Speech to Maori exporters: New Zealand business and the role of trade in 10 years

Speech to the Tekau Plus Symposium, Te Papa 

E nga mana, E nga reo, E nga iwi, E nga hau e wha, tena koutou, tena koutou, tena koutou katoa.

It is my pleasure to join you this morning for the opening of the Tekau Plus Symposium.

I would like to acknowledge the Federation of Māori Authorities, Poutama Trust and the Maori Trustee for taking the initiative to convene this meeting.

I would also like to endorse a key objective of this forum, which is to build Maori export capacity and capabilities.

We are a country which lives by exporting. Beyond our reliance on export of traditional commodities we also need to ensure that we have innovative firms with the capability to adjust to the new international challenges and to seize opportunities that exist in a rapidly globalising market.

Māori businesses have the potential to be an increasingly important player in our export growth.

The Māori asset base - which provides the foundation for Maori economic development has seen tremendous growth. It has doubled in worth from $8.9 billion in 2001 to $16.4 billion in 2005/06.

Up to 2005, Treaty settlements totalling $705 million were reached between Iwi and the Crown.

Under Michael Cullen as Minister in Charge of Treaty of Waitangi Negotiations, the settlement process is now moving forward very rapidly.

The latest settlement with the Central North Island Iwi alone is worth $418 million, with $13 million annually in income.

The Māori asset base is concentrated in export-orientated areas of primary production and processing with $3.1billion worth of assets in 2005 centred on agriculture, fishing and forestry.

In forestry for example, the potential for Maori economic growth is significant. Maori make up nearly 25% of all workers in the forestry sector.

With an increase of wood supply, jobs and opportunities to develop niche products in forestry for Maori will continue to expand strongly.

Roughly 10% of New Zealand’s commercial forestry sector is grown on Maori land. Furthermore, Maori control large amounts of uncommitted land in many North Island areas suitable for forestry.

In the fisheries sector, Māori are now the largest single player in the industry. Aotearoa Fisheries Limited’s asset base is now reported as being in excess of $434 million.

The Maori Economic Development Review in 2003 showed that the Maori economy accounted for only 1.4% of GDP but made up 2.5% of total exports, indicating a strong interest and ability in export development.

While the core of the Māori export growth will continue to be focused on land-based industries such as farming and forestry, and fisheries, the sector has also grown. They have prospered in areas such as tourism and culturally-based activities.

Maori businesses have thrived on developing cultural tourism. Tamaki Heritage Tours and Whale Watch Kaikoura are two high profile examples of this, and the New Zealand Māori Tourism Council has been active in growing this sector.

There is also growing investment in the tertiary sector and the creative industry – art, films and fashion.

Toi Māori Aotearoa Ltd has demonstrated that there is a prime market on the west coast of the United States for the works of our Māori artists.

The Māori film industry is growing also, and together with the highly-successful Māori Television Ltd there is a potential market for both product and expertise internationally.

Fashion labels like Kia Kaha have the potential to niche market overseas their distinctive brand.

The challenge facing Maori as well as other businesses is to take competitive advantage and potential and transform it into effective business practice and a successful export operation.

Our economic performance has been impressive over the last ten years. Our economy today is about 30 percent larger than it was in 1999.

However, New Zealand’s exports of goods and services have remained at about 30 percent of GDP – a similar level to the mid 1980s. Our exports have increased, but they have not increased faster than overall GDP growth.

We need to do better. We need to know how to deal with, and operate in, global supply chains. And we need to be skilled in marketing, branding and product development.

We need more firms which are globally competitive.

Export Year 2007 was a watershed year for New Zealand in looking to address the challenges that face the export community.

We looked very closely at areas the Government and businesses, together, had to focus on to better position New Zealand for future export growth.

Export year saw increased funding for export marketing through the Market Development Assistance Scheme with an additional $34 million going into the programme.

And resourcing for New Zealand Trade and Enterprise to expand its presence on the ground in Asia was boosted by a further $24 million. NZTE has a range of programmes such as Beachheads and Path to Market to help firms with exporting potential, as well as supporting programmes such as mentoring and incubator programmes which help individuals and companies commercialise innovative and creative ideas.

The New Zealand Export Credit Office has seen its product expanded into new markets allowing New Zealand businesses to bid for contracts that were previously out of reach.

At a local level, regional export development plans have been established by business organisations focussing on co-operation and collaboration among exporters and at the ground level the Exporter Education programme launched a number of new courses in Export Year.

Innovation will play a central role in the ability of our exporters to prosper in the global economy.

One major initiative that the Government has recently developed to foster innovation is New Zealand Fast Forward.

This initiative is focused on investing in economic transformation, innovation and enhanced sustainability of our pastoral, food and related industries.

It will help to connect producers and manufacturers with the scientists and researchers who can then develop new technological innovations designed to help make production more efficient and sustainable.
The Government will make a capital investment of $700 million over 10-15 years under this initiative.

Industries and businesses in the pastoral and food sectors have agreed in response to also substantially increase their spending on innovation, beyond "business-as-usual" investments, aiming overall to match the level of Government's investment.

As Trade Minister one of my roles is to negotiate Free Trade Agreements (FTAs) with Governments that improve the terms of access New Zealand businesses have into foreign markets.

FTAs give our exporters advantages over their competitors from third countries when selling their goods into the FTA partner market by reducing tariff rates and other barriers to trade.

They also counter the risks of negative trade diversion that arise if we are excluded from or fall too far behind FTAs negotiated by our key trading partners. This is a particular risk for us in the context of Australia.

We have a very active FTA agenda. Two weeks ago, we concluded substantive negotiations with the ten members of the Association of South East Asian Nations (ASEAN) for a comprehensive free trade agreement, which I hope will be signed in December.

The Asean countries collectively take $4.6 billion in exports from us each year, and the market has other the last three years grown at an average annual rate of 24%.

We have active negotiations under way with Malaysia and the six members of the Gulf Cooperation Council in the Middle East.

The United States has recently joined the investment and financial services chapter negotiations of the Trans-Pacific Strategic Economic Partnership Agreement – or P4 – with New Zealand, Brunei, Chile and Singapore,

We are hopeful that this will lead to comprehensive FTA negotiations with the US in the P4 setting in the near future.

Access to a free trade agreement with the USA, our second largest market, is obviously important and we are working hard right now to secure this negotiation.

We have also made solid progress in preparatory processes for the launch of FTA negotiations this year with Korea, India and Japan.
I hoe to begin negotiations with Korea, our fifth largest market, early next year.

In April, New Zealand became the first OECD country to conclude an FTA with China.

The FTA, which will come into force on 1 October, covered goods, services, investment and intellectual property. It also included dispute resolution provisions.

The “first-mover” status we have achieved with China means that for a period of time we will enjoy a significant competitive advantage over our key competitors in China.
Our exports are expected as a result of this agreement to increase by between $225 million and $350 million per year above normal growth for the next 20 years - or about 20% to 30% above current baselines.

In due course, the FTA will also result in a reduction in tariff payments of approximately $115 million per year.

I welcomed the support of the Māori business delegation – led by Paul Morgan, Wayne Mulligan and Wally Stone who travelled to Beijing to participate in the New Zealand – China FTA signing events.

Reflecting the unique importance of Maori culture to New Zealand, there was also significant Maori cultural component to these events, with the kapa haka group Te Manawa Maurea from Gisborne and Deborah Wai Kapohe participating in them, and with Lewis Moeau accompanying the delegation as our kaumatua.

Te Manawa Maurea brought the house down by singing in Mandarin a well known Chinese love song as well as their repertoire of Maori songs.

In all of our FTAs, we have sought to incorporate a clause which states that the New Zealand Government cannot be prevented, under an FTA, from taking measures that it deems necessary to fulfil its obligations to Maori, including under the Treaty of Waitangi.

New Zealand’s economy is largely open and competitive. Most of the tariff and other protections we had were removed during the 1980s and 1990s.

Yet, we continue to face high export barriers in many of our export markets overseas.

For New Zealand, FTAs are primarily about securing a removal of the barriers that our exporters face, and protecting our businesses from the negative impacts of trade diversion due to other FTAs.

They are about ensuring that our trade-dependant economy can continue to grow. It is this economic growth that creates new jobs and, ultimately, higher living standards for all New Zealanders.

We have in return for elimination of tariffs on our exporters agreed to remove remaining tariffs on our manufactured products – such as in textiles, clothing and footwear – in our FTA negotiations.

However, the removal of tariffs are phased out over a period of time, to ensure that industries are able to adjust to the changing environment.

In conclusion, export growth is the key to New Zealand’s future well-being. As a small country growth in our production depends on developing international markets.

And with our exchange rate falling in conjunction with the fall in our interest rates down a further .5 this morning, New Zealand’s competitive advantage in export markets is growing stronger. This together with a slow down in domestic consumption means that this is a very good time to consider entering the export market.

The Government will continue to work to open new doors for New Zealand exporters through the negotiation of high quality, comprehensive free trade agreements; and through initiatives such as New Zealand Fast Forward.

But it is businesses that have to walk through these doors. Maori business-led initiatives such as Tekau Plus are important in helping Maori businesses develop leadership skills and networks that will be necessary for more Maori businesses to operate, and succeed, in the global business environment.

Best wishes with your endeavours to ensure that Maori businesses play an important role in the future export-led growth of our country.

No reira tena koutou, tena koutou, tena koutou katoa.