Rt Hon Helen Clark Prime Minister

“New Challenges for New Zealand in the International Arena”

ADDRESS TO

NZ APEC Business Coalition and Auckland Chamber of Commerce

Carlton Hotel Auckland

1.00 pm

Wednesday 27 November 2002

A month has now passed since I attended the APEC Leaders’ Summit in Los Cabos, Mexico. The talk around the table was as much about terrorism as about trade. Thus for the second year in a row, as in three out of the past four years, security and political issues dominated our discussions. This year’s Summit also took place against the backdrop of intense negotiations in the United Nations Security Council over Iraq.

When APEC began, it was envisaged to be an organisation representing economies rather than nations, with a focus on matters of trade and economic development. In all likelihood it may not have formed at all had a broader brief been contemplated at the time.

Yet what is now clear to all those seated at the APEC table is that trade and economic development do not occur in a vacuum. The context in which they flourish is international stability and certainty. It is precisely those factors of relative stability and certainty which the terrorist attacks of September 11 and their aftermath have unsettled, and that has profound economic consequences. I believe that the ongoing uncertainty over how to resolve the issue of Iraq’s weapons of mass destruction has also been dampening prospects of global economic recovery.

There is every reason therefore for these non-economic issues to be debated at APEC, along with consideration of their consequences. I understand that in the parallel business meetings at Los Cabos, considerable concern was expressed about the prospect of deflation and sluggish international growth. New Zealand’s growth prospects currently look rather better than those of many of its trading partners.

New Zealand may be a small country, but our government is determined that we should play a constructive role in the debates and initiatives which preoccupy the international community. A top priority for us is trade policy and contributing to a successful WTO round. But recognising again that trade and trade policy advances do not occur in a vacuum, we have also been active in addressing the factors, like terrorism, which influence stability and certainty.

We have been prepared to commit to the international campaign against terrorism to the extent of significant military deployments. As you know, we deployed New Zealand Defence Force personnel to Afghanistan, both to the peacekeeping force, ISAF, and to Operation Enduring Freedom. This month we announced that there would be further deployments to the latter over the course of the next year, involving the frigates, Te Kaha and Te Mana, and RNZAF Orions.

While these commitments and the military component of the anti-terrorism campaign are useful, we also believe the root causes of terrorism need to be addressed. Some of those causes are to be found in entrenched underdevelopment and its associated poverty which can breed bitterness and envy. It is to APEC’s credit that these days it is agreed among members that development and prosperity must be widely shared, and that a world which entrenches a gap between haves and have nots cannot be a stable world. The same of course applies to individual societies. APEC recognises the opportunities offered by globalisation and open trade, but stresses that a broad distribution of the gains is required.

This philosophy needs to flow over into the way developed countries approach the current WTO round. It is called the Doha development round for a reason. Put simply, the developing world needs to get real gains from it if the North-South divide is to be bridged. The events of September 11 did give a new impetus to efforts to address the needs of developing countries. That flowed through not only to the Doha WTO conference, but also to the Monterrey conference on development finance at which the United States and Europe made significant new commitments, and to the Johannesburg Summit on Sustainable Development. It has also influenced the New Partnership for Africa’s Development (NEPAD) which has been developed from dialogue between Africa and the G8 major world economies.

I see the underlying theme of much international discourse now being how to advance economic development and prosperity in order to ensure longer term stability and security. This debate is happening in a post Cold War world from which only one superpower has emerged. How that superpower, the United States, chooses to engage with the rest of the world has a significant impact on the geo-political balance.

Recently, the prestigious US journal Foreign Affairs published a thought provoking article arguing that the September 11 attacks had actually reinforced America’s unique position as the world’s only superpower. Its response to those attacks had demonstrated its ability to project power in several parts of the globe simultaneously. At the same time, the US increased its defence spending by roughly the equivalent of New Zealand’s GDP.

The authors warned, however, that while the United States might have the power to act unilaterally, and that could get results in the short term, the exercise of that power unilaterally would risk losing the co-operation of other countries.

Over the past two years, there has been a lot of debate over signals that the United States had become more prepared to go it alone on important global issues. On certain key issues, however, the United States has chosen to work through the United Nations Security Council; for example, in its response to the September 11 attacks and in its approach to the problem of Iraq.

For New Zealand, these moves represent important and welcome validations of the multilateral rules and processes that we as a small nation rely on and value so highly. A strong multilateral system, in which the international community has confidence, offers the best path forward for trade, for development, and for dealing with what UN Secretary General Kofi Annan calls the “problems without passports”.

Terrorism is the most serious of those problems. It is a threat by the small and often faceless against the strong; it is usually not state sponsored or managed. It is ideological and, according to our values, seems irrational. Its organisation is fragmented and easy to conceal. It is recognised as a threat by virtually all states. It is the common enemy. It has affected New Zealand, with two of our citizens killed in the September 11 attacks and three in the Bali bombings.

The common sense of threat from terrorism has caused a wide cross section of nations to work together. It has produced remarkable co-operation between the permanent members of the Security Council, and between countries with political systems as diverse as those of the western democracies, Pakistan, Malaysia, and the Central Asian republics.

New relationships are emerging which are changing the geo-political balance, for example, between Russia and the United States, and in the easing in the formerly tense relationship between Beijing and Washington.

Terrorism is at the extreme end of Kofi Annan’s list of “problems without passports”. Others include the trans-national crimes of people smuggling and trafficking, drug running, and money laundering. Then there are the trans-border challenges like climate change, or the threats to our public health and our economy from biosecurity risks.

Impact on New Zealand

How does this post Cold War world with its new challenges and relationships affect New Zealand and how should we respond?

We are of course a small country in a crowded international scene. In a rapidly globalising world we need to work even harder to get our voice heard and to avoid marginalisation.

We need to be able to read accurately the trends in the international environment, to work out what they mean for New Zealand, and endeavour to influence them where we can.

The government believes that New Zealand must strive to lift its level of engagement with the rest of the world at all levels. We take responsibility for that at the inter-governmental and diplomatic levels. But there is also a large role for the business community in international engagement, as many companies and leading individuals recognise through their involvement in a range of regional and bilateral trade and business organisations. That engagement is also ongoing through our exporters, large and small.

Our Growth and Innovation Framework released in February prioritises global connectedness for New Zealand to ensure our future prosperity. For the government, that will mean improving the capacity of “New Zealand Incorporated” offshore to influence the thinking of overseas decision makers to our advantage. We are working to link our international networks of diplomatic, trade, and investment representatives more closely to the forward looking growth and innovation programme being driven from New Zealand. That will help us to offer a better service to New Zealand companies which want to connect globally and to develop New Zealand’s recruitment of international investment where it can add to our capacity for growth.

These will be key roles of the new agency being created from merging Industry New Zealand and Trade New Zealand. Investment New Zealand will be part of it, under its own brand.

These new agencies, working closely with a sharply focused Ministry of Foreign Affairs and Trade, can give New Zealand highly effective offshore networks.

Business has a very important role in the offshore efforts of New Zealand Inc. Your business contacts in the international policy debates and your feedback on the trading conditions you are encountering are important. In turn the government’s agencies stand ready to share information on international developments and to help address the problems which inevitably arise from time to time in the export of goods and services.

Here in New Zealand our economic and business development policies must be tuned to the requirements of the international environment which ultimately judges our performance. Our research and technology must be world class. Through information and communications technologies, we must continue to bridge the geographical and time distances which worked against us in the past. Our education and training systems must provide the people capable of producing even more world-class goods and services.

Supporting that, our immigration policies must serve to recruit those who can fill our skills gaps and expand our capabilities, not expand our unemployment. Migrants also provide an ongoing link to the countries they came from, just as our expatriates can see opportunities for us overseas through New Zealand eyes.

We will also continue to press our trading partners to open their markets further. Bilateral links to our most important partners are the starting point. First and foremost of these is Australia. Our Closer Economic Relations treaty will pass its twenty-year milestone next year. It still sets an international benchmark by which all bilateral open trade agreements can be judged.

Key players in the New Zealand business community have been closely involved, through the NZ-US Council, in the lobbying to have New Zealand included as a negotiating partner with the US for a Free Trade Agreement.

We now have what amounts to a seat in the US Trade Representative’s waiting room, and that is progress for which both government and business have worked hard. But now is not the time to ease back and await our turn. Getting to the next stage – a negotiation – will need the closest co-operation between government and business, targeted lobbying, and skilful diplomacy.

Our embassy in Washington has been given significant extra resources to progress this issue. I thank the members of the NZ-US Council here today for the efforts and resources they too have devoted to this project. Now is the time to redouble our joint efforts to approach our contacts in the United States and to push our case in Washington. The prize is no less than a special working partnership with the world’s largest economy.

I hope that the business community will also maintain a close interest and involvement with its counterparts at APEC and in the debate around the Doha trade round. Clearly the greatest trade openings for New Zealand would come from APEC achieving its Bogor goals and from the Doha round succeeding. If the Bogor goals are not realised, and the Doha round falters, then major trading blocs may form to our disadvantage.

At Quebec last year, the United States held out the prospect of a free trade agreement covering all the Americas. At APEC this year, President Bush made a similar offer to the ASEAN leaders present. The United States also has a free trade proposal for the countries of Southern Africa.

ASEAN is proposing a free trade agreement with China. And, increasingly an “ASEAN Plus Three”, involving China, Korea, and Japan is taking shape with clear trade implications.

New Zealand and Australia have endeavoured as CER partners to work towards an agreement with the ASEAN Free Trade Area (AFTA). But neither separately nor together do we offer a big enough economic prize to counter the attraction to ASEAN of the large North Asian economies.

New Zealand cannot stand like the proverbial possum in the headlights and allow itself to be marginalised in this re-shaping of regional and international economic and power relationships. Over several decades of hard work, this country built broad based and sometimes deeply rooted links with Japan, China, the core ASEAN countries, and in economic terms with Taiwan.

These links can never be taken for granted. Relationships this important for New Zealand need constant and consistent attention. I have asked the Asia 2000 Foundation to bring together government and business next year, to encourage us all to take a fresh look at our relationships with the nations of Asia and the important challenges and opportunities they offer New Zealand.

Relationships with Europe also need attention as the EU proceeds to expand from fifteen to twenty five members. New Zealand has had little contact with the new entrants from Eastern Europe, the Baltic, and the Mediterranean. Yet shortly they will be in the inner circle in Brussels making decisions which affect us. That is why next year I will be making the first Prime Ministerial visit to Brussels from this country in twenty years. New Zealand’s profile there needs to be lifted.

In the WTO, as in APEC, as elsewhere, New Zealand’s future success will depend on our ability to convince others that we are relevant and that we should be in the room when the deals are crunched. We achieved that over agriculture in the Uruguay Round of global trade talks, which concluded in 1994. The challenge is to do so again in the Doha Development Round, with a much bigger WTO membership and a more complex range of issues.

A key to having influence is coming up with new ideas. Of course, clever ideas only get you so far – unless they get picked up by more influential players. This month in the WTO, New Zealand challenged members to agree to remove all tariffs on manufactured products on a reciprocal basis. That has set the objective for the round at an ambitiously high level, and I understand has enhanced New Zealand’s reputation as a serious player.

In closing, I would like to commend the role which business organisations represented here today are playing in reinforcing New Zealand’s international connections. The APEC Business Coalition I hope will wish to be engaged with us in getting more focus back on New Zealand’s Asian relationships next year. The New Zealand-United States Council has done critical work on New Zealand’s behalf in the United States, and there is more to be done. The Auckland Chamber of Commerce can always be counted on to support New Zealand’s trade and export effort.

All these key organisations are making a contribution to New Zealand’s future prosperity. All are out there, working their contacts, gathering information, and using their influence. We all, government and business, share a determination to get the best for our country.

Together we can build on New Zealand’s strengths and areas where we excel, and ensure that the rest of the world knows about them. We can ensure that New Zealand is valued and respected by others as a partner. We can secure ourselves a place as new relationships form in the trade and diplomatic arenas.

Today’s world presents big challenges for a small country. Our ability to meet them depends on our working together. I give you my, and the government’s, commitment to improving our joint effort to secure the future well-being of New Zealand, and I know that the business community and its key organisations will want to play their part.

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