Helen Clark: Nation can’t afford to stand in line

Helen Clark

In recent months New Zealand has launched significant initiatives in the drive to forge new trade and economic links with countries important to our future.

We have concluded a free trade agreement with Thailand. We have begun free trade negotiations with China - the first developed country to do so. With Australia, New Zealand has also launched free trade negotiations with the 10 Asean countries.

We are well down the track in negotiations with Chile and Singapore on a three-way agreement. A free trade agreement study with Malaysia is under way. And countries as diverse as India, Egypt and Brunei are showing real interest in engaging more with New Zealand.

As we enter 2005, it is worth pausing to review this clutch of significant trade initiatives and to reflect on why the Government accords them such a high priority.

The case for trade is clear: it is New Zealand's economic lifeblood. The lower tariffs which come with trade agreements bring higher returns to our exporters. Put simply, that means more wealth and jobs for New Zealanders.

But we see these agreements as not only being of economic benefit, but also acting as platforms for building stronger links of many kinds with nations which will play an important role in our future.

Trade policy is all about advancing our economic security, particularly in the Asian region, where we need to be party to emerging regional agreements. To be involved presents huge opportunities to New Zealand. To be outside poses huge risks to our prosperity.

New Zealand's partners in the region want us to be an insider. Standing aside would mean that our businesses and exporters would be on the outside while other Asian and Australian competitors would have the inside running in each other's markets.

It would mean we are never on the radar screen when it comes to developing regional business and investment strategies.

The agreement with Thailand gives a concrete illustration of what is at stake.

China already has a free trade agreement with Thailand. Under that agreement it has secured huge tariff preferences for its fruits and vegetables in the Thai market. Our exporters of those goods would have had significant tariff disadvantages, had we not secured an equivalent agreement.

Australia also has a free trade agreement with Thailand. It will eventually have bilateral free trade in dairy products to the Thai market. Without New Zealand having a free trade agreement, we could have been squeezed out of that growing dairy market.

It is the same story with China. We anticipate improved export gains to the order of $260 million to $400 million a year through a free trade agreement with China.

But, more critically, the rest of the world will not be standing still even if we were to stand aside and pass up the historic opportunity of developing a unique partnership with the emerging economic powerhouse of the 21st century.

Asean and Chile are negotiating agreements with China and there is a queue forming. We would be looking at being progressively disadvantaged if we were on the outside.

We are also reaching out to the Asean region. The 10 member countries have a combined population of 530 million and an estimated GDP exceeding US$700 billion. An agreement with those economies would consolidate our commercial relationship with Southeast Asia, and allow New Zealand to better engage with countries which are strategically significant for us.

The Apec leaders meeting I attended in Santiago in November was once again a good opportunity to advance New Zealand's interests. The Apec goal is for all of the countries in the region to progressively open up their markets to each other.

New Zealand has concluded, or is negotiating, free trade agreements with 11 of the 21 Apec economies. A successful World Trade Organisation round remains the top priority for New Zealand, and we are assiduous in promoting the WTO multilateral agenda.

But free trade arrangements will help to move us further and faster where we can. If we can also wrap them all into a global trade round, so much the better.

In trade policy it is New Zealand's national interest that will drive our agenda. Sound trading arrangements are critical to our future. We simply cannot afford to stand back and see others gain preference.

I am confident that the initiatives of recent months will contribute enormously to New Zealand's growth and development.