New Zealand Embassy Mexico City

Prime Minister Key speech to the Latin America New Zealand Business Council

Speech to: Latin America New Zealand Business Council

Ladies and Gentlemen, it’s great to be speaking to the Latin America New Zealand Business Council again today.

I see a lot of familiar faces here in this room from the trade mission I led to Latin America in March.

The work of Latin American and New Zealand Ambassadors, government officials and the enthusiastic business delegation helped to make this visit a real success.

I’m told the New Zealand business leaders on the visit are already seeing benefits from the trade mission, which saw us cover four countries in 10 days – Mexico, Colombia, Chile and Brazil.

I’m going to talk to you more about that trade mission shortly, but first I want to update you on what the Government’s been doing since I last spoke to you.

In May our Minister of Finance, Bill English, delivered his fifth Budget.

None of our Budgets has been easy to put together, given the difficult economic situation around the world.

But each Budget has been part of a longer term plan to help New Zealanders through the recession and global financial crisis, get the country’s books back into good order, and build a stronger economy.

We are on track to meet our two overall fiscal goals, which are to return to a budget surplus in 2014/15, and to reduce net core Crown debt to 20 per cent of GDP by 2020.

We are able to do this – despite the challenges thrown up by the Canterbury earthquakes – because we’ve kept a tight rein on spending, we’ve improved the way public services are delivered, and we’ve made changes to the long-term drivers of government spending, such as in the area of welfare.
New Zealand’s economy grew 2.4 per cent over the last year, despite the nationwide drought which knocked the country in the first half of this year.
That is one of the higher growth rates in the OECD.

And economists are forecasting growth to increase, driven by rising consumer and business confidence, and a lift in construction.
Business confidence, for example, is the highest it has been since 1999.

That growing economy means wages have continued to rise faster than inflation, and there are 65,000 more jobs in the economy than there were two years ago.

That ties into one of our four priorities for this term – to build a more competitive and productive economy, which I am sure is front and centre in your minds.

Our other priorities are to responsibly manage the Government’s finances, to deliver better public services and to rebuild Christchurch – our second-largest city.

New Zealand is a diverse nation. We are small, outward-facing and reliant on global trade.

In recent years, we’ve put a lot of work into our relationship with Asian countries, and this is bearing fruit. Since New Zealand became the first developed country to sign a free trade agreement with China in 2008, for example, the trade relationship has gone from strength to strength.

New Zealand now exports 10 times the value of product to China every day than we did in the whole of 1972.

Together with Australia, New Zealand is part of a free trade agreement with the ASEAN nations, and we are negotiating free trade deals with Korea and India.

But Latin America is just as geographically close to New Zealand as some of our important Asian markets.

For example, it’s about 10,300 kilometres to Beijing, and just a fraction more to Mexico City.

The LAN Chile flights from Auckland to Santiago mean we have a direct gateway to Latin America.

As a trading nation reliant on producing more of what the world wants, we need to open up new markets.

So it’s time for New Zealand to look more closely to our Latin American neighbours – those who share the Pacific Ocean with us, and those who are Atlantic-facing, like Brazil.

And those relationships are not just about trading goods.

Young Latin Americans to study here, for example.

And New Zealand is well-placed to be a hub for Latin American businesses wanting to move into Asia.

So it was in that context that I recently visited Latin America.

The main focus of the visit was to advance our trade and economic relationships in each country, as well as strengthening our bilateral ties with them.
Our relationships with the four countries are in good heart.

This was underscored by Mexico, Colombia and Chile all announcing their support for New Zealand’s candidacy for a seat on the United Nations Security Council during my visit.

I was also encouraged by President Rousseff’s remarks to the media after our meeting in Brasilia. She said New Zealand and Brazil shared the view that reform of the Security Council was needed, and that Brazil was contemplating supporting our bid.

I also wanted to raise the profile of Latin American nations in New Zealand, which is why I was accompanied by a delegation, comprising 22 senior business people.

Mexico, Colombia, Chile and Brazil have so many things going them – they are fast-growing economies with increasingly affluent populations, and they are gaining influence on the international stage.

I was struck by the size and diversity of Latin America.

The cities – particularly Sao Paulo with its 20 million people and never-ending skyline – are on such a scale it’s almost impossible to comprehend when you’re from a country of 4 million.

But I was also struck by my visit to a Soprole farm in Puerto Montt, in the south of Chile. We had a barbecue in a marquee on the farm, and with the drizzly grey skies and rolling green paddocks, it felt like a National Party function in the Waikato.

So my visit reinforced just how varied these countries are.

The visit was a great chance to re-connect with Chile’s President Sebastian Piñera, and to establish relationships with the Presidents of Mexico, Colombia and Brazil.

It was also a chance to talk about the Trans Pacific Partnership.

The negotiations are important to New Zealand, and of interest to many of you here today, as they also include Chile, Mexico and Peru.

The grouping now comprises 12 economies, accounting for 40 per cent of world trade.

I will be travelling to Bali for APEC in October and will be meeting other leaders of TPP economies. This meeting will be an important milestone in negotiations as we strive to reach an agreement consistent with the vision leaders agreed to in Hawaii in 2011.

I know negotiators are working hard to achieve this.

But I share the sentiments of the new US Trade Minister, Mike Froman, who recently said the US wouldn’t rush the negotiations just for the sake of a deadline.

We want a good deal, not a quick deal.

I now want to run you through the highlights of my visit, country by country.

So I’ll start with Mexico.

My visit to Mexico was the first by a world leader under the Presidency of Enrique Peña Nieto, and it was very positive for the relationship between our two countries.

Mexico has been our largest goods trading partner in Latin America for over 20 years. In the year to June we exported about NZD$313 million worth of goods there, with the vast bulk of that being dairy and meat products. We imported about NZD$ 240 million worth of goods, and most of that comprised different types of machinery and vehicles.

Mexico is also a good platform for New Zealand businesses wanting to expand into the North American market.

Our similarities mean we compete in some areas. But one thing that’s struck me over the past few years is that as more and more of Asia’s population transition into the middle class, there is almost boundless demand for the food we all produce.

So New Zealand is not shutting anyone out of the market. What’s more, New Zealand can work with other suppliers, like those in Latin America, to ensure we can meet this growing demand together.

So it was pleasing that, during my visit, our two countries agreed to a Statement of Intent, which will provide the framework for the New Zealand Ministry of Business, Innovation and Employment to work with the newly created Mexican National Entrepreneurs Institute.

This framework will enable the two organisations to share information and carry out joint projects to grow trade and investment between Mexico and New Zealand.

President Pena Nieto and I also discussed the TPP, which Mexico joined at the end of last year.

For a long time, our two countries have been talking about a free trade agreement but, for various reasons, it has never moved to the next step.

The TPP has changed that, and both President Peña Nieto and I are committed to negotiating a broad, high-quality agreement.

Moving south, I can report my visit to Colombia was the first by a New Zealand Prime Minister.

This is a country going places – emerging from decades of internal strife, it’s now firmly looking outwards across the Pacific for trade, investment and education.

Our trade in goods with Colombia is relatively modest – around NZD $13 million a year – but I see huge opportunities for New Zealand and Colombia to build off that base.

A large part of that is down to Colombia’s President, Juan Manuel Santos and his desire to forge comprehensive, outward-looking trade deals.
At our meeting in Bogotá, President Santos announced Colombia’s interest in negotiating a free trade agreement with New Zealand.

This would be a big win for both countries – in the immediate future, for example, it would give our world-leading agri-tech businesses greater scope to invest their expertise and know-how in Colombia.

New Zealand’s skills in this area are highly sought-after. Next month, over 100 Colombia farmers will be coming to New Zealand to learn from their counterparts.

In the long-term, a free trade deal with Colombia would give us a pathway to an FTA with each of the four countries that make up the Pacific Alliance – which, in addition to Colombia, includes Chile, Mexico and Peru.

The third country on my visit was Chile – one of New Zealand’s oldest relationships in the region.

New Zealand’s relationship with Chile is in great shape, and it was an excellent opportunity to reaffirm that during my meeting with President Piñera.

New Zealand businesses have a long and successful history in Chile.

Some of our biggest companies, like Mighty River Power and Fonterra, have sizable investments and operations there in the geothermal and dairy sectors.

But a significant growth area for New Zealand in Chile is education.

Right across the Latin American countries we visited, I saw a big pent-up demand for the high-quality education New Zealand offers, and at competitive prices compared to other English-speaking countries.

On my second day in Santiago, we finalised an agreement with the Economy Minister to expand the Penguins without Borders scheme, which will see 100 young Chileans studying here in terms three and four this year.

More students are set to arrive in January for the first half of the 2014 school year.

Our Education Minister, Hekia Parata, followed up this interest in our education system with a visit to Santiago in June, and was well-received.
Brazil was the final country on my itinerary. Our first stop was São Paulo, the economic hub of this vast country.

Surprisingly, it also turned out to be the rugby capital of Brazil, and I was lucky enough to go along to a training session run by the Canterbury Crusaders for young Brazilian rugby players.

In Brasilia I met President Dilma Rousseff, and we had a wide-ranging discussion on the global economic situation.

One area New Zealand and Brazil have in common is agriculture. Our countries are big producers of beef and dairy products, and we can work together to enhance our exports in a number of ways – bilaterally and through forums like the WTO and the Global Research Alliance.

Brazil is Latin America’s economic powerhouse and a natural leader in the region, so it presents a vast array of opportunities for New Zealand businesses.

There’s real scope for New Zealanders to export world-class agri-tech, intellectual property and services to Brazil.

It’s fair to say that there are challenges in understanding the business and regulatory environment in Brazil, but the scale and size of the country mean the opportunities are impressive.

Again, education is an area where New Zealand can play a significant role.

New Zealand and Brazil signed the Science Without Borders agreement in Brasilia, which will help facilitate Brazilian graduate and PhD students to further their studies at New Zealand universities.

Around 3,000 Brazilians study in New Zealand each year, and the agreement will help cement Brazil as one of our country’s most important export education markets.

If I can now take a step back and reflect on the whole trip, two areas really stood out to me where New Zealand can beef up its profile in Latin America: education and tourism.

As I said before, it’s clear there’s a big demand for the high-quality secondary and tertiary education New Zealand can offer young and ambitious Latin Americans.

About 4500 Latin Americans study here each year, with Brazil making up the bulk of that. Argentina, Chile and Colombia round out the remaining 1500 places.

There is plenty of appetite both in New Zealand and Latin countries to expand on that.

Welcoming Latin American students to this part of the Pacific is an investment in the future.

It means there will be a growing cohort of bright, determined young people in Latin America who understand New Zealand, and who will probably want to retain relationships with the country they studied in.

The outlook is similar for tourism. As well as being Prime Minister, I’m also Tourism Minister, so I take a very strong interest in this area. The Latin American tourism market has real potential for growth.

Currently we get around 24,000 visitors a year from Latin America, but we’d like to see a lot more.

In this year’s Budget the Government allocated over $44 million dollars across four years to emerging tourism markets, including Latin America.

In fact we have allocated about a quarter of that money to ramping up New Zealand’s profile in Latin America.

This is a big step up in investment. Last year, for example, Tourism New Zealand spent around $80,000 marketing New Zealand to Latin America – this year we’re spending $2 million.

So I’m confident we’ll see an increase in the number of Latin American visitors from all walks of life – backpackers, families, honeymooners and business
people – as a result of that sustained marketing investment.

The main constraint is the lack of direct air links, apart from the existing Auckland to Santiago route.

But I hope the endorsement of a new air services agreement between New Zealand and Brazil will encourage airlines to think seriously about expanding connections between the two countries.

Tourism New Zealand has identified that there are over 6 million potential travellers in Brazil who have a preference for travel to New Zealand. So that market, in particular, offers significant opportunities.

To make the most of those opportunities we need to have a team in-market, building relationships with the travel trade and media, and running marketing campaigns.

So I happy to say that Tourism New Zealand will shortly open an office in São Paulo to serve as the base of our new Latin American activity.
This will allow us to quite quickly deepen our knowledge of, and influence on, the Brazilian market, as well as improving contact with partners in other important parts of the region.

Before I wrap up, I just want to mention the business delegation that accompanied me on the visit.

Some of you here today were part of that, and I know it was a big success for you.

I’d like to especially thank Primary Industries Minister, Nathan Guy, for his hard work on the visit.

While developing contacts and writing business was significant, so too was being part of an NZ Inc group, and feeding off one another’s know-how and experience.

I know a range of the businesses – from technology manufacturers to agri-tech experts to meat producers – have secured new contracts and many of the companies are following up promising leads.

In this context I’d like to acknowledge the work the Latin America New Zealand Business Council does in bringing together businesses to share expertise and experiences.

Ladies and Gentlemen.

New Zealand has much to offer Latin America.

Over time, our relationship with nations in that part of the world will deepen and grow.

We’re ambitious, energetic and forward-looking nations. We want our businesses to succeed at home, and in the rest of the world, by being the best in their fields.

I hope my visit to Mexico, Colombia, Chile and Brazil will be a springboard to bring business people together, to explore possibilities, and to collaborate and cooperate.

Thank you.
 

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