Address to the Japan New Zealand Commemorative Symposium, Wellington, 22 Feb 2008 Graeme Harrison, Chairman, New Zealand International Business Forum “Future economic and trade relations between Japan and New Zealand”

Ambassador Takahashi, Ladies and Gentlemen

It’s a pleasure to be with you today and I appreciate the opportunity to join you for this commemorative symposium.

I am particularly pleased to share this podium with Mizuno-san whom I met for the first time at the meeting of the Japan New Zealand Business Council held in Tokyo last November.

At that event I announced that the International Business Forum which I have the honour to chair intended to hold the first ever Japan New Zealand Partnership Forum in Tokyo in May 2008.

Today’s symposium gives me an opportunity to provide an update on progress towards organising the Partnership Forum.

I intend to do so in the context of some remarks about the importance of trade and investment for both our countries and about the current and future direction of our economic and trade relations.

There’s no better time to do this than in the year in which we celebrate 50 years of the signing of the very first Treaty of Commerce which in 1958 laid the first foundation for the trade relations between us.

The importance of trade and investment

Let me start then by reflecting on the differences in both our economies in the 50 years since our Treaty of Commerce was signed.

Japan’s technological prowess has driven the country forward to the point where it is now the world’s second largest economy.

In New Zealand we have moved from being a country insulated from the rest of the world by high tariffs and import licensing to being one of the most open and deregulated in the world.

At the same time we have diversified our external markets away from “mother Britain” and have become a global trader in a far more diverse range of products.

Of course agriculture remains the backbone of the economy  – notwithstanding the success of “Lord of the Rings” and “the Flight of the Concords”.

Even our agriculture has become more technologically oriented as we develop new, safe and sustainable products to meet consumers’ needs.

I know that some in Japan perceive New Zealand’s agriculture as a threat.

But in reality our production systems are complementary and New Zealand plays a key role in ensuring food security and sustainable supply for Japanese consumers all year round.

My own company, Anzco Foods, has been operating in Japan since 1984.

Our association with our shareholder partners Itoham and Nissui has provided the platform to develop opportunities in other markets in the Asia Pacific region and beyond.

This has been of benefit to all of us.

At the national level what has made a key difference to both our economies over the last 50 years is expanding trade and outward investment.

Although Japan has a significant domestic market, both of us rely on external markets to drive our economies.

I recall Mizuno-san telling us in Tokyo that Japanese companies are benefiting from the free trade agreements which Thailand has negotiated with various countries.

That’s a good example of how markets are becoming more integrated and the borders which once defined our national economies are becoming less significant, at least in a commercial sense.

Some, including in our own country, fear this growing trend towards internationalisation and globalisation.

They see only risks and downsides not challenges and opportunities.

At the New Zealand International Business Forum we embrace globalisation.

Our Forum believes that engagement with the rest of the world is critical for New Zealand’s future.

Expanding international business is vital for increasing productivity, raising living standards and lifting overall economic performance.

We in business need to work at making globalisation work for our companies and for the societies in which we operate.

The Government has a clear role to play in putting in place the right external relationships as well as positive economic policies and negotiating improved market access.

But ultimately business is done by business: it is business which has the commercial interest, the market knowledge and the contacts and networks that will ensure these efforts are focused on the main priorities for business growth.

The Board of the International Business Forum is drawn from New Zealand’s leading internationally oriented companies and from the country’s peak business organisations.

The companies cover the dairy, meat, seafood, kiwifruit, technology and services sectors and the business organisations represent New Zealand’s export, manufacturing and services industries.

The International Business Forum marks the first time that the Chairs and CEOs of these organisations have come together in this way.

As we develop our strategy for promoting New Zealand’s international business engagement we intend to focus on a small number of key projects.

Japan is our top priority.

We had no hesitation in coming to that conclusion.

Japan is not only the world’s second largest economy, it is a longstanding partner for New Zealand and a country with whom we share abiding democratic and free market values.

We don’t always agree on everything of course ? our different views on whaling are a case in point.

But what we have in common is greater than what we see differently.

At the International Business Forum we believe there is more that can be done to develop even closer relations and to find ways for industries in the two countries to work together to develop new global business.

One way of achieving this would be to negotiate a future economic partnership agreement.

These agreements are not just about reducing trade barriers: they also focus significant commercial attention on opportunities for future growth.

We can certainly see the advantages that will accrue to Australia once their negotiation with Japan is completed.

The fact is New Zealand risks being significantly disadvantaged in some sectors if the Australians are able to secure preferential access in Japan.

That disadvantage could quickly turn into a loss of investment as funds flow to Australia to take advantage of the new agreement.

This is because New Zealand and Australia are already linked through a comprehensive free trade agreement, CER, which has led to the creation of a truly trans-Tasman economy.

At the same time we are realistic that starting a similar negotiation with Japan may take some time.

Our immediate interest in strengthening relations is not driven by any short term trade outcome.

In the longer term it is quite obvious that new economic arrangements can only come from a strengthened relationship across the board.

At this point we need to focus on the big picture of the relationship.

The first step is to recognise that this relationship needs to be seen in terms of its contribution to our respective national goals ? to economic growth and stronger communities at home and security and sustainable development in our region and beyond.

In New Zealand we must engage our people with the reality of Japan today.

And in Japan we must do more to tell the story of a relationship which delivers real value for the Japanese economy and for Japanese people.

Japan NZ relations

Our two countries are natural partners in the Asia Pacific region.

It is becoming increasingly clear in these early years of the 21st century that the United States is gradually losing its place as the main driver of the global economy as integration fuels growth in both Asia and Europe.

For the time being the United States remains the world’s largest and richest economy and the dollar is still the world’s pre-eminent currency.

But the relative importance of American trade and American capital are diminishing and Asia is reclaiming the leading position.

If the 20th century was the American century, then the 21st century is the Asian century.

Despite the astonishing growth of China, Japan continues to play a central role in Asia’s economy.

I make these comments because it seems to me that all too often we think only of bilateral trade and investment when the real significance for the Japan New Zealand relationship is the broader Asian context in which we are both heavily engaged.

Look for example at the pattern of our FTAs.

We both have FTAs with Singapore, Thailand, Brunei and Chile.

Japan has an FTA with Malaysia and New Zealand is negotiating with Malaysia.

New Zealand has an FTA with Australia and Japan is negotiating with Australia.

We are both negotiating with ASEAN.

New Zealand strongly supports the Japanese concept of a Comprehensive Economic Partnership in East Asia.

When Prime Minister Fukuda addressed the Diet in January he spoke about Japan’s global strategy:

“We will carry out a “Global Strategy” that makes Japan more open to the world, and expands flows of people, goods, money, and information to and from Asia and the world. In order to turn the vitality of the world into energy for Japan’s growth, we will work for an early conclusion of the negotiations at the World Trade Organisation (WTO) as well as the negotiations on Economic Partnership Agreements (EPAs) with countries in the Asia-Pacific region”[1] .

In similar vein Prime Minister Clark speaking in Parliament last week spoke about New Zealand’s trade priorities.

“In coming weeks I hope to be able to announce the outcome of the FTA negotiations with China, which, if successful, will come to Parliament for scrutiny and enabling legislation this year.  Negotiations for FTAs with ASEAN and the Gulf Co-operation Council are ongoing, and we continue to pursue a successful outcome of the WTO’s Doha Round as our top trade policy priority” [2]

It’s not at all surprising that both of us should follow a similar approach to seeking closer relations and developing trade with countries in our region.

Although at opposite ends of the Pacific, we share similar values and interests.

These interests go beyond the economic sphere, encompassing broader policy co-operation as well as a vast network of people to people links through tourism, academic and research exchanges and sister city links.

When it comes to trade, since 1962 Japan has consistently ranked as New Zealand’s second or third largest trading partner.

The question for us today is whether the relationship is as good as it can be and delivering the maximum value to both countries.

In the case of Japan, China has recently passed Japan as New Zealand’s third largest trading partner and largest in Asia.

And that growth will accelerate as China continues to grow and becomes increasingly sophisticated both in its consumer tastes and in the goods and services it has to offer.

That is why New Zealand was keen to engage in an FTA with China which we expect to be signed in the next few months.

At a time when higher commodity prices look here to stay, and when newer markets are easily able to absorb New Zealand’s increasing production, it is likely that the old patterns of trade and investment will come under increasing pressure.

This reminds us that even the strongest of relations need to be constantly updated to take account of changes in the global and regional economy.

Japan/New Zealand relations are no different.

We are old friends but the world is changing rapidly.

That’s doubtless why when Prime Minister Clark and then Prime Minister Koizumi met in 2005 they agreed to take steps to re-invigorate the relationship.

An officials’ working group was established to look at ways of delivering on the Prime Ministers’ undertaking: their report is now overdue and I hope it will be released soon.

The New Zealand International Business Forum welcomes the working group process and looks forward to playing our part alongside both governments and in close co-operation with other business partners to move the relationship forward.

Towards a Japan NZ Partnership Forum

It’s against this background that we have developed the concept of the first ever Japan NZ Partnership Forum.

New Zealand already has similar structures which operate in respect to our other key relationships, Australia and the United States.

Japan too has high level dialogues with a range of countries including the United States, Australia, Canada and the European Union.

Our experience is that these events can provide an effective independent platform for leaders from both countries to identify common approaches to global and regional challenges.

And so, on 14 and 15 May, in Tokyo, we will gather 60 or so prominent leaders from government, business and the wider community from both countries to meet together at the International House of Japan.

The Forum’s logo, which you see for the first time here, reflects the coming together of two countries, two cultures and two partners.

I am delighted to announce today that the Forum will be co-chaired by distinguished business leaders on both sides, Mr Yoshihiko Miyauchi, Chairman and CEO of ORIX Corporation and the Honourable Philip Burdon, Chairman of the Asia New Zealand Foundation.

We are particularly honoured that Mr Miyauchi has been willing to undertake this role and we have changed our earlier timing a little to accommodate his busy schedule.

Hon Philip Burdon is well known to many here in New Zealand as our former Trade Minister: he was in Tokyo last month and was able to meet with Mr Miyauchi to discuss the Forum’s programme.

Support for the Forum has been offered by the Government of Japan and by leading business organisations, the Nippon Keidanren and the Japan Chamber of Commerce and Industry.

We are working very closely with both the New Zealand Government and the Japan New Zealand Business Council.

Ambassador Kennedy in Tokyo has brought together an informal group of advisors, all eminent and influential Japanese personalities, who have been generous with their time and advice.

Ambassador Takahashi here in Wellington has also been generous with his encouragement and advice.

The Partnership Forum will carry the theme “New Thinking, New Partnership”.

It will examine ways in which we can work together to promote growth and sustainable development, to address the challenges of climate change and sustainability and to promote innovation in business practices and new technologies.

The Forum will focus on how the two countries can address new business challenges at the regional and global levels.

Already senior government and business leaders from both countries have confirmed their attendance and are looking forward to a stimulating debate.

Where might this dialogue lead us ?

It is important that the Partnership Forum be more than a talk-fest but we can be happy enough if a high level group of this nature can be successfully brought together and if the discussion is both challenging and robust.

Ideally however those who participate will see the value of future gatherings of this type and will be enthused and motivated to become advocates of the relationship in their respective countries.

Conclusion

When I spoke to the annual joint meeting of the Japan New Zealand Business Council in Tokyo last November I reminded the audience that it was the Harris Treaty which in 1858 opened up Japan to the rest of the world.

One hundred years later New Zealand and Japan signed the first Treaty of Commerce and fifty years later we will meet in Tokyo to consider how that relationship can be taken forward.

Strengthening Japan New Zealand relations will require both leadership and commitment.

If we do not continue to take steps to nurture our partnership, the changing dynamics of trade and the global economy could see it lose relevance and momentum.

Japan has long been New Zealand’s leading partner in Asia and I see no reason why we should let that change.

That’s why the New Zealand International Business Forum proposes to hold the first ever Japan New Zealand Partnership Forum in Tokyo on 14 and 15 May this year.

Strengthening the relationship will require the coming together of different stakeholders in the relationship from government, business and the wider community.

The Partnership Forum’s theme “New thinking, new Partnership” and the high level Japanese and New Zealand leaders who attend will help keep moving this relationship forward for the benefit of both our peoples.

[1] Prime Minister Yasuo Fukuda, Policy Speech, 18 January 2008
[2] Prime Minister Helen Clark, Statement to Parliament, 12 February 2008