Chile Business Seminar

Rt Hon Helen Clark: Chile and New Zealand: A Growing Strategic Economic Partnership within New Zealand's Asia-Pacific Relationships

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I would like to begin my address today by thanking the co-hosts of this meeting: the Fundacion del Pacifico and SOFOFA.

I know that the Fundacion works tirelessly to promote Chile's economic, cultural, and social links with the Pacific Basin, and that SOFOFA as a federation of industry has long championed an open economy and foreign trade for Chile. The New Zealand Government shares your vision of an inter-connected world where global linkages contribute to peace and prosperity for us all.

New Zealand and Chile are close friends and, increasingly, we are partners with a similar vision. Our relationship is moving beyond seeing each other as competitors to one where we can look for opportunities to work together as small like-minded countries for the benefit of us both.

I myself am a strong promoter of New Zealand's links with Chile. This is my fourth visit here as Prime Minister in pursuit of that objective, and in a less busy time of my life I came twice as a private citizen too.

Six years ago I came to the presidential inauguration of President Ricardo Lagos, who has become a good friend and colleague. In our many meetings since then, we have determined to advance our shared vision. Now, I am saying farewell to President Lagos in his current position, but that will not be the end of our working together. I know President Lagos will continue to be active in international affairs and that our paths will cross again, including I hope in New Zealand.

This weekend I am here with other international leaders to witness the inauguration of your new President, Michelle Bachelet. It is during her Presidency that we will see the realisation of the partnership vision between New Zealand and Chile which President Lagos and I and our governments have worked for.

In the next few months, our new, four-nation trade agreement, the Trans-Pacific Strategic Economic Partnership, will enter into force. Through it, New Zealand and Chile will join Singapore and Brunei in forging new economic links across the Pacific.

This is the first free trade agreement signed by New Zealand which includes a strategic partnership chapter. That offers exciting prospects for our relationship, with ripple effects possible far beyond the immediate economic and trade benefits.

Of course links, including trading links, between our two countries go back a long time: we were trading in the nineteenth century, and there is a shared Polynesian heritage between the people of Rapa Nui and New Zealand Maori going back many centuries. In the latter part of the twentieth century, New Zealand companies began investing in and establishing joint ventures and trade relationships with Chile, and, from here into other parts of the continent.

That being the case, some may ask why a free trade agreement between New Zealand and Chile was necessary, particularly given that both economies have comparatively low tariffs. Others may ask whether as producers of a similar range of primary sector products, we are likely to grow two-way trade very much.

The mutual benefits of the trade agreement between us can perhaps be best understood by drawing the analogy with New Zealand's longstanding free trade agreement with Australia. For New Zealand, Australia is a competitor producing many similar goods and services; yet our two countries have over NZ$14 billion in two-way trade. While it would be unrealistic to expect the New Zealand - Chile two-way trade of NZ$80million to increase to anything like that level, the new agreement will provide new openings for trade in goods and services, and for economic partnerships. As well as the phase out of tariffs, the Trans-Pacific Agreement also provides for the simplification of many regulatory provisions.

I believe that as New Zealand business gets to know more about the development and direction of the Chilean economy, many new opportunities for business will emerge. Our trade and economic development agency, New Zealand Trade and Enterprise, is working now on how to link New Zealand business in to Chile's fast growth and development. We believe that New Zealand agri-tech products and services, along with food processors and manufacturers, for example, could do well here as Chile seeks to lift the value of its land-based industries and related processing.

There are already a number of examples of relationships in these areas:

·Our major dairy exporting company, Fonterra, has a majority share holding in leading Chilean dairy company SOPROLE, and is committed to improving local dairy production. While in the past Chile was a significant dairy market for New Zealand, now with Chile's growth of self-sufficiency in dairy production, New Zealand's involvement - largely through Fonterra's investments - has been as a player in the development of Chile's own dairy capacity. Fonterra's investment in the Chilean dairy market is significant, with a current value of around NZ$150 -250 million. This is Fonterra's third largest investment in the consumer products retail market; the other two being in New Zealand and Australia.

· Part of Fonterra's long-term commitment is to grow exports of dairy products out of Chile. Production at internationally competitive rates will be key to this strategy, and to that end Fonterra is driving a range of on-farm and in-plant initiatives within Chile. They include:

·establishing a model farm using New Zealand technology.

·Soprole's announcement, through its subsidiary Prolesur, of investment in capacity development, worth US$15 million. This programme, known as the "Pradera Project", already has initiatives focusing on food safety, quality, and increasing processing capacity.

·Fonterra has also set up a Chilean Farmer of the Year competition and various information-sharing mechanisms with New Zealand.

·Gold kiwifruit (Kiwi Gold) - a honey-sweet variety of kiwifruit developed in New Zealand - is grown in Chile for export under New Zealand's Zespri brand. It goes out to global markets through Zespri's distribution chain, and expands the seasonal coverage and geographic penetration of fruit beyond what New Zealand's own supply can cover. Indeed Zespri became interested in growing kiwifruit in Chile to help meet Northern Hemisphere demands for year-round supply. Zespri worked with Chilean producers on training and technical co-operation to ensure that the Chilean product conformed to Zespri's high standards.

·A Chile/New Zealand joint venture called FlowerZone supplies flower and plant genetics from New Zealand for increasing production in Chile and for export to global markets. Chile provides preferential access to key markets, which complements New Zealand's contribution to the joint venture of intellectual property and research and development skills.

·Massey University in New Zealand and the Universidad Austral in Valdivia enjoy strong linkages resulting from the presence of a New Zealand agricultural researcher as head of a section in the Faculty of Agricultural Science.
·Millers Mechanical from New Zealand designs and manufactures world-class slaughter process systems for both beef and sheep, and has supplied plant and technology upgrades in Chile.

·New Zealand firms Pacific Basin Exports and Rissington Breedline both supply germplasm to Chile.

·New Zealand Agriseeds Ltd sells pasture seeds to Chile, and also provides pasture improvement technology to Chilean farmers.

·Looking ahead, there are opportunities in the fruit-related research being developed between New Zealand and Chilean partners. We are both experiencing problems in getting our fruit products in to Northern Hemisphere markets at good prices.

·It's also worth noting the co-operation between our large fishing company, Sealord, with Friosur, and Nippon Suissan of Japan, in a distribution company based in Spain to supply Spanish and Portuguese frozen seafood markets.

·Our fisheries co-operation also extends to government to government co-operation, for example on fisheries management. Only last month, Chile, along with Australia, was a co-sponsor of the first meeting, held in New Zealand, to establish a regional fisheries management organisation in the South Pacific.

I believe there are many ways in which we can develop innovative partnerships, which, with respect to business will go well beyond the traditional model of companies in one country supplying goods and services to customers in another. We can combine the respective strengths of both countries in research and development, production, distribution, and marketing to create new business opportunities. Both sides benefit as a result.

I said earlier that one of the most exciting aspects of our new economic partnership was its strategic partnership chapter and its potential for ripple effects into other aspects of the New Zealand - Chile relationship.

In that chapter of the agreement, we have signed up to an implementation arrangement, focusing initially on co-operation across the economic, primary industry, science, technology, education, and cultural sectors.

We have been developing links in all these fields fast in recent years, building on the solid government to government relationships and seeing the potential of the Free Trade Agreement to draw us together.

New Zealand's experience with the Singapore Free Trade Agreement signed in 2000 was that it became a catalyst for closer linkages in many fields beyond the narrowly economic, as each country's profile was raised in the other. That is our hope for this agreement with Chile too.

Already we've seen the benefits of the visa waiver agreement for tourists in place since 1999 in increasing visitor flows and better direct airline services.

The Working Holiday Scheme set up in 2001 for young people has been a run away success, with young Chileans queuing to use it. Our initial allocation of 200 places now stands at 500, with demand constantly exceeding the places available. With New Zealand's unemployment the lowest in the OECD at 3.6 per cent, there is plenty of work for young people in the seasonal industries like fruit picking.

In the year 2000, our government set up a Latin American Strategy Fund to promote a wider range of contacts between us and key partners in Latin America.

Over the past six years that fund has supported a wide range of contacts with Chile, across education, culture, science, media, sport, conservation, and indigenous people's relations. It has sent New Zealanders in these fields to Chile, and brought Chileans to New Zealand. I hope to see a further flowering of these contacts in the years ahead.

As well, we have a raft of formal agreements between our two countries on which to build co-operation, ranging across science and technology, education, air services, the Antarctic, customs, and exchanges of information between our navies. There is also the Double Taxation Agreement signed in 2004, but still awaiting Chilean ratification before it can take effect.

The strategic vision of our Trans-Pacific Agreement is also about enabling businesses based in one of our four partner countries to work with those in one or more of the others to gain entry to third country markets.

New Zealand is a natural half-way point to East Asia for Chileans. The existence of a direct air link between Santiago and Auckland, and direct flights from Auckland to many major Asian cities, make the connection to Asia through New Zealand a natural one, just as Chile is a gateway for us into Latin America.

As well I believe that the close and deep relations New Zealand is developing with East Asia will be of growing interest to Chile, given this country's own focus on developing strong links with Asia.

In 2005 New Zealand commemorated the thirty year anniversary of its dialogue relationship with ASEAN. Last year we also acceded to ASEAN's Treaty of Amity and Co-operation, as an indication of our desire to build even stronger relations with our South East Asian neighbours.

We have embarked on a series of free trade agreement negotiations in the region. Our FTA with Australia is more than two decades old, but the past six years have seen us sign and ratify free trade agreements with Singapore and Thailand, and commence negotiations with China, Malaysia, and all of ASEAN.

Of course the Trans-Pacific Agreement we now have with Chile, Singapore, and Brunei is also open for accession by other Asia Pacific partners and can be a model for negotiations between APEC members.

A new development for New Zealand in the region was the invitation to us to participate in the first East Asia Summit, held in Kuala Lumpur last December. The Summit brought together the ten member nations of ASEAN; with China, Japan, Korea, India, New Zealand, and Australia. Henceforth the Summit will be held annually. New Zealand supports the Summit as a way of lifting wider regional dialogue and co-operation. We hope it will lead over time to the development of an East Asia Community in which New Zealand can be fully engaged.

Our participation represents a new stage in our relations with East Asia. It is consistent with our ongoing efforts to ensure that New Zealanders understand Asia and vice versa. It reinforces our closeness to the region; and our role as a partner in the creation of regional prosperity, peace, and stability.

New Zealand has also become closely involved with the Asia-Pacific Interfaith Dialogue. We have had heightened concern since September 11 2001 about the deep divide between the West and the Muslim world. Our Asia-Pacific region itself is at the intersection of many faiths; and religious tensions, intermingled with ethnic and tribal tensions, have contributed to conflict in the region.

But just as friction between faith communities can give rise to conflict, so dialogue between faiths may help find solutions. On that basis New Zealand is a co-sponsor of the Second Inter-Faith Dialogue, to be held in the Philippines next week, and I will be travelling there from Chile to attend.

Closer to home in the South Pacific, New Zealand is closely involved in Pacific regionalism through the Pacific Islands Forum and other organisations, and through our strong bilateral links. Chile has its own links to the Pacific Islands through Rapa Nui, and your outgoing Foreign Minister, Ignacio Walker, launched new initiatives to strengthen Chile's relations with the South Pacific.

Overall, New Zealand has a strong web of bilateral relationships throughout the Asia-Pacific and is well linked to developments in the new regionalism of East Asia and the South Pacific.

Among those relationships of course is APEC which binds us to Chile in another way. I hope that Chile will find our insights, perspectives, and linkages into the Asia Pacific of interest, just as we look to Chile, our oldest diplomatic partner in Latin America, for insights into developments in your near region.

New Zealand's experience of broadening its relationships in Latin America is still relatively new. It's only six years since we launched our Latin American Strategy to step up our contacts. Chile's interest in reciprocating has enabled us both to grow our relationship a great deal in a short time. My visit this week for the presidential inauguration, and the impending coming into force of the Trans-Pacific Strategic Economic Partnership, will add to the momentum further, and we hope to see much more of Chileans across many fields in New Zealand in future.

Thank you.

ENDS

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