Friday 15 December 2006

Rt Hon Helen Clark
Prime Minister

Address at
Business Breakfast
Hong Kong Chamber Of Commerce

‘Enhancing New Zealand’s Place in Asia’

Island Shangri-La Hotel,
Pacific Place,
Hong Kong

8.30am
Friday 15 December 2006

My thanks go to the Hong Kong General Chamber of Commerce and the New Zealand Chamber of Commerce in Hong Kong for hosting my address this morning.

I was last here as New Zealand Prime Minister in 2001 in the aftermath of the Asian financial crisis, as Hong Kong was recovering from that major challenge. Following that, the SARS outbreak in 2003 was also disruptive of Hong Kong's society and economy.

What Hong Kong is known for, however, is its very considerable resilience and its ability to adapt continually to new challenges.

Many of us grew up when Hong Kong's economy was characterised by its competitive manufacturing. Now its connection with that sector is largely through its investments in China and elsewhere.

Hong Kong today is a very impressive financial, services, logistics and transportation centre, with state-of-the-art supporting infrastructure. Its strategic location alongside China's massive economic growth, and its Closer Economic Partnership Agreement with the Mainland Government are very important contributors to Hong Kong's ongoing success.

And Hong Kong's success matters to New Zealand. This place is the tenth largest market for our exports, and our ninth largest source of foreign direct investment.

Like Hong Kong, New Zealand has also undergone a significant repositioning of its economy as we move up the value chain with our exports. In this market we are increasingly known for the quality of our fine foods and beverages, and for our outstanding bloodstock which is the lifeblood of a quality racing industry.

Our direct air links with Hong Kong provide for a steady flow of visitors both ways. And only in recent weeks Air New Zealand has opened up a direct route to London through Hong Kong, adding to the choices Hong Kong people have for flights to Europe.

A recent survey of British travellers revealed that Hong Kong is their first choice as a foreign city destination, and New Zealand is their first choice as a foreign country destination. Perhaps that suggests we should be marketing our complementary destinations together!

New Zealand's interests in Hong Kong are a microcosm of our overall interests in East Asia. We see ourselves as part of the overall region, and indeed from the time of the Second World War we have been engaged in the region in many ways. Peace, stability and prosperity in East Asia matter greatly to us, and in our small way we have contributed to it: diplomatically, through peacekeeping deployments and development assistance, and through our openness to trade.

Our reward has been in seeing East Asia develop a network of regional institutions and links between neighbours which not only make conflict much less likely, but also have the potential to build a strong community of interest. And New Zealand seeks to be part of that broader community building in East Asia.

That's why we accepted the invitation to be a foundation member of the East Asia summit, which has grown out of the web of relationships initiated by ASEAN. We have been a dialogue partner of ASEAN for 32 years, and a participant in the ASEAN Regional Forum on security issues since its formation. We also have strong bilateral links with ASEAN's "Plus Three" partners – China, Japan and Korea. Our involvement with those three, and with most of the ASEAN countries, has deepened through our common membership of APEC.

Asia these days is home to ten of our top twenty markets, and our exports into the region have doubled since 1990, accounting for just under forty per cent of our export trade. In the same time period, visitor arrivals from Asia have almost trebled, making up twenty per cent of the total and with significant potential for growth. Students from Asia also dominate our significant international education sector.

As well, Asia is contributing to New Zealand's fast-changing demography. Our 2006 Census results have just been published, showing a fifty per cent increase in the number of Asian New Zealanders over the past ten years, to comprise 9.2 per cent of the population. That figure is expected to grow to fifteen per cent by 2020.

All these linkages explain why New Zealand increasingly sees itself as part of broader East Asian regionalism, and why we are continually looking for new ways to deepen our relationship with the region.

On the economic front, we have sought to negotiate free trade agreements within the region.

Like Hong Kong, we see the WTO as the preferred route for opening up trade because the benefits of its decisions are their wide application. We very much hope that the current talks in Geneva at the technical level will lead to movement on the Doha Round.

But throughout the early years of this century, we have also been active on bilateral and sub-regional trade agreements.

We concluded FTAs with Singapore in 2001 and with Thailand in 2003. This year has seen a four-way Trans-Pacific FTA with Singapore, Brunei, and Chile take effect.

Meanwhile, we have been through a number of rounds of negotiation for an FTA with Malaysia, and enter the tenth round with China in January.

China sees New Zealand as the nation of the three firsts on trade:
 the first nation to conclude a bilateral WTO accession agreement with China;
 the first to recognise China's market economy status; and
 the first developed nation to enter FTA negotiations with China.

We are now focused on achieving the fourth first: by becoming the first developed nation to conclude an FTA with China.

Negotiations between New Zealand, Australia, and ASEAN for an FTA are also ongoing, while our negotiations with Hong Kong, initiated in 2001, are currently on hold.

Meanwhile, in the face of question marks over the Doha process, there is talk in the region of other possible approaches to promote more open trade, and to overcome the emergence of a "noodle bowl" of preferential trading agreements criss-crossing the region and beyond. One such idea is for a Comprehensive Economic Partnership of those countries participating in the East Asia Summit. Another is for a Free Trade Area of the Asia Pacific. This latter concept gained traction at the recent APEC Summit in Ha Noi when the United States threw its weight behind taking it further.

New Zealand welcomes examination of these ways of achieving more open trade in the region. While negotiations would likely be a slow process, given the different stages of development of the member countries in both the EAS and APEC, we think that it can only be beneficial to consider such options.

APEC's business advisory group, ABAC, has often warned of the risks and costs of a proliferation of bilateral FTAs, especially where they are not comprehensive and open to others. Business itself is now faced with a proliferation of different requirements, and preferential tariffs can divert trade from other trading partners. That of course is among the many reasons why a successful conclusion to the Doha Round negotiations is so important. But a wider regional process of liberalisation could temper some of the risks and costs of bilateral deals.

While negotiations and discussions go on, it's also important for New Zealand to be taking new initiatives on the ground to increase our trade into Asia.

While Asian exports into New Zealand have grown strongly, New Zealand exports to the region have not matched the rate of growth in regional markets. We want to do better.

Here in Hong Kong we have opened the New Zealand Focus centre to showcase our goods and services. We opened a New Zealand Wood Innovation Centre in Shanghai this year to allow the trade to see how New Zealand wood products can be used.

Our new Student Ambassador Scheme here in Hong Kong enables selected students to travel to New Zealand for English language education and a working holiday experience, as a way of promoting travel to and study in New Zealand.

We have designated 2007 as New Zealand's Export Year with a range of initiatives to lift our export performance and make our overseas markets more aware of the range of goods and services our very innovative economy has to offer.

While the primary sector commodity trade is still a big contributor to New Zealand's prosperity, its future like that of our whole economy is linked to our strategy to transform New Zealand into a high value, knowledge based economy.

In our primary sectors, innovation is being applied to techniques of production and to the development of improved or new products. The transformation of our wine and kiwifruit sectors into being significant high value export sectors, has been especially fast.

Elsewhere we have world leading ICT, biotechnology, marine, and creative industry sectors. The turnover of our screen production sector is now close to that of forestry and of horticulture.

There are other niche areas where we are developing innovation and taking it abroad. For example, New Zealand baggage handling systems for airports and petrol pump technology are having an impact in China.

There are good opportunities for Hong Kong investors to partner New Zealand enterprises in developing new and innovative products and services to take to the wider Asian market.

Tourism dominates our services exports, with returns generally close to those of our world leading dairy sector. Education has emerged as the second largest services export sector. We offer world-class English-based education which encourages lateral thinking and problem solving by our students.

We are very keen to see increased numbers of tourists and students in New Zealand visiting from Hong Kong.

One way for young people to travel is under the Working Holiday Scheme. It provides 200 places for young Hong Kong people annually, but is presently undersubscribed.

The New Zealand economy in recent years has been a Western success story with growth averaging around 3.8 per cent in the first five and a half years of this century. Presently we are at the bottom of the business cycle with annual growth averaging close to two per cent.

Our unemployment, currently at 3.8 per cent, has been sitting at, or close to, the lowest rate in the OECD for several years.

Inward net migration is positive, and New Zealand continues to reach out to the world for the skilled people who can help us drive our growth and development.

New Zealand today is a forward and outward looking nation, focused on its economic transformation and its international linkages as the means to guarantee our own prosperity and security.

East Asia is already playing a big part in our lives, and will be increasingly important to us in the future.

I welcome this opportunity to visit Hong Kong, an old friend and partner, and a very important link in New Zealand's web of relationships in this region.

ENDS

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