Hon John Key
Prime Minister 6 July 2010
Keynote address to Korea-New Zealand Business Roundtable
Seoul

I am delighted to be here at the second Korea-New Zealand Business Roundtable.

And it’s great to be in Korea at the invitation of President Lee, following his own visit to New Zealand last year.

I’d like to congratulate the organisers of this event – the New Zealand International Business Forum and the Korea International Trade Association - for building on the success of last year’s inaugural event with a second, equally promising occasion.

I understand that this event originated from a belief that by bringing together political, business and academic leaders from both countries, the Roundtable could highlight opportunities for deeper Korea-New Zealand business engagement.

The size and quality of today’s turn-out shows us that this belief is being realised.

I fully support the theme of this Roundtable – “Innovation, Growth, Opportunity”.

And the topics you have chosen to address under this theme are particularly relevant ones - responses to changes in the global economy and innovative business partnerships between Korea and New Zealand.

When we met last year, President Lee and I committed ourselves to take an already strong bilateral relationship to the next level.

This visit is a chance to give further effect to that commitment.

Korea is a remarkable country and an economic powerhouse in Asia.

It is also a long-standing friend of New Zealand.

The relationship between our two countries is underpinned by a shared bond forged in the Korean War 60 years ago.

It is also underpinned by the similar values that we hold - in democracy, human rights and rule of law. And our common interest in a peaceful and prosperous Asia-Pacific region.

Today, Korea is an important partner for New Zealand in trade, investment, agriculture, forestry, science and technology.

Korea has risen to become our seventh-largest trading partner overall.

It is also our seventh-largest source of visitors and second-largest source of international students.

Beyond trade, the relationship between our two countries has matured to the point where we have deep engagement across a wide range of areas – including education and people-to-people links.

We are immensely proud of the more than 30,000 Koreans who, like my colleague Melissa Lee, have made New Zealand their home and contribute a lot to our culture and society.

So what we see now are two globally-facing export-oriented economies, and an already strong relationship with great potential to advance even further.

Today you will be discussing the position of Korea and New Zealand in the new economic landscape.

As you are aware, the recent global economic and financial crisis significantly altered the international economic environment in which our two countries operate.

New Zealand was already in recession when the world crisis hit.

But I’m pleased that following the severe economic downturn over the past two years, the present global outlook is much improved.

For example, according to the IMF, world trade is expected to grow by 7 percent this year and 6.1 percent in 2011.

This is after a 10.7 percent contraction in 2009.

Asian economies are a big force behind the economic recovery - led by China, where growth is expected to be 10 percent in 2010, based on infrastructure investment and stronger domestic consumption.

Of course, Korea continues to perform well.

You posted GDP growth of 0.2 percent in 2009, the third-highest in the OECD.

GDP forecasts for 2010 and 2011 continue to be revised upwards across the board, ranging from 4.3 percent to a high of almost 8 percent.

I very much welcome these strong economic indicators in Korea and the region - they will have significant flow-on effects for economic growth coming out of the recession.

At the Government level, as the global economic situation improves, it is important for countries to be aware of the downside risks that threaten the recovery.

These include high unemployment rates in advanced countries, high sovereign debt in some economies, and continuing fragility of financial markets.

Governments need to be ready to act to ensure a sustainable recovery takes hold.

For New Zealand, this means continuing with a heavy domestic agenda focused on measures to increase our long-term competitiveness and standards of living.

My Government is showing strong economic leadership and we are firmly focused on looking forward.

We are focused on building on the recovery so we come out of the downturn in a better position to create jobs, build productive firms and attract investment.

An example of this is the tax reform we unveiled just over a month ago in the Budget.

We lowered the headline company tax rate, cut personal taxes and re-balanced the tax system away from consumption and toward savings and investment.

We are also investing billions of dollars in infrastructure, including broadband, to help lift the long-term performance of the New Zealand economy.

At the international level, the risks require an unprecedented level of international cooperation.

We want to contribute constructively to international debates in this regard and encourage coordination.

At the moment, the G20 is the big game in town.

New Zealand has been supportive of the emergence of the G20 as the pre-eminent forum for providing direction to the international response to the global economic crisis.

The outcomes of the G20 Summits to date have been consistent with New Zealand’s policy objectives and important in maintaining confidence in the world’s financial markets.

My visit to Korea is well timed.

I was able to speak yesterday with President Lee soon after his attendance at the G20 Summit in Toronto, and I’ve just had a very useful conversation with Chairman Sakong about the G20.

I appreciated President’s Lee’s perspectives on the Summit. I especially welcome the fact that despite pressures to expand its agenda, the G20 remains focused on dealing with the aftermath of the global economic crisis.

Korea will host the next G20 Summit in November.

This is a truly remarkable achievement for President Lee and for the country.

It acknowledges that Korea is now a powerful voice on the international stage.

It acknowledges, too, that Korea has added credibility based on the fact that you have transformed yourself from being a recipient of aid to a donor nation.

I am pleased that Korea will be emphasising development issues at the next Leaders’ Summit.

Speaking of Korea’s encouraging economic performance in recent years and stature on the international stage leads me back to a point I made earlier - about the potential to grow the bilateral relationship.

The second topic you will address today has to do with innovative partnerships between Korea and New Zealand.

Our economies are highly complementary.

New Zealand exports meet Korea’s industrial processing and food needs, and Korea supplies important capital and consumer goods for New Zealand.

From my discussions in these last two days with government leaders and business representatives, it has also become clear that synergies in the relationship create many opportunities for New Zealand and Korea:

In the manufacturing and high tech areas – Korea is a manufacturing giant. New Zealand has innovative companies developing smart technologies and looking for ways to commercialise and market those products.

In agriculture – Korean consumers place high priority on food safety and security. New Zealand has a well-earned reputation as a reliable, safe supplier of high quality food.

In investment – Korean companies are looking to invest offshore. New Zealand has opportunities for partners to help develop its infrastructure and to share technologies.

In the environment – Korea has an admirable focus on increasing the contribution of renewable energy. New Zealand’s clean, green reputation is supported by our use of substantial amounts of hydro, geothermal and wind power.

President Lee and I have discussed the many rich prospects for business and investment growth between Korea and New Zealand.

He and I agreed last year to launch Free Trade Agreement negotiations because we could see this potential.

We believe an FTA is the vehicle to take our relationship to the next level.

That has been New Zealand’s experience of the FTAs we have concluded to date.

For example, in the two years since we signed our ground-breaking, comprehensive FTA with China, we have seen remarkable growth in commercial contact across the economic and trade spectrum.

China has moved from being New Zealand’s 4th largest trading partner to our 2nd largest in that time.

This is the kind of boost that a Korea-New Zealand FTA could deliver for this relationship.

And there are other economic benefits as well.

President Lee and I know the FTA will help increase the resilience of our economies and position us well within an Asia region that is pursuing closer economic integration.

FTA negotiations are never easy, but our negotiators are making progress.

My visit here is a good opportunity to see where we have got to and to give highlevel support to getting the deal done.

President Lee and I agree that we want this agreement concluded as soon as possible, and with an outcome that delivers real commercial and business wins to both our countries.

There are sticking points.

Agriculture is the main one.

Let me address this directly.

Concerns about the impact of an FTA with New Zealand are overstated in relation to agriculture.

They are based on perceptions of New Zealand rather than the reality of our trade with Korea.

New Zealand provides less than 3% of Korea’s total agricultural imports.

We do not compete with Korean production. We don’t produce rice.

We are counter-seasonal. We don’t export fresh milk to Korea.

Our grass-fed beef competes with imported product, not Korean grown beef.

Concluding an FTA is about removing barriers.

It is about unlocking potential.

It is about enabling companies to conduct their business in the most efficient way possible.

And it is about creating the chance for consumers – so often forgotten in these discussions - to get the things they need cheaper than before.

Korea and New Zealand have both come a long way in the 60 years since the beginning of our relationship on the battlefields of the Korean War.

Few would have imagined back then that we would have the kind of close bilateral relationship that we have today.

It is important that we continue to work hard together to develop the relationship.

I am confident that those in this room are playing their part.

I thank you for that and look forward to celebrating future successes with you.

ENDS

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