Office of Hon Jim Sutton Speech Notes

Exporters' Forum meeting, Wellington

Ladies and Gentlemen: thank you for the invitation to speak today.

The past month has been a whirlwind for me - travel to Qatar in the Middle East for the World Trade Organisation ministerial meeting where we launched the Qatar development round, as well as welcoming China and Taiwan into the organisation, and then travel to Singapore, to review the first year of the Closer Economic Partnership trade agreement, and then to Hong Kong, where officials were negotiating another possible CEP agreement.

All these meetings have direct spinoffs for you.

Team New Zealand did outstandingly well at the WTO meeting in Doha, Qatar.

We succeeded in working with various groups of other WTO members in persuading all the141 other members to support a text that will form the basis of the negotiations that will now start. That text includes a significant number of issues that were important for New Zealand.

First and foremost was the inclusion of the phrase "phasing out" of agricultural export subsidies.

For New Zealand and other agricultural exporting nations in the Cairns Group, that phrase had to stay. We would have preferred the word "elimination" - but the Europeans would not wear that. For a while, it looked like the French and Irish members of the European Union would not wear "phasing out" either - they threatened an EU walk out, blocking the launch of a new round.

Europe is already reducing some agricultural subsidies, and the chances are that it will do a lot more in the next few years as the membership of the European Union grows and the Common Agricultural Policy undergoes urgent restructuring.

The Qatar text is, after all, only the basis for negotiations - it's not the end-point. We have another four years of fierce negotiations to go before we'll see a final result for all this work.

But if sectors are to be included in those negotiations, we have to get them on the table right at the start.

That's why I am delighted to have references to phasing out agricultural subsidies and improvements to market access for agricultural goods in this text. It's a good starting point.

Now the Cairns Group of agricultural trading nations and the developing world can work together to see progress on this vital issue.

Agriculture was left out of international trading reform for more than 50 years. It made it onto the agenda for the first time for the Uruguay Round. But it is still a long way behind manufactured goods.

The average bound tariff rate for manufactured goods has fallen from 50 per cent to less than 4 per cent during the past 50 years, the average bound tariff rate for agricultural products is still more than 40 per cent.

It's time to have a catch-up for agriculture. It's time countries from the Cairns Group and from the developing world benefited from the international trading system the way industrialised nations have.

New Zealand, Australia, other Cairns Group members, and the developing countries (many of whom have up to 80 per cent of their workforce engaged in food production) need market access on fair terms.

Agriculture needs to be treated as other products are, so that we can all concentrate on producing what we do best. And on producing things consumers actually want.

You can be proud of the team that formed the New Zealand delegation.

Not only did they work extremely hard to achieve the inclusion of the phasing out of agricultural subsidies, but they also won the inclusion of a commitment to eliminate fish catch subsidies.

New Zealand, as convenor of the "Friends of Fish" group at the WTO, has led the way on this issue since 1997. It has been a hard fight, again against the Europeans, Norway, Japan, and Canada, but this result holds real promise.

The global fishing industry is worth about US$50 billion a year - 20 per cent of that in subsidies.

If we can wind back subsidies to fishing industries, it will be good for fisheries exporters such as New Zealand, good for developing countries competing agains subsidised rich country fleets, and above all, good for fish stocks being ravaged by subsidised overfishing.

Perhaps the proudest New Zealand achievement was to broker the ice-breaker deal of the conference - the TRIPS agreement which enables poor countries to use cheap, generic drugs to fight public health emergencies, such as the HIV-AIDS scourge.

That was the first sector to reach agreement at the Doha conference, and our people were right in the middle of it.

No wonder WTO director-general Mike Moore describes New Zealanders as the master race to anyone who will listen?.

The results from the Qatar development round are still someway off, perhaps four years away.

But there are tangible results already from the Doha meeting. The accession of China and Taiwan, which will come into force in about a month, means significant benefits for us, and across all sectors, not just agriculture.

The membership packages negotiated with both economies means benefits of about $100 million in tariff reductions, based on current trade levels. That's not to be sneezed at.

And we don't have to do anything - we don't have to lower our tariffs an iota - no jobs here are at risk because of China and Taiwan joining the WTO.

The WTO provides the broad framework of rules for international trade and a forum for pursuing trade liberalisation at a global level. But high quality CEPs deepen economic interaction. When they are based, as New Zealand's are, on the multilateral framework, they can also provide guidance on the direction in which the multilateral rules should evolve. They therefore complement the WTO system and will remain an important element of New Zealand's trade policy.

I do not see that these free trade areas and Closer Economic Partnerships as new defensive walls that divide regions because they exclude neighbours who don't belong. Rather, they signal a determination to head even faster towards the goals that all WTO members are committed to.

Such agreements aim to make it easier for our traders to do business in each other's economies on terms as close to equal as possible.

They lower trade barriers or 'bind' duty-free entry so those barriers can't be re-erected in the future; they address the dross of red tape that adds to the cost and hassle of getting goods to market; they harmonise areas like regulations, professional qualifications and standards and making them transparent, so the practitioners from one market can have confidence they'll be on a reasonably even footing with the local competitors when opening up shop in the partner economy; They highlight areas of opportunity that might otherwise remain obscure or difficult to access, such as large government contracts.

Finally, CEPs offer the opportunity to address the overarching nature of an economic partnership, to knit together and strengthen the separate areas that make up the relationship.

Last week, I visited Singapore for the first ministerial review of the New Zealand Singapore. This review went well and will be repeated, It is very important that Singapore and New Zealand Ministers continue to take a close interest in developments so that we can make sure that we keep moving forward. The whole aim of the Agreement is that it should be a dynamic arrangement.

I also visited Hong Kong, at the same time as our officials were there for another round of CEP negotiations. Those negotiations are taking longer than anticipated, but I expect progress will be made.

New Zealand sees merit in a trade agreement with the United States. The United States is not just the world's largest and wealthiest market. It is also a crucial market where ideas and innovation and investment and initiative and technical knowledge and research are all sold and bought and exchanged. Engagement with the United States is an important part of any national strategy for success in the global market. And as I see it, a trade agreement is the best possible way of securing and maintaining that engagement with the United States.

New Zealand is certainly not interested in low-quality trade agreements which would undercut what needs to happen at the WTO. We strongly oppose narrow agreements which opportunistically pick the low fruit, but leave the so-called "sensitive" sectors in an unattractive "too-hard basket". We want to see "WTO Plus" agreements that enhance rather than impede multilateralism. These should meet at least the same standards of openness and comprehensiveness over all sectors that made getting the launch of a new WTO round such a challenge - and such an achievement.

Within the twenty-one economies that make up APEC, we have the Bogor goals of free and open trade and investment by 2010 for developed countries and 2020 for developing - goals that some member economies are struggling with. But APEC contributes another dimension, again, to multilateralism with the principle of open regionalism - which means lowering barriers against non-participants as well as participants.

Such openness is important to ensuring that CEPs don't widen the gap between the pace-setters and the developing economies in our region - that the less fortunate, the less attractive potential partners are not left sidelined. This may yet be a major area where the WTO's "development agenda" launched at Doha can be picked up at the level of implementation within the partner economies of APEC. This is a challenge for us within our region and at the multilateral level.

There is a lot of confusion out there in the community about what our trade policy is.

Let me repeat it again, the Labour-led Government is not a free trader. We are not going to reduce our tariff barriers unilaterally, just because some ideology says we should. We do not believe in unregulated free trade, in the law of the jungle.

Quite the contrary.

The New Zealand Government promotes rules-based trade liberalisation, both here and internationally. It is the only way a small economy such as ours can force large economies to play fair - the way the United States was forced to drop unfair safeguard measures on our lamb exports, and the way Korea was forced to drop unfair barriers to our beef exports.

We also promote the linkage of trade and labour, and trade and the environment, to ensure that the WTO takes account of the work of other international organisations in its own negotiations. Trade doesn't happen in a vaccuum.

Both within the WTO and within many other international fora, New Zealand works hard to promote the improvement of living standards throughout the world. That means promoting the rule of law, enhancing peace, and fostering innovation.

New Zealand lives by trade. We need vibrant, healthy trading partners throughout the world in order to do well ourselves.

We have a strong interest in ending war and civil unrest in other countries, in seeing them develop good legal systems that can protect their citizens and ensure that businesses obey the rules. Poor people who have been forced from their homes by war don't tend to buy our exports.

Ladies and Gentlemen: this is a very internationally oriented speech.

But as exporters, you know full well how important international events and trends are for your business.

Thank you for your attention today, and I look forward to answering any questions you may have.

ENDS

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