[asia-apec 922] More NZ Govt Hype on APEC

[Gatt Watchdog]

   Speech: Smith On Trade Liberalisation
   Thursday, 26 November 1998, 12:36 pm
   Press Release: New Zealand Government

      An Address By The
      Trade Minister
      Dr The Hon Lockwood Smith

      1999: The Year for Trade Liberalisation

      Diplomatic Club Luncheon
      Ambassador Suite
      Plaza International Hotel
      Wellington

      12.15 pm Thursday 26 November 1998

      New Zealand sees 1999 as potentially a great year for trade
      liberalisation. As Trade Minister, I've spoken often about
      what I see as a unique convergence of events to achieve
      better market access for New Zealand exporters:

      * the possibility of a free trade agreement with the United
      States;
      * APEC's trade liberalisation agenda;
      * the World Trade Organisation's negotiations to liberalise
      agricultural trade, and the prospect of a full,
      comprehensive Round.

      Nineteen ninety nine is the year for each. We trust 1999
      will be the year President Clinton is granted fast-track
      negotiating authority, allowing for progress towards an FTA.
      New Zealand is in the chair of APEC in 1999, and we'll be
      working to bind the EVSL package at the WTO. The WTO
      agriculture negotiations are mandated to start before the
      end of next year, and work is progressing well for them to
      be launched late in the year in the United States. From New
      Zealand's perspective, we don't see three such opportunities
      converging in quite the same way ever again.

      New Zealand chairing APEC is the biggest trade policy
      challenge we've ever faced - which is appropriate given that
      APEC has been described as the biggest trade policy
      initiative in history. The Leaders' Meeting will be the most
      important meeting ever held in this country. We relish the
      challenge.

      New Zealand is taking over the chair at a difficult time for
      the APEC region. The IMF has described the Asian Economic
      Crisis as "one of the worst financial crises in the post-war
      period". Latest Consensus Forecasts for 1998 suggest that
      South East Asia will contract by over 5% and for North Asia
      to experience no growth. Most APEC economies have been hard
      hit. The economic woes of one of APEC's newest members,
      Russia, have been severely exacerbated. Here in New Zealand,
      we have experienced a small recession. Globally, the IMF
      forecasts growth to be down to 2% in 1998.

      Some in the international media have criticised the extent
      of progress made at last week's APEC meetings in Kuala
      Lumpur. I can understand that criticism if one were to
      compare the outcome with the agenda set in Vancouver, and
      ignored the events in the region since. But were you to
      compare the KL outcome with how developments appeared to be
      heading only a few weeks before, I think you would reach a
      different conclusion. I believe it was a very credible
      outcome. I found it heartening. I believe economies with
      severe economic difficulties showed great vision and
      leadership in staying true to APEC's goals. I say that as
      Trade Minister from an economy which likes to see itself as
      being a major advocate for faster and more comprehensive
      liberalisation.

      The Bogor goals were reconfirmed: free and open trade and
      investment by developed APEC economies by 2010, and the same
      for developing APEC economies by 2020. In KL, a record six
      economies, including the economic powerhouses the United
      States and Japan, agreed to submit their Individual Action
      Plans, outlining how they intend to achieve those goals, to
      peer review in 1999. By the end of 1999, 12 of APEC's 21
      economies will have been peer reviewed, including New
      Zealand which has, of course, already decided to abolish all
      our tariffs by 2006.

      It is a process that is working. Chile, for example,
      recorded in its IAP its intention to reduce its applied
      tariffs across the board from 11% to 6% by 2003. Indonesia
      has implemented its commitment to cut tariffs on all food
      items to a maximum of 5%. China has announced its commitment
      to cut tariffs on 5,700 industrial tariffs to an average of
      10.8% by 2005. It will eliminate tariffs on 185 IT products
      by the same year. These are just three examples, but they
      show the APEC approach to trade liberalisation is working.

      Early Voluntary Sectoral Liberalisation is also firmly on
      track. Given the economic situation in the region, it would
      have been all too easy for some economies to start to
      unravel the package. They did not. They recognised that
      unravelling the package would have further undermined
      business confidence in the region. They recognised that by
      maintaining the commitment to the package, APEC could send a
      powerful signal which would help to restore business
      confidence.

      All sixteen participating economies, including the US and
      Japan, remain part of the package. All nine initial sectors,
      including the contentious forestry and fisheries sectors,
      remain part of the package. The Kuching end-rates and
      end-dates remain in place. And there is agreement that APEC
      economies may begin implementing the package immediately.

      Even more importantly, it goes to the WTO to become binding,
      and to achieve wider participation. There is commitment by
      all 16 participating APEC economies to endeavour to conclude
      agreement next year.

      In the context of the Asian Economic Crisis, that was a very
      credible agreement. All 16 participating economies have
      publicly committed themselves to the deal. We in New Zealand
      trust that they will live up to that commitment.

      At the same time, progress was made on the trade and
      investment facilitation front. APEC agreed to work towards
      aligning electrical and electronic equipment standards by
      2004 for developed economies and 2008 for developing
      economies. A menu of options for investment liberalisation
      and facilitation was agreed to. We made progress on
      principles for government procurement, for conclusion in
      1999. We agreed to expand the availability of multiple entry
      visas. The APEC Business Card offers accredited business
      travellers visa-free travel and speedy processing when
      visiting participating economies. New Zealand will join in
      March.

      In all these areas, the aim is to make doing business in the
      region cheaper and faster. APEC's business people have
      estimated that the average international transaction
      involves between 27 and 30 different parties, 40 documents,
      200 data elements and the retyping of 60 to 70% of all data
      at least once. There is clearly a lot APEC can do to improve
      upon that throughout our region.

      In KL, APEC also endorsed an action programme on skills
      development. It's part of APEC's ecotech work, and is
      designed to contribute to a rapid improvements in four
      areas: upgrading the industrial skills base, spawning new
      entrepreneurs, improving technology skills, and
      strengthening institutional infrastructure to facilitate
      trade and investment liberalisation.

      The aim of all of APEC's ecotech work is to ensure that
      every APEC economy has the human, institutional and physical
      infrastructure to be able to implement and benefit from
      APEC's liberalisation agenda. The new action plan will
      certainly help.

      The economic crisis was also directly addressed by APEC
      leaders, with their Cooperative Growth Strategy. It included
      a renewed commitment to the 2010/2020 Bogor goals. It has a
      strong focus on encouraging growth-orientated macroeconomic
      policies. It will provide for additional financial
      assistance to soften the social impact of the crisis. It
      involves initiatives to encourage restructuring of the
      finance and corporate sectors and to restore trade finance
      and stable capital flows. And there are measures to
      strengthen domestic and international financial systems. The
      package will be supported by Japan's offer of a US$30
      billion aid package as well as the joint Japan-US-ADB-World
      Bank initiative to revitalise private sector growth. APEC,
      the extended G-22, domestic economies, and multilateral and
      regional development banks will share responsibility for its
      implementation.

      It is in this context that New Zealand will take over the
      chair of APEC. We'll be developing initiatives around three
      key themes:

      1. trade and investment liberalisation and facilitation
      2. strengthening markets, and
      3. broadening support for APEC

      One key priority for 1999 will be to develop the remaining
      six sectors for EVSL, among them food. We are also
      particularly interested in the APEC Business Advisory
      Council's proposal for an APEC Food System, which leaders
      have requested us to study. The goal of the proposed APEC
      Food System is to achieve a more open, more robust food
      system. It would be one which would better harness the
      resources of the region, efficiently linking producers,
      processors and consumers throughout the region. The idea is
      to maximise the contribution the food sector makes to the
      wealth of the region. ABAC's proposal calls for action in
      three areas: rural infrastructure, dissemination of
      technical advances and promotion of trade.

      Making progress on food will not be easy. But New Zealand
      sees progress on the issue as not just being about providing
      better access for our exporters. Ensuring the efficient
      production and distribution of food is critical to enhancing
      the long-term stability of a region with a growing
      population. It is a perfect APEC project involving all three
      of APEC's pillars: trade liberalisation, trade facilitation,
      and economic and technical cooperation.

      New Zealand also has work planned to strengthen markets and
      restore investment flows, as part of the ongoing response to
      the economic crisis. Closely related are ecotech measures to
      strengthen corporate and economic governance. In response to
      the KL meeting, there will be work on examining how
      competition and regulatory reforms can help facilitate trade
      and investment. We'll also be working on implementing APEC's
      Blueprint for Action on Electronic Commerce.

      Our APEC agenda is ambitious. But we're confident that each
      member economy is sufficiently committed to ensuring that
      the APEC process works. I don't deny that New Zealand sees
      the APEC process as leading to substantial gains for our
      exporters and economy. Seventy percent of our two way trade
      is with APEC economies. Eight of our top ten markets are
      APEC economies, and 12 of our top 20 tourist sources. Eighty
      percent of our investment comes from within APEC.

      But we also recognise the historic importance of APEC to the
      region. In the last 25 years, we've seen huge growth in
      regional consultation, cooperation and trade through the
      Asia Pacific region. It has meant that more people have
      risen out of poverty in a shorter period and on a greater
      scale than at any other place or time in human history.
      What's more, New Zealand holds the view that greater
      economic integration contributes to the maintenance of peace
      and greater stability. We believe that the success of APEC's
      trade and investment agenda will play a major part in
      ensuring continued improvements in standards of living and
      stability throughout the Pacific Rim. We see APEC as a
      development of world historical importance.

      We also see the World Trade Organisation as having the same
      role, but globally. We believe that all economies should,
      assuming obligations are met, be members of the WTO. We were
      the first country in the world to complete our bilateral
      negotiations with China on its accession to the WTO. We are
      supportive of Russia's joining, should it meet WTO
      obligations. Our ultimate goal - admittedly unrealistic in
      anything other than the long term - is free trade covering
      all economies and all goods and services. We believe that
      were that goal to be achieved, it would play a major role in
      promoting peace and enhancing living standards globally.

      To New Zealand, agriculture is of primary importance because
      it is our major export earner. But we also believe that free
      trade in agricultural products is the best way of ensuring
      food security in a peaceful world. We therefore look to the
      mandated WTO agriculture negotiations as not just being of
      benefit to the New Zealand economy. We see the negotiations
      as taking us towards the goal of efficient production and
      distribution of food globally, thereby contributing to
      international stability.

      At the negotiations next year, we will be seeking progress
      far in excess of that achieved from the Uruguay Round. With
      our friends in the Cairns Group, we will be seek trade in
      agricultural products to be put on the same basis as trade
      in other goods. Specifically, we will be seeking:

      * open market access and deep cuts in tariffs
      * the elimination and prohibition of export subsidies
      * the decoupling of domestic support from production

      Like New Zealand's APEC agenda, the Cairns Groups goals are
      ambitious but realistic. We recognise that to achieve them,
      a full, comprehensive Round may be required in order to
      allow for the necessary trade-offs. New Zealand is therefore
      a supporter of a Round, working with the Friends of the
      Round group to achieve one.

      The Friends of the Round is an open and informal collection
      of 13 WTO members. In Hong Kong, China, last week we said we
      believed that, with the financial crisis, economies needed
      further opportunities to trade their way back to improved
      prosperity and employment. We therefore concluded that a
      full and comprehensive Round is needed with the goal of
      securing a high quality outcome within a short duration. We
      will be working to achieve the launch of a Round following
      the Third WTO Ministerial in the United States next year. We
      urge all other WTO members to support those goals.

      I began by saying that New Zealand believes 1999 could
      potentially be a great year for trade liberalisation. We
      will be working hard for the liberalisation agenda to make
      progress as far and as fast as possible. We believe that is
      in the interests of the populations of all APEC economies
      and all WTO members. We know it will not be easy. We know
      there will have to be compromises along the way. But we urge
      all our partners to work constructively towards a regional
      and global trading environment which is as free and open as
      possible. Because we believe that would do more than almost
      anything else to help create more employment, prosperity and
      stability throughout the region and the world.

      Ends