Rising to Global Challenges: Trade Wars and Climate Change

Speech to the Institute of International and European Affairs, Dublin 

July 16,  2019

Thank you for the opportunity to be among such a group of distinguished guests this afternoon. It’s a genuine pleasure to be in Dublin.

As many of you are aware, New Zealand and Ireland recently opened embassies in Dublin and Wellington. Something which may come as a surprise to many who rightfully might have expected a long-standing presence given our shared history and heritage, and the contribution Irish migrants have made to New Zealand’s story and our national fabric.

In 1840, William Hobson, hailing from Waterford, signed New Zealand’s founding document – the Treaty of Waitangi. Sixty-five years later, Dave Gallaher, a hero of the sports and battle fields – now memorialised in bronze in Donegal – captained the original All Blacks.

In the 1980s New Zealand stood shoulder-to-shoulder with Ireland in helping to bring an end to the troubles by establishing the International Fund for Ireland. At the same time, many of Ireland’s agricultural leaders of this generation were learning their trade on New Zealand farms. From 2011 Irish tradespeople seeking prosperity in the aftermath of a crisis at home helped rebuild a devastated Christchurch. And 60 days ago, the Taoiseach [pron tee-shock] stood with New Zealand Prime Minister Ardern in Paris, rejecting the hate-inspired attack on New Zealanders practicing their faith in Christchurch and committing to tackle online violent extremist content.

Our similarity in size, geography, our rich natural capital and resulting economic strengths are all often cited as reasons for such closeness between Ireland and New Zealand.

But the connection runs much deeper than this. A sense of connected identity and shared outlook on life. Common values that go to the heart of who we are.

It is this that has driven meaningful, global New Zealand-Irish partnership. It has underpinned our leadership of the New Agenda Coalition to combat nuclear proliferation; has sparked innovation in our joint creation of the Small Advanced Economies group to cultivate policy exchange, learnings and aspiration to do better. is why Ireland stood with New Zealand in Paris in signing up to the Christchurch Call to counter extreme violent content online.

All global challenges. In some cases crises. All examples of New Zealand and Ireland working together to rise to them.

As New Zealand Minister for Trade and Export Growth, and the Environment, there are two current challenges that weigh heavily.

The outlook for global trade today is the darkest I can remember in all my years of public service. 40 new trade restrictions alone in six months last year, introduced by G20 economies, affecting half a trillion in exports. In the last two years, we have seen the highest increase in protectionist measures since the World Trade Organisation was established. Even in the engine room of current global growth – economies in the Asia Pacific – analysis shows a 74%  increase in non-tariff barriers in the region between 2004 to 2015.[1] That this is bad for small, dynamic and internationally dependent economies like Ireland and New Zealand goes without saying.

We have much on our plates: Managing the challenges of Brexit; navigating global power tension – doing our best to sidestep collateral damage while encouraging dialogue and standing up for our own interests. Mounting yet another effort – this time at the eleventh hour – to safeguard and strengthen the WTO in Geneva. This list goes on and the risks are serious.

The stakes are significant for trading nations like ours.

Part of the response starts at home. A fraying of the domestic consensus in many countries, and New Zealand has not been immune from this, has led to a rise in distrust over trade and globalisation.

At its heart, in my opinion, this was born of the insecurity of the middle class. This itself was caused by many factors including digital disruption, wealth going to the 1%, the Panama Papers which showed how little tax was paid by some, extremes on social media, the global financial crisis and its flow on effects, and the sense that trade agreements work for multinationals rather than ordinary people.  cornerstone of my effort in New Zealand has been to launch a genuine dialogue with New Zealanders to develop a new Trade for All policy that ensures outcomes deliver for everyone, including women, Māori, rural communities and SMEs. Alongside this, an independent Trade for All Advisory Board will make recommendations to the Government this year.

This is not about upending core things. We will continue to fiercely advocate for free and open global markets. Our efforts to lead an inclusive trade agenda will only intensify, including through our initiatives like the Inclusive Trade Action Group with Canada and Chile, and our work to curb environmentally harmful subsidies. There are things we must do better, as well as communicating more effectively why international trade is so vital to New Zealand’s economy, that globalisation is an irresistible force and that we should embrace technological change not be shielded from it.

When we are talking with New Zealanders about the trade agenda, many are surprised that we have only just now got around to negotiating a free trade agreement with the EU. I can understand that reaction – because it is out of step with the close partnership across so many other forums like disarmament, in environmental protection and climate change leadership, in standing up for human rights, on cyber security, and more broadly in global bodies in New York, Geneva and beyond. As my Foreign Minister colleague Winston Peters said on this very platform when he visited in November last year to open the Embassy, free societies need to support each other.

So I am pleased that we are finally making progress towards completing a truly progressive and high quality New Zealand-European Union FTA, which brings me to what we can do together – championing free trade, open markets, and – critically – delivering to that ambition. By doing so, opening up new opportunities for business and diversifying their market risk. 

The negotiations themselves were launched only last June. But we have been talking and preparing for much longer, which explains why European Commission President Juncker is hopeful we can conclude the agreement this year. This is our number one, but not only, trade policy priority. Of course, it’s more important that we get the right type of agreement – one that truly makes a difference for business.

That type of agreement will lift Irish companies in New Zealand, and Kiwi companies looking to make Ireland their European home. It will bring us closer together by growing trade and investment, and creating opportunities for the Irish exporters who accompanied Minister Humphreys to New Zealand last month. Companies like Combilift who are breaking into the New Zealand market by supplying Ports with critical infrastructure – their first southern hemisphere customer for some products. Or home-grown Irish companies like Fexco and Westbourne IT that have chosen New Zealand as their entry point into the Asia-Pacific.

There are some complexities. I haven’t come across a trade negotiation that doesn’t. Some New Zealand producers and businesses sometimes get a mixed reception from our European friends for simply wanting to export the same products to you that you trade freely with us. This despite, for example, the large trade surplus Ireland and Irish agriculture currently enjoys. But I am confident these issues can be managed while still achieving a very high quality agreement.

And in this era of increasing illiberal policies and a retreat to small-minded protectionism, if the EU doesn’t lead in carving out forward-thinking and progressive new trade deals with important partners and like-minded friends like New Zealand, I am deeply concerned about what the future holds for global trade.

But I’m an optimist. We are both committed to the cause. We both have very experienced negotiators on the case that are very good at what they do and have managed transitions very successfully in the past. The last few years has seen both our countries conclude agreements that represent markets with a sizable bulk of global GDP, with the focus increasingly shifting to countries where we are being actively excluded from markets. The New Zealand-EU FTA will ensure we put that discussion to bed.

What also gives me hope is our shared drive to put sustainability at the centre of the agreement. This includes a drive to:

• Ensure trade agreements do not lead to a derogation from important environment and labour laws;
• Support the credibility and robustness of the Paris Agreement and to take and advocate for ambitious climate action that helps keeps the 1.5 degree temperature limit within reach;
• Tackle environmentally harmful subsidies – subsidies that put more CO2 into the environment, or leads to over fishing.
• Promote products and services that are good for the environment by prioritising the treatment they receive under the agreement.
  A truly ground-breaking agreement can make a difference on our shores, and spur others. And in this way our trade priorities can also contribute to tackling a second, frankly far more existential global challenge – climate change.
  We need all the tools we can muster. Achieving the Paris Agreement’s goals requires economic transformation on a very large scale. It also represents a huge opportunity for those who lead.
  I’m visiting Dublin when climate legislation is before the New Zealand Parliament and following the release of Ireland’s All of Government Climate Action Plan to Tackle Climate Breakdown.
  Some bold decisions have been made:
  In New Zealand:
• An end to new offshore oil and gas exploration permits;
• Working to achieve 100% renewable energy generation in 15 years. We’ve gone from 64% to 85% in the last decade.;
• A Zero Carbon Bill that mandates methane reductions of 10% by 2030 and between 24 and 47% by 2050. We are taking all other gases to net zero and creating a legally binding objective to implement policies that contribute to  limiting global warming to no more than 1.5 degrees Celsius;
• A target to plant 1 billion trees in the next 10 years;
• A commitment to a just transition for those affected by our journey to our low emissions future.
• This means that by 2050 New Zealand will be making no contribution to global warning.
  In Ireland:
• a fourfold increase to the carbon tax to €80 a tonne and to more than double renewable energy generation (to 70%) by 2030;
• intentions to phase out the sale of petrol / diesel cars from 2030 and pushing for more zero emissions vehicles in the immediate future; and
• working towards a more ambitious 2050 objective of achieving net zero emissions.

Many varied policy levers need to be pulled to drive the transformation to a low-emissions, climate resilient economy. And it sits alongside other environmental priorities our Government has, including new environmental standards to halt the degradation of fresh waterways and water quality in New Zealand. So many of the issues that we face now transcend borders and no one country can fix them alone. International action and  commitment are needed to achieve the results that we want.

At present the New Zealand Ministry of Foreign Affairs and Trade’s efforts include seeking high-ambition provisions on climate change in FTAs under negotiation; leading efforts on fossil fuel subsidy reform advocacy internationally, including at the WTO ahead of the June 2020 Ministerial Conference; working to build a coalition of countries taking action to mitigate agricultural emissions through the Global Research Alliance on Greenhouse Gases; funding work by the OECD on carbon leakage risks in jurisdictions that include a carbon price in their economies (including for agriculture); and engaging in UNFCCC work streams that touch on trade policy. Through our engagement in APEC we are putting sustainability issues on the agenda of the Asia-Pacific’s preeminent trade and economic forum.

As things stand, there are a host of additional trade-related policy actions which could contribute meaningfully to combatting climate change. These include further liberalising trade in climate-friendly technologies (including goods and services), concrete action on reforming subsidies to fossil fuels, fisheries and other environmentally harmful subsidies, and promoting the development of international carbon markets with environmental integrity. New Zealand is looking for the most effective way to advance all these issues.

Both Ireland and New Zealand, as agricultural producers, also face challenges unique to our communities – like tackling on-farm emissions, keeping our farms disease free, and protecting the environment.  We are working together on these issues through initiatives such as the Global Research Alliance. New Zealand and Ireland are currently co-chairs of the GRA Livestock Research Group.   At last year’s climate change conference New Zealand and Ireland worked together to convene a three day event focused on harnessing the triple win of reducing agricultural emissions, increasing productivity, and strengthening resilience to climate impacts.  It was relevant and well received so our officials are now working together on possible follow up.  

New Zealand is co-leading, with China, the nature based solutions pillar of the UN Secretary-General’s climate change summit, to be held in September in New York.    Amongst its deliverables, the pillar will seek political commitment to reducing food system emissions, underscore the need for community and private sector engagement, emphasising the need for practical policy and practical implementation targets.  Under the auspices of that pillar New Zealand has proposed a new agriculture initiative, focused on investment in strengthening developing countries’ ability to monitor agricultural greenhouse gases, to increase ambition on agriculture within nationally determined contributions, and mobilising investment in agricultural mitigation research.   We will call upon countries such as Ireland to come on board.

That’s a weighty agenda. And, understandably, I have only touched the tip of the iceberg. But Ireland and New Zealand, working closely together, have risen to big challenges before. And I’m confident we are doing so again.