Hon John Key
Prime Minister

26 May 2009
Speech

Speech to the New Zealand Institute of International Affairs

It’s good to be here today to discuss some of the international issues affecting New Zealand.

I am reminded that the founding members of this organisation first met against the backdrop of a world economy shattered by the Great Depression.

In fact among the first issues this institute canvassed 75 years ago was the impact of the ‘Slump’ on the lives of New Zealanders.

The focus of that work was on putting New Zealand’s localised economic pain into a global context.

Last year you again addressed the implications of a global economic crisis for New Zealand’s prospects in the international context.

The OECD Secretary-General Angel Gurria delivered a lecture last July on the Global Financial Crisis and its implications for OECD countries.

He concluded that the economic crisis was a worldwide problem which needed a global solution to build mutual trust and keep our markets open and growing.

It is this reality – the need to work for a global solution to the economic crisis, and in particular to position New Zealand so it survives and then thrives – that is my Government’s immediate focus.

Our bilateral, regional and multi-lateral relationships with the rest of the world are an important part of the solution.

The importance the Government places on these relationships is underscored by the fact that I spent my first week in office in a foreign country.

Within a day of being sworn in as Prime Minister I was on a plane travelling to the APEC Leaders meeting in Peru.

At that meeting I took the opportunity to address the APEC CEO’s summit about New Zealand’s views on the economic crisis, what it meant for a small country like ours and our desired response.

I stressed then, as I continue to stress, the importance of strengthening, not weakening our trading relationships. And, vitally, I met and built relationships with leaders from across our region.

It was a great opportunity and a great start to my time as Prime Minister.

Six months later we are continuing to experience major impacts on the world economy.

Firms with household names have fallen over. World trade flows have shrunk for the first time since WWII. In OECD member countries there are 25 million more unemployed than there were in 2007.

In addressing these challenges, New Zealand must position itself both for the short and long term.

Quite what the future opportunities will look like is not yet clear. But compared with 75 years ago the international landscape is vastly different, and in many ways more conducive to achieving the global solution the OECD Secretary-General called for.

New Zealand in particular has much to gain from our international relationships.

As I said at this forum last year, China and the Asia Pacific region more generally look set to be the powerhouse for the world economy for as far ahead as we can reasonably see.

More recently, with its massive (USD 580 billion) domestic stimulus, China looks like it may recover from the crisis – perhaps slowly by its standards – in a time frame that would help the regional and global economy.

I am keen to see New Zealand make the most of the opportunities presented by China’s economic strength.

Our FTA is off to a good start, and in the year since its signing, trade in both directions has grown, despite the state of the global economy. Two-way trade between China and New Zealand grew by 19% to more than $9 billion New Zealand dollars in the year to February 2009.

I believe there is considerable room for future growth.

When we signed the Free Trade Agreement we opened an important door, and now our task is to boldly walk through it.

That is why I chose to visit China as a matter of priority this year. I believe there is much more our two countries can achieve together for the benefit of both our peoples.

My meetings with both President Hu and Premier Wen was very positive, with Premier Wen describing the relationship between China and New Zealand as the strongest it has ever been.

I was accompanied by representatives of several of our major exporters who wished to learn more about China, to strengthen relationships and to seek out future opportunities.

Those opportunities range from increased trade in agricultural products through to tourism, education and resources.

I have also asked Government agencies to focus on ways to help New Zealand companies make their mark in China. As part of that commitment we are investing heavily in our trade presence in China, with Consulates-General in Shanghai and Guangzhou and a major new business centre in Shanghai.

We are also planning to develop smaller business offices in cities that New Zealand businesses are typically less familiar with including Shenzen, Qingdao and others. We are committing heavily to the Shanghai Expo in 2010 and I hope to lead a New Zealand business delegation to the Expo in July next year.

We continue to build our relationships with other countries in the Asia-Pacific region.

Japan is a close friend and we are steadily pursuing ways to work with them to study the relevant issues as a precursor to an FTA.

We are moving into an FTA negotiation with India. Stimulated by entrepreneurial wealth and vigour and by new generation ideas and technology, India is transforming its economy. I want to see New Zealand making the most of the economic opportunities that presents us.

We are engaged in an FTA negotiation with Korea. And, of course, we have just signed an FTA with the ten ASEAN nations, which potentially connects New Zealand to the embryonic single market in East Asia (CEPEA).

New Zealand must be part of a web of bilateral and plurilateral trade links that are being established throughout the Asia-Pacific region.

We want FTAs to be high quality and regionalism to be open. We are supportive of developing plurilateral arrangements including the possibility of a Trans-Pacific Partnership, a closer economic partnership for East Asia and the APEC Free Trade Agreement in the Asia/Pacific.

We expect the Obama Administration’s outlook on trade will have Asia as a major focus.

New Zealand has an interest, too, in being part of the rapidly evolving political ‘architecture’ of the region and in efforts to establish an Asia/Pacific community. We are already an active member of the existing regional process led by ASEAN.

We need to be plugged into the security arrangements that govern peace and stability in the region. These are multilateral arrangements, but our bilateral security relationships in the region are also important. New Zealand has a strong interest in robust US engagement in the region.

Beyond Asia, we are pursuing important new trade and economic opportunities for NZ in the Middle East, including through negotiation of an FTA with Saudi Arabia and the Gulf States.

After considerable diplomatic investment, New Zealand’s relationships with Latin America are showing a new maturity with economic links driven by investment from New Zealand, not commodity trade.

My aim is to help New Zealanders capitalise on new opportunities in a globalising world. In focussing on the new we are determined not to neglect the potential to come from long-standing relationships. We seek to deepen our links with our traditional partners.

Building up further our important relationship with the US is a core focus of this Government’s foreign policy.

We have an excellent relationship with the US. We are old friends facing new opportunities. New Zealand sees itself as a small but important partner for the US and with our shared values we believe New Zealand can work with the US on efforts to enhance global peace and security.

As previously outlined, New Zealand is undertaking a review of our contribution to Afghanistan. We will be looking at what we have achieved in Bamiyan and further afield, and at what we may be able to do in the future.

I discussed this and other issues recently with President Obama

We are also giving increased focus to developing and strengthening our relationship with Europe - especially the member states of the European Union which collectively represent our second largest export market, and an important source of new technologies and innovation for the NZ economy.

I talked with EU President Barosso earlier this year about the potential to do more together, and we now have agreement to explore the scope for a comprehensive bilateral agreement covering political, security and economic areas.

This would be the most far-reaching agreement we have negotiated with the EU.

In our immediate neighbourhood my Government’s approach is shaped by the crucial need for a secure, stable and prosperous Pacific region.

We have devoted considerable time and energy to growing our relations with the Pacific.

Fiji is clearly a focus, concentrating on how to help that country break out of its ‘coup cycle’ and find its way to restoring democracy.

The Pacific Forum took action to suspend Fiji from 1 May with deep regret, but little alternative, in the clear absence of any forward movement from the Fiji regime.

Recent months have in fact seen a further deterioration in the conditions in Fiji, with the abrogation of the Constitution, the muzzling and intimidation of the press, suspension of the judiciary, with a handful of judges only just appointed in recent days, and a clampdown on the legal professions.

Bainimarama also told the Fijian people, and its regional neighbours, there can be no elections before 2014 – a full eight years after the coup.

This is simply not acceptable, and we and other Forum members have said as much. But the Fiji regime only listens to those telling it what it wants to hear – whether inside Fiji, although this is an ever decreasing pool – or outside.

I have spoken before about Bainimarama handing the Fiji people a passport to poverty, where through the regime’s actions and omissions it is patently failing to cope with the economic challenges buffeting the country.

But we do stand ready to help, with people, resources, finance – when Fiji shows it is genuinely prepared to move in the right direction.

The tragedy of the situation in Fiji is also that it has diverted attention away from the other huge challenges confronting the region, particularly for economic development.

Most Pacific Island countries are not well-positioned to weather the economic down-turn.

Australia and New Zealand share a special responsibility to assist our regional neighbours through these troubled times. In particular, we are undertaking a Joint Study into the effects of the global economic crisis on the Pacific region which will be completed prior to the Cairns Pacific Islands Forum in August

With the increased focus on the promotion of sustainable economic development in our aid programmes, we want to explore how we can assist our Pacific neighbours address the increased challenges they are now facing.

The New Zealand Government has already announced an increase in our overall aid budget from $471 million to $600 million over the next four years, and this support will be increasingly targeted at the Pacific region.

Trade remains a key driver for economic development in the Pacific.

The Pacific Agreement on Closer Economic Relations (PACER) is the plurilateral framework that will underpin the future development of trade across the region. This agreement envisages a free trade agreement between Australia, New Zealand, and Pacific Island countries.

It will not be a typical ‘self interested’ free trade agreement. Rather it will complement our Official Development Assistance efforts by assisting Pacific Island countries to capitalise on potential for trade to fuel their economies.

Our relationship with our nearest and closest neighbour Australia is, quite simply, unlike any other in the world – whether we’re talking people-to-people contacts, academic or political links, trade or economic issues, security and defence, the environment or foreign policy.

When we met in March, Kevin Rudd and I set out an ambitious agenda of initiatives.
To build prosperity, we want to break down barriers at the borders, whether for investment, tourism, or for people flows.

We want to erode barriers behind the borders, by exploring further harmonisation on climate change, science and innovation and domestic regulation where that makes sense. And we want to tackle barriers to prosperity beyond our borders, by promoting open markets and healthy capital flows around the world.

When I go to Australia again in August, Kevin Rudd and I will review progress on those initiatives, and set new goals towards creating a truly single, economic market. The importance of that in raising New Zealand’s performance and productivity cannot be understated.

Australia and New Zealand are relatively lightly exposed to the problems of global financial markets. Our banks are highly-regarded. Our track-record for quality regulation, good management of public accounts and robust monetary policy is well-established. We are both stable, open economies, with flexible product and labour markets.

But we are also exposed to the misfortunes of our important trading partners, whether in Asia, North America or Europe. A robust Single Economic Market gives us the extra economic weight that will help us to weather the current economic storms. And a vibrant and robust trans-Tasman economy will position us strongly to grow and prosper together when the worst of the global recession has passed.

At times of global uncertainty, small countries like New Zealand rely even more heavily on effective international rules to help roll back protectionism, protect resources and deal with global challenges such as terrorism, weapons proliferation, climate change, the threat of a pandemic, and the effectiveness of international financial and economic institutions.

North Korea’s nuclear test yesterday is another reminder of the unstable global environment we face.

At the heart of the world's ability to take global action lies the United Nations.

I plan to go to New York in September to the annual meeting of the UN General Assembly, where I and other leaders set out our expectations for the global agenda.

No-one pretends that the United Nations has achieved all the ambitions set out for it when it was established sixty-four years ago. It has not saved succeeding generations from the scourge of war. Human rights abuses continue, daily. Standards of living have not improved for many.

It is in our direct national interest that the UN works better to promote solutions to international and regional conflicts; and develops effective international rules to manage trans-boundary and resource issues.

A tangible example is the recent confirmation, by the United Nations Commission on the Limits of the Continental Shelf, of New Zealand’s right to approximately 1.7 million square kilometres of extended continental shelf seabed. Thanks to the United Nations no-one can challenge New Zealand’s rights to whatever natural resources might be there.

We have had to work hard to protect interests like these, but we do not have to work alone.

We all have shared interests in making the United Nations, and indeed the “Bretton Woods” international financial institutions, more effective and accountable.

We welcome the new US Administration’s interest in multilateralism, and we plan to work closely with them and other friends who want to make the UN and its agencies more relevant.

Development reform, championed by Helen Clark as head of the UN Development Programme, coupled with changes of emphasis in the Government’s approach to development assistance, is another way New Zealand can work under the multilateral system to improve the lives of everyday people.

Many of the poorest and most vulnerable live in Commonwealth countries, including in small island states in our own region. My goal at this year’s Commonwealth Heads of Government meeting in Trinidad and Tobago is –likewise - to make that organisation a vehicle for improved delivery of practical benefits to citizens, as well as a voice for their rights.

It is on this note that I will finish.

Seventy-five years ago the New Zealand Institute of International Affairs was formed in recognition that New Zealand was not immune from events beyond our shores.

That still applies today. New Zealanders have a keen interest in what happens overseas – and this goes far beyond academic curiosity.

A child dies from influenza in Mexico, and soon after New Zealand is responding to threats to our tourism market in Japan, and facing the prospect of bans to our meat trade in certain other markets.

We are connected. We react to international events, and we can help shape them as well.

I must admit to being surprised at the extent to which I have been drawn into the foreign policy sphere, on a daily basis – and it is a challenge I am thoroughly enjoying.

New Zealanders can and do make a difference in international affairs – where we bring all the qualities that mark us out as unique.

It reflects the skills of our representatives offshore, whether from government or NZ business, supported and sustained by robust and informed debate back home, in Parliament, in the media, and in forums such as the Institute over these last 75 years.

Your voice in promoting discussion and understanding of international issues that affect New Zealanders will always be an important one.

I congratulate the institute on its first 75 years and wish you all the best for your future.

ENDS

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