PM John Key's Speech to United States Chamber of Commerce in Washington DC

(delivered overnight NZT in Washington DC)

Thank you for that introduction, Myron. And thank you to the US Chamber of Commerce for continuing to support the US/New Zealand relationship.

It's great to be back in the United States. I arrived in Washington DC only last night, but on my way over, I spent a couple of days in California.

I met representatives of the film industry in Los Angeles, and visited some IT companies – including Facebook and Google – in San Francisco.

It was a good chance to touch base with corporate America, and be reminded that, while the US and New Zealand economies have many differences, we also have a lot in common.

At the most basic level, we share a commitment to the democratic, capitalist system.

Our governments are freely elected. Our economies encourage enterprise, hard work, and innovation. We trust people to get on with their lives and make the best choices for themselves. We also both understand the importance of world-class education.

For these reasons, our countries are amongst the most sought after places to live, raise families, and do business.

Christchurch

But, as good as our lifestyles are, the last year has reminded us of the high costs of natural disasters.

In New Zealand, we’re still dealing with the effects of the Canterbury earthquakes, the most devastating of which struck in February.

I know many of you here today – including Myron and his senior advisor, Catherine Mellor – were in Christchurch at the time for the US/New Zealand Partnership Forum.

The February earthquake devastated Christchurch, and our whole nation. 181 people lost their lives. Many homes, businesses, schools, roads, and basic utilities have been destroyed or severely damaged.

To put the sheer size of these events into perspective, my Treasury Department has estimated the combined cost of the first two Canterbury earthquakes at about $15 to $20 billion.

For New Zealand, with a population comparable to Louisiana’s, that is an enormous impact.

Hurricane Katrina is estimated to have cost about 1% of US GDP. By contrast, the Canterbury quakes are estimated to have cost 8% of our GDP.

My Government’s commitment to rebuilding Canterbury remains firm. In this year’s Budget, we put aside $5.5 billion to do just that.

And, in our time of great need, people from all over New Zealand and the world have stood alongside us. They’ve dug deep and shown extraordinary generosity.

It is humbling to know our friends in the US are among those so willing to help in times of tragedy.

President Obama called soon after the earthquake, and assured me he would extend any assistance we required.

As a result, your Government deployed a 74person Urban Search and Rescue Team from LA County, and gifted sophisticated detection and rescue equipment to our fire service.

We also received tremendous support from US businesses and individuals. In fact, the US is the largest external donor to the Government’s Christchurch Earthquake Appeal.

The US has contributed about 10% of the NZ$90 million raised to date for the Appeal.

The money will be spent on worthy projects in Canterbury. It’ll help rebuild sports fields, community halls, galleries, swimming pools, and libraries – rather than core infrastructure, which central and local government will fund.

On behalf of the people of New Zealand, I want to thank you for all the US has done to support the rescue, recovery and rebuilding efforts in Canterbury.

The US/NZ defence and security relationship

This kind of support reflects the strength of the relationship between our two countries, which is based on deep historical ties.

Your Secretary of State, Hillary Clinton, has described our relationship as the best it's been in 25 years, and we are working to further strengthen ties.

Next year marks the 70th anniversary of the arrival of the United States Marines in New Zealand during the Pacific War. The support of the US at that time is remembered by all New Zealanders.

We have fought alongside the US in many conflicts since. The events of September 11 – and other events of international terrorism – have shocked and saddened New Zealanders. And, unfortunately, New Zealanders are among the victims of such events.

We took the view that Al Qaida’s violence on 9/11 was an affront to us all, and should be resisted. Afghanistan was an obvious haven for Al Qaida, and by December 2001 – just three months after 9/11 – our Special Forces were deployed to Afghanistan, and they serve there still. They have received a Presidential citation for their achievements.

In August 2003, New Zealand was also the first non-NATO country to deploy troops to a Provincial Reconstruction Team in Afghanistan – a commitment we've maintained ever since.

Our countries also cooperate in a number of areas beyond defence and security, which I'll turn to later.

The New Zealand economy

But first, I want to update you on New Zealand’s economic outlook.

It’s been a challenging few years. The impact of the Canterbury earthquakes comes on top of our recovery from the global economic and financial crisis.

Despite this, I’m pleased to report our economy has grown in seven out of the past eight quarters, including by 0.8 per cent in the March quarter.

That sends a strong signal that our recovery is picking up.

The Canterbury rebuild, along with near record commodity export prices, interest rates at 40-year lows, improving business and household confidence, lower household debt, and the upcoming Rugby World Cup, give us confidence in the outlook for our economy.

We expect it to be back onto a solid growth track by the end of this year, and to return to a fiscal surplus by 2014/15.

The Government's growth agenda

New Zealand needs a more competitive economy to grow. That’s why my Government is building a more outward-looking economy, based on exports and savings.

We’ve already made good progress. We are building a competitive tax system, improving infrastructure, getting better results from education, boosting trade, cutting red tape, and building a more productive public sector.

For those of you looking for a great place to do business in the AsiaPacific, I’m proud to say the World Bank has again ranked us third out of 183 countries in its 'Ease of doing business' study, just behind Singapore and Hong Kong.

This is a good outcome, but I know we can do more to improve our productivity and competitiveness.

Science and innovation

One area we are particularly focused on is science and innovation. Boosting innovation will play a crucial role in our plan for economic growth.

Any of you who have sampled our wine, seafood, meat or dairy products will know that these sectors are world class, and continue to build their reputation in the international market.

New Zealand's ground-breaking technology and innovative energies are very much on public display.

An example is technologies and innovations developed and employed in Peter Jackson's Lord of the Rings trilogy, and more recently The Hobbit.

As many of you know, New Zealand is very much regarded as Middle Earth, as a result of these films.

But what might be less well known is that some of James Cameron's ground-breaking Avatar movie was also done in New Zealand, including special effects.

All of this shows that New Zealanders are among the top innovators in the world.

Cooperating with countries such as the US is important as we look to maximise our opportunities.

Earlier this week I met with Warner Bros and New Line executives in Los Angeles to further explore those opportunities.

The US is already our biggest partner in science and innovation.

The global challenges we face, such as food security, energy security and climate change, provide new opportunities for our scientists, innovators and entrepreneurs to work together.

The Global Research Alliance on Agricultural Greenhouse Gases is a great example of the benefits of collaboration.

The Alliance aims to increase cooperation and investment in research activities to find ways to grow more food, with fewer emissions.

This was a New Zealand idea, but translating it into a group of 31 countries from across five continents has relied on US resources and leadership.

Another example of scientific cooperation comes from our partnership in Antarctica, where we work together to better understand a number of scientific issues. This partnership is over 50 years old, but still very active.

Trade

Trade will also make a significant contribution to my Government’s plan for economic growth.

Our trading links have played an important role in helping our economy out of recession.

And, we know that to increase our exports, we need to be more integrated with, and connected to, the global economy. That’s why we are focused on breaking down barriers to trade.

Our cooperation with the US on this is important. New Zealand has long been supportive of the multilateral trading system. Our current Ambassador to the US, Mike Moore, is tirelessly committed to this.

We’ve worked closely with the US to advance the work of the WTO, and, most recently, the Doha Round.

New Zealand has always wanted a Round that makes a real difference for the global economy. Unfortunately we’re simply not there yet, but we’ll continue to do everything we can, working with our friends, including the US, to see how we can move forward.

APEC

We're delighted the US is hosting APEC this year. It was President Clinton who lifted APEC to the highlevel summit it is today, by inviting his counterparts to meet with him at Blake Island in 1993.

With President Obama in the White House and the US again hosting a Leaders Meeting in the Pacific, 2011 represents another opportunity for the US to take APEC to a new level.

TPP

From our perspective, the Trans Pacific Partnership will have a significant impact on the way business is done in our region.

New Zealand was delighted that President Obama confirmed US participation in TPP.

TPP represents something genuinely new and important. It will establish a framework that will work for countries as diverse as Viet Nam, New Zealand and the US.

New Zealand wants a high-quality agreement. It needs to be flexible and futureproofed. And it needs to address the trade and economic issues of the 21st century.

With the immediate prospects for the Doha Round looking poor, we see more value in a TPP that aims to modernise trade rules, across a wide agenda, in a region that has become the engine of global economic and trade growth.

Other big players in the region are taking notice. TPP helped prompt Japan’s reformist statements on trade – the most progressive in a generation. We know others in the region are paying close attention too.

Ultimately, I believe TPP has the potential to become the basis of an integrated regional trading bloc linking Asia, Australasia and the Americas.

It has the potential to be a pathway to the free trade area of the Asia-Pacific region. And, this year, it has the potential to help complete a circle of US leadership in APEC: From Blake Island, to Honolulu.

Sustaining momentum will be critical. New Zealand exporters, like our US counterparts, are keen for TPP to deliver commercially meaningful outcomes, as quickly as possible.

For New Zealand’s part, we will be working hard to ensure we have the broad outlines of a high-quality agreement in place by the APEC Economic Leaders Meeting in November.

Working together to meet global demand

TPP is exciting for both of our countries. It's an opportunity to expand our cooperation on trade and help our exporters succeed.

As fertile as New Zealand is, we simply cannot meet the huge growth in demand for protein, which is projected to come from Asia, in particular, over the next 10 to 20 years.

Those of us with the capacity to produce surplus food need to focus on working together to open markets in Asia.

We can then get on and compete, and in some areas collaborate, to ensure that we can meet the demands of Asia's growing middle class.

And if we can do this, I believe we'll continue to see our economies deliver the new, highpaying jobs that we need as we face the demands of the 21st century.

Conclusion

I’d like to finish today with some reflections on the US economy.

The health of the US economy is not only vital for the American people, but also for the rest of the world.

As you may know, I spent much of my career working for US financial institutions.

Throughout that time, and in the years since, I’ve been continually impressed by the US economy.

I’ve been impressed by its ability to rebound, its ability to innovate, its ability to improve productivity, and its ability to create new wealth.

These are the characteristics that will get the US through what by any definition has been challenging times in the past few years.

Like all countries, the US faces both opportunities and challenges.

In my time as Prime Minister of New Zealand, I’ve witnessed incredible growth coming from the Asia-Pacific region, particularly China.

This has important implications for the economies of the US, New Zealand, and the whole region.

We live in a time where China has an increasing presence, and we have to make the most of the enormous trading opportunities it poses.

New Zealand signed a Free Trade Agreement with China in 2008.

This was China’s first FTA with a developed nation, and it has seen a huge increase in trade between our two countries.

In fact, China has now become our second largest trading partner, recently eclipsing the US.

This boost in trade helped us mitigate some of the impact of the global recession, and China’s growing middle-class will continue to provide great opportunities for our exporters.

We are also looking to India. Two weeks ago I visited India, and being on the ground made me confident that we’re making good progress towards signing a Free Trade Agreement early next year.

New Zealand is determined to maximise the opportunities provided by the whole Asia-Pacific region, so that we can speed up economic growth.

The rapid emergence of this new middle class in China and India, and indeed all of the Asian region, is a unique opportunity for both New Zealand and the US.

It continues to present challenges and frustrations particularly when we reflect on the more restrictive and controlled exchange rate mechanism prevalent in Asia as opposed to the developed world.

Equally many of our companies have had to contend with a less predictable and transparent business environment.

But what is clear is despite all this the Asia-Pacific region will be where the growth action will dominate in the next decade or two, and for the US this has to present a very exciting prospect.

It is against this backdrop that TPP should be viewed. TPP is a gateway for increased US participation in Asia, and a stepping stone to wider and more far-reaching trade agreements in Asia.

Both the US and NZ are democratic, so inevitably there will be aspects of potential FTAs that are not met with universal agreement. But that cannot be a reason to not move forward. The TPP promises too much to miss on this great opportunity.

Thank you.

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