Hamilton Gets A Trade Burst

Hamilton Gets A Trade Burst

Remember when the only music you could listen to was by New Zealand artists who played their own material or covers from overseas bands?

Remember when a car, even a second hand one, cost a year's wages?

And how about the fact that every New Zealand farmer is better off to the tune of about $11,000 a year since our products gained better access to markets in North America, Asia and Europe.

Trade liberalisation has done great things for us all.

The Trade Liberalisation Network (TLN) is taking its message to Hamilton today. A privately funded business lobby group, the TLN, was established in July 2001 to encourage public understanding and support for trade.

"We tend to take our open trading environment for granted. Opening our economy to international trade has meant more job creation, greater choice and better lifestyles for all New Zealanders," said TLN Executive Director, Suse Reynolds.

"Some have yet to be convinced of the benefits of trade but the TLN is working to change that," she added.

Focusing specifically on the Waikato's role as the heartland of New Zealand's dairy production, Reynolds said the last round of international trade liberalisation delivered tariff savings of $131 million a year to the industry.

"The Uruguay Round also prized open the European market to allow another 15,000 tonnes of our butter to be sold there. This has improved dairying export returns by over $50 million per annum," said Reynolds.

Trade liberalisation is as much about creating export opportunities as it is about creating opportunities in our own market through a liberal import regime.

In this respect Reynolds pointed out that Hamilton boasts the largest proportion of businesses in the manufacturing sector of any New Zealand city.

"Only a decade or two ago if a Waikato business woman required imported components for the product she was manufacturing she had to contend with import licensing and high tariffs.

"Today import licensing is gone and 95% of New Zealand imports are tariff free. The average tariff on that remaining 5% of goods is just 3%. As a result, imported components are affordable and businesses are better able to identify where they are going to be most efficient and price competitive."

Trade liberalisation is all about creating the best environment for commerce to thrive in.

"The fact that over 50 international businesses have chosen Hamilton as the location for either their head office or for branch representation says pretty compelling things about the region's international competitiveness," Reynolds concluded.

Hamilton Trade Burst Wednesday 8 October 2003

Executive Director – Suse Reynolds

Now it’s time to tell you why you are all here! We are absolutely delighted to see you all and thrilled you could come. Hamilton has been in the Trade Liberalisation Network’s sites for some time, so it is great to be here.

We are particularly pleased to be co-hosting this event with Wallace Corporation. They are a key sponsor and symbolise so much of what the TLN is all about. Our most sincere thanks, Mr Wallace, for your company’s support.

What is the Trade Liberalisation Network?

The TLN was established in July 2001 to encourage public understanding and support for trade and our key messages are that trade liberalisation should be rules based and that trade is the means to more jobs, better lifestyles and greater choice. Maybe this sounds a little mundane, but it’s a fabulous job.

So what does trade liberalisation mean to Hamilton?

I have spent the day in Hamilton. It’s such a great city. And what a shining example it is of the importance of trade liberalisation. Nearly a quarter of a million people live in the Waikato region. Not one of them isn’t touched in some way by the degree of trade openness we have today.

Some of the more tangible examples of this are dotted around the room in our posters. You can pick up mini versions of these as you leave if you’d like to.

Trade liberalisation is all about creating the best environment for business to thrive. Over 50 international businesses have chosen Hamilton as the location of either their head office or for branch representation. This is says pretty compelling things about your region’s international competitiveness.

Trade liberalisation is as much about creating export opportunities as it is about creating opportunities in our own market through a liberal import regime.

Let’s look at what freeing up trade has done for the Waikato.

This is the heartland of NZ’s dairy production. This industry is saving $131 million a year in tariffs thanks to the Uruguay trade round. This Round also delivered access for another 15,000 tonnes of New Zealand butter into Europe every year - improving export returns by over $50 million per annum.

Hamilton boasts the largest proportion of businesses in the manufacturing sector of any New Zealand city. International tariffs on our non-agricultural, or manufactured goods, were cut by a third following the last trade round. What does this mean for our exporters? They are saving an average $128 million a year. They are more competitive off shore and they have more money to invest elsewhere. Opening our market to off shore products and services has also benefited Waikato manufacturers. Remember import licensing and high tariffs? Today 95% of New Zealand imports are tariff free and the average tariff on that remaining 5% of goods is just 3%. As a result imported componentary is affordable and allows business to better identify where they are going to be most efficient and price competitive.

What about the downsides?

Trade liberalisation is a complex issue. There are downsides too. At times there is a need for policies to help business and employees adjust to the effects of more open markets.

But many of the downsides are over played. Before handing over to Brian I want to address two or three of these very briefly.

It is frequently argued that imports and open economies destroy jobs. Actually it’s only infrequently that imports that are to blame. Technological change and other non-trade factors, such as monetary policy, the business cycle and labour market flexibility account for most workers who lose their jobs.

Studies carried out by the Cato Institute in the United States show that in fact for the last twenty years changes in import volume and employment in the US have been positively correlated.

In June this year, Trade Negotiations Minister, Jim Sutton, released figures from an MFAT study which estimated that the improved market access gained as a result of the Uruguay Round had contributed $9 billion to the economy in ten years and played large part in the creation of over 17,000 jobs.

Developing countries are harmed by international trade say our opponents. In fact it’s an inability to trade which harms these countries as rich economies deny them access to their markets with high tariffs and import quotas. Weak legal systems, a lack of enforceable property rights and corruption also play a big part in their plight.

World Bank studies, cited by aid agencies, note however that if developing countries could increase their share of earnings from world exports by just 5% this would generate some US$350 billion in additional income – seven times as much as they receive in aid.

Anti-trade advocates say international commerce is destroying the environment. In fact those countries that have benefited most from international commerce have better environmental records than those who have not.

The provision of services benefiting the environment turns over $420 billion a year globally. Freeing up this trade would benefit the environment as trade barriers prevent modern eco-friendly technologies from spreading as fast as they might.

What’s your role in all of this ?

There are two things you can do …

Be informed … no matter how far you might feel you’re removed from trade issues, the nub of it is your living standards will only improve if New Zealand is fully attuned to the international market place and performing strongly in it.

And speak up for trade liberalization … if your business exports or imports then speak up for the need for open trading environments. If you appreciate the choice we now have in our supermarkets and hardware shops point this out to people who say New Zealand products should be protected by tariffs. If you hear anyone saying trade is bad for jobs, developing countries or the environment tell them what the real story is.

It’s now my real pleasure to hand over to Brian Lynch, the Chairman of the TLN Board. He will give you a quick over view of New Zealand’s international trading relationships.

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