Hon Phil Goff

Minister of Trade

15 May 2008

Speech Notes

Speech at Japan – NZ Partnership Forum

Firstly, let me congratulate the International Business Forum for its initiative in convening this forum, our co-Chairs Mr Miyauchi and Philip Burdon, for leading discussions, the Japan – New Zealand Business Council, the Japan Chamber of Commerce, Nippon Keidanren, delegates here from New Zealand and Japan for their participation and the New Zealand Embassy for its input and assistance.

The significance of this Forum is reflected in the importance of those who have attended it, and the quality of the contributions that have been made.

New Zealand and Japan lie geographically at different ends of the Pacific. We are of vastly different sizes in terms of population and economy. We have quite different histories and cultures.

Yet the modern relationship between our two countries, now some 56 years old, is underpinned by important shared values and interests.

We have a common commitment to justice, democracy, respect for international law, the promotion of human rights and concern for the environment.

We have a shared interest in and commitment to supporting the stability and prosperity of the Asia-Pacific region.

We work closely and cooperatively in regional groupings such as APEC, the East Asia Summit and the ASEAN Regional Forum.

We are multilateralists, with a shared desire to see the United Nations perform more effectively. We work together in defence and security to counter terrorism, with Japanese tankers currently fuelling our frigate, Te Mana, in the Gulf. We share a deep concern about weapons of mass destruction and participate together in the Proliferation Security Initiative.

We are both strong supporters of the World Trade Organisation and the maintenance and development of a rules-based multilateral trading system.

We have developed strong people-to-people ties. We have some 47 sister city relationships, strong education connections and growing links in science and technology and cultural exchange.

In trade, our two-way trade in goods is over NZ$7.3 billion, with substantial relationships also in services trade such as tourism and education.

Those are all things we can celebrate. But it is also clear that we need to work on and reinvigorate our relationship, particularly in the area of our trade and economic partnership.

Over the last ten years the contribution of Japan’s exports and imports as a percentage of New Zealand’s total trade has fallen.

Both of us have been engaged in important bilateral negotiations with other countries in our region, in pursuit of economic partnership agreements, but not with each other.

Indeed, New Zealand was one of the few countries in the region with which Japan did not have, and was not negotiating, an economic partnership agreement.

Given the close relationship that our two countries have in many areas, that was anomalous.

The drift in the economic relationship was the focus of Prime Ministers Clark and Koizumi when they met in 2005.

Agreement was reached to set up a Working Group process to put new energy and forward direction into the relationship. While useful it has, however, made slow progress.

The need for a stronger economic partnership also came to the attention of the corporate and business sector.

In New Zealand, the International Business Forum was set up with the goal of ensuring that New Zealand enterprises were fully integrated and engaged in the global economy.

It attracted major players with a turnover of more than $20 billion.

Early in its life, it raised the valid question why in recent years New Zealand had developed partnership forums with its two largest trading partners, Australia and the United States, but no steps had been taken to engage in this way with its third largest partner, Japan.

I agreed with their assessment that this was necessary and the result is this Forum today, to bring together business, academic and political leaders to look at how we can boost our relationship and to discuss critical issues affecting both countries in our region.

I hope that the success of this Forum will lead to others.

Last night, the Prime Minister’s announcement that she had agreed with Prime Minister Fukuda that Japan and New Zealand should launch a study into the implications of a Japan – New Zealand Economic Partnership Agreement was the best possible launch for this Forum.

Negotiations for such an Agreement are always preceded by a study to allow both sides to undertake an analysis of benefits, and any possible difficulties that freeing up trade between the countries would create.

Generally such studies take around a year, followed by a longer period where negotiators work through each area of the proposed agreement to ensure that we get a comprehensive, high quality and balanced outcome which is of mutual benefit.

I have no doubt that the outcome of the study will be to show that an economic partnership agreement will provide real and meaningful benefits to both countries.

We are countries with complementary economies, and are natural economic partners.

New Zealand is a producer of high quality food products and industrial inputs such as wood, coal and aluminium.

In commodities the world has become a sellers’ market.

More favourable terms of supply combined with increasing competition are diverting New Zealand’s exports from Japan to other markets.

China is now taking more of our fisheries products than our traditionally largest market, Japan, and India is taking more high quality coal.

An economic partnership agreement would be a clear way for Japan to ensure security of supply of safe foods, as well as other commodities.

Removal of tariffs would also help counter spiralling global food price inflation.

New Zealand has just signed a comprehensive free trade agreement with China.

We have just completed a free trade study with South Korea, which points to, and I am confident will result in, a free trade agreement with that country.

And there is a strong probability that our P4 free trade agreement with Chile, Singapore and Brunei will be joined by the United States and in future will be expanded to encompass many countries within, and possibly beyond, APEC.

We do not want a situation where less favourable trading provisions apply to one of our oldest and most important trading partners, Japan.

And, equally, we are concerned that an economic partnership agreement with Japan might take in only one side of the Australia – New Zealand Closer Economic Relationship, which is the world’s most advanced free trade agreement, and exclude New Zealand.

I understand Japan’s sensitivities about the impact of an Agreement on its agriculture sector but I believe the impact will in fact be a largely positive one.

New Zealand does not export Japan’s most sensitive products, such as rice, wheat and sugar.

In horticulture and agriculture we have opposite growing seasons, so we are largely complementary.

There is already a high degree of cooperation in areas such as kiwifruit, blackcurrants and flowers.

In beef, we largely produce grass-fed not grain fed products, so our exports tend not to be in the sensitive areas such as Wagyu beef.

And in dairy, New Zealand has limited potential for expansion of production and cannot meet current market demand.

Around 60% of New Zealand’s dairy exports to Japan is value-added product not made in Japan, or does not compete directly with Japanese dairy products.

What we can offer, however, is a world class marketing network for Japan’s products.

We can offer world-leading products in agritechnology and biotechnology to expand Japan’s production.

And we can share with you our own experience of agriculture reforms, which resulted in boosted productivity and a rejection by our farmers of the need for tariff production and subsidies.

My speech today for obvious reasons has focused on the strong benefits of an economic partnership agreement, which I believe the study initiated yesterday by our two Prime Ministers will demonstrate.

I want, however, also to acknowledge that the discussion today as been much wider.

It has looked at the role and importance of innovation and synergies between New Zealand achievements in food technology, digital design, and environmental products.

These are a good fit with Japan’s capabilities as a world leader in producing and commercialising new concepts.

We have discussed collaboration in the area of climate change and sustainability.

New Zealand and Japan have worked together on the Kyoto Protocol. We share the commitment to ensuring that large developing countries reduce their emissions and helping them to do so.

And, as in many other areas of collaboration in the Pacific, Japan and New Zealand can work together to help the Pacific Island countries meet the challenges posed by global warming.

Once again, I congratulate all of those who have contributed to the holding of this Forum, and thank those who participated in it.

I am confident that this forum has already helped to build a constituency in support of strengthening the Japan – New Zealand relationship.

I would welcome those involved continuing the process of helping develop new relationships across sectors and between countries, and providing a forum to discuss critical issues of relevance to both of our countries. Thank you.

ENDS

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