An FTA with Mexico and increased focus on economic and political relations with Brazil are among New Zealand's priorities.
BY HELEN CLARK
There is growing dynamism in New Zealand’s relationship with Latin America. And today Latin America is looking more to New Zealand and the Asia Pacific.
Our relationship with Latin America is of great interest to me. I first visited the region twenty-one years ago, and have returned many times officially and unofficially. In the last eight years as Prime Minister I have been in Chile four times, Mexico twice, and in each of Brazil, Argentina, and Uruguay once. I have a long standing interest in the region’s history, politics, and culture.
The platform for the development of New Zealand’s current relations with Latin America was laid in 2000 with the Government’s Latin America Strategy. It focuses on the enhancement of government and diplomatic, trade and economic, and people-to-people links with key countries in the region. These relationships have evolved significantly since the Strategy’s inception seven years ago. (...)
STRONG OPPORTUNITIES FOR NEW ZEALAND
With a population of over 500 million people between the Rio Grande in the north and Cape Horn in the south, Latin America accounts for approximately 7.5 percent of global GDP and approximately 5 per cent of world trade. Between 2004 and 2006 Latin America experienced its strongest three year period of growth since the late 1970s.
Brazil’s exports doubled in the past three years. The dynamism, size and diversity of this region presents a myriad of opportunities for economic, political and cultural engagement by New Zealand.
New Zealand exports to Latin America were valued at NZ$1.1 billion in 2006 - about 3 per cent of our total exports. Major Kiwi exports to the region include dairy, meat (particularly sheep meat and frozen beef), purebred breeding cows and bulls, and machinery (such as radio transmitters and sorting machinery).
While countries such as Mexico, Venezuela, Cuba, and some Central American countries remain strong markets for primary exports, especially dairy, some South American countries (particularly Chile, Brazil, and Argentina) are becoming increasingly significant and efficient producers in their own right. So New Zealand needs to look at new ways to engage.
Recent years have seen significant investment activity and the establishment of a number of business partnerships. In many cases these leverage off New Zealand’s agricultural expertise. Additional investment opportunities have been identified in horticulture, fisheries, tourism, IT, and boat building.
New Zealand imports from Latin America in 2006 were valued at NZ$400 million, which represents 1 per cent of our imports.
Latin America is an important source for some goods, including a number which New Zealand does not produce itself. For instance, in 2006, Latin America accounted for 44 per cent of New Zealand’s banana imports (mainly from Ecuador); 40 per cent of our coffee bean imports; 84 per cent of New Zealand’s orange juice imports (of which the vast majority comes from Brazil); and 34 per cent of New Zealand’s beer imports (mainly from Mexico).
Moreover, Latin America is a major supplier of some niche manufactured goods; for example, Brazil is New Zealand’s fifth largest supplier of electrical motors and generators, supplying 8 per cent of New Zealand’s imports.
NEW ZEALAND'S PRIORITIES
The Government’s Latin America Strategy was reviewed and reaffirmed in 2006. Under the Strategy, New Zealand’s priorities include:
- Implementing the Trans Pacific Strategic Economic Partnership Agreement (P4) with Chile, and supporting its possible expansion to other countries;
- Continuing to work for an FTA with Mexico;
- Increased focus on economic and political relations with Brazil;
- Support for New Zealand’s growing investment interests in Argentina, Uruguay and Brazil; Developing a strategy for enhanced education links with the region; and
- Promoting the opportunities offered by the region to New Zealand young people and to business.
Political linkages between our two regions have been strengthening. President Bachelet of Chile visited New Zealand in November 2006. The themes of her visit - innovation, education, and people-to-people links - reflect the strong partnership between New Zealand and Chile. Her predecessor, former President Ricardo Lagos, visited us officially twice.
The Minister of Foreign Affairs and Trade, Rt Hon Winston Peters, visited South America in March this year. He met with President Lula and Foreign Minister Amorim in Brazil, Foreign Minister Taiana in Argentina and Foreign Minister Gargano and Minister of Agriculture Mujica in Uruguay.
The President of Mexico, Felipe Calderón, made a short but productive visit to Auckland earlier this month - the first bilateral visit by a Mexican President to New Zealand. We discussed areas of bilateral engagement and ways to enhance the bilateral economic relationship.
More broadly, NZ Parliamentary Groups have recently been established in Mexico, and re-established in Brazil, providing another opportunity for engagement. New Zealand will host the Asia Pacific Parliamentary Forum in January, which will bring Parliamentarians from a number of Latin American countries to New Zealand.
In building our relationship with the region, the New Zealand Government perceives that:
- New Zealand can be a valuable partner for Latin America in the Asia-Pacific – we sit equi-distant between Asia and Latin America;
- Latin America offers us trade and economic opportunities which we have yet to see the full potential of, and
- We have opportunities to do business together to create wealth for our respective economies, especially through the food value chain.
New Zealand’s desire for an FTA with Mexico is well known. Mr Goff visited Mexico in March 2007 to discuss taking forward the recommendations of the New Zealand-Mexico Joint Experts Group which pointed to the potential mutual gains from a deeper trading relationship.
Jim Anderton visited Mexico in July to discuss agriculture and economic issues. New Zealand’s Special Agricultural Trade Envoy has also visited Mexico to engage directly with farmers and industry leaders on the opportunities NZ can offer under an enhanced economic relationship.
We see tremendous potential for closer strategic collaboration in areas such as agri-tech, science and technology, and education and tourism - not just in Mexico, but throughout Latin America.
CURRENT TRADE MISSION
Phil Goff is currently leading an Export Year business mission to Argentina, Brazil, Chile, and Uruguay, to promote commercial collaboration between New Zealand firms and South American partners.
The focus is on companies involved in the “food value chain”, that is, in all aspects of the food production industry: research, production systems, processing, packing, marketing, distribution, and training.
New Zealand’s experience in agriculture, horticulture and fisheries has laid the foundation for investment in South America. Many New Zealand firms have taken advantage of these opportunities.
One example is PGG Wrightson’s project in Uruguay – NZ Farm Systems Uruguay – which involves a NZ$160 million share float to develop dairy farms in Uruguay.
Fonterra has substantial investments in the dairy processing sectors of several countries in the region including Chile, Brazil, and Argentina. Sealord and Talleys have fishing operations in Argentina.
People to people links, an important pillar of the Latin America Strategy, are growing too.
A Working Holiday Scheme with Mexico was signed during President Calderón’s visit earlier this month. Under this scheme up to 200 young people can visit and work for a year in the host country, enabling both New Zealand and Mexican young people to experience each other’s countries and cultures. New Zealand has had working holiday schemes with Argentina and Uruguay since 2003, and with Chile since 2002.
The schemes have been so successful in attracting young travelers from Argentina and Chile that places have been progressively increased from 300 and 200 respectively, to 1000 places each today.
The Working Holiday Scheme with Uruguay offers 100 places and was fully subscribed by young Uruguayans this year. I’m pleased to announce that we are close to finalizing a Working Holiday Scheme with Brazil, and we are in negotiations with Peru.
An Education Counselor has been appointed, and has taken up his job, in Santiago. The numbers of students coming to the region are slowly increasing. In 2006, there were 453 international students of Latin American nationality enrolled in New Zealand tertiary institutions – but there is tremendous potential for growth.
New Zealand is well placed to provide certain types of education to Latin America. These include the supply of both advanced and applied agricultural training, other vocational and practical training, and English language training. (..)
Tourism is another area of growth - 21,000 visitors from Latin America came to New Zealand in the year ended March 2007. Interestingly, the number of Latin American visitors whose primary purpose was to visit friends and family has more than doubled in the past 10 years. This illustrates the effect of the growing migration to New Zealand, which, although small, forms an important foundation for links between us and the region.
We see prospects for cooperation in areas, such as national parks management and the development of regulatory frameworks for adventure tourism and eco-tourism. Management of these areas of tourism will be the focus of the next Latin America Strategy Visiting Journalists’ Program, which will take place in March 2008.
We are starting to tap into research, science and technology collaboration opportunities with Latin America, particularly in the areas of agriculture and biotechnology. Some of our scientists have visited Brazil and Chile to discuss collaboration on biofuels, and on joint research possibilities to tackle the common problems agricultural producers are likely to face from climate change. We hope Latin American researchers will participate in the Greenhouse Gases and Pastoral Agriculture Conference in New Zealand in November. (,..)
POVERTY AND MARKET ACCESS
The NZAID Latin American Development Program continues to contribute to addressing poverty in Latin America, in particular in rural areas and amongst indigenous people.
The Program has been assisting with market chain access and food safety in Peru, and supporting the economic development of Mapuche communities in Chile. NZAID has supported World Food Programs in Guatemala and Peru and funded intensive language training for Peruvian APEC officials.
Another focus for NZAID is supporting good governance. A study tour from Argentina in August looked at local government and community participation in New Zealand. NZAID is also funding Latin American participation at the International Conference of Information Commissioners to be held in Wellington in November. (...)
New Zealand remains committed to trans-Pacific models for regional co-operation, including APEC and the Forum for East Asia-Latin America Cooperation (FEALAC).
APEC remains the Asia-Pacific region’s pre-eminent economic organization, and is of significant strategic importance to New Zealand. The emergence of the regional economic integration agenda, including the idea of a Free Trade Area of the Asia-Pacific (FTAAP) as a long term prospect, has breathed new life into APEC’s trade agenda.
Work within APEC to define how FTAAP could be developed is a priority in the coming year. The Trans-Pacific Strategic Economic Partnership Agreement – P4 - between New Zealand, Chile, Singapore and Brunei has been mentioned by several APEC economies as a possible template for a region-wide agreement.
New Zealand is very open to this possibility. P4 is a high quality and innovative agreement which has injected new life into the economic relationship between New Zealand and Chile in particular.
The adoption of climate change as the flagship issue for this year’s APEC Summit has also demonstrated the capacity of APEC to rise to new challenges.
New Zealand is looking forward to working with Peru during its year as chair of APEC in 2008, and to using the opportunity to enhance our bilateral links in addition to our APEC connections.
We are also active in FEALAC, which brings together 33 countries from throughout the wider Asia-Latin America region together to stimulate greater interaction and political dialogue. The FEALAC Foreign Ministers met in Brasilia in late August, with the Minister of Conservation Hon Chris Carter representing New Zealand.
New Zealand values these opportunities to exchange ideas with Latin American counterparts. For the next two years, New Zealand will co-chair with Panama the FEALAC Working Group on Science and Technology. We view this as an opportunity to deepen our links with Latin America and East Asia further. (...)
A large and diverse delegation of Chileans involved in the decision-making process on establishing a new marine protected area in Southern Chile, with a particular focus on the conservation of blue whales, visited New Zealand earlier this month.
They studied New Zealand’s marine protection areas, including eco-tourism ventures based on whale watching. The visit was timely, given that Chile will host the International Whaling Commission’s annual meeting in Santiago next year. (...)
In conclusion, in view of Latin America’s economic potential, its growing political influence in international fora, and its geographic proximity to us, it makes sense for New Zealand to increase engagement with the region - both as a bilateral partner and as a link between the Asian and Latin American regions. The Government’s Latin America Strategy is focused on that.
Our government takes a strategic and forward looking approach to building relationships Latin America. We are committed to working hard and creatively to develop further and deeper ties.
Helen Clark is the prime minister of New Zealand. This column is based on excerpts of her remarks at a seminar organized by Victoria University of Wellington in co-operation with the New Zealand Institute for International Affairs.