

Europe built the European Union to ensure stability and security.

In East Asia, greater trade and economic cooperation has taken more people out of poverty, and on a greater scale, than at any other time or place in human history.

Trade raises living standards.

And brings people together, socially and culturally.

The more trade the more prosperous the world will be, and the more peaceful.

We owe that to our New Zealand children, and the children of all nations.

We can do it. A better tomorrow does start today.