Nikkei Shimbun “Future of Asia” conference, Tokyo, Japan

Press Release – New Zealand Government

On 4 September 2010 a magnitude 7.1 earthquake struck New Zealand’s second largest city, Christchurch, causing widespread damage. Fortunately on that occasion there were no casualties. Then on 22 February this year, a violent aftershock struck the …Hon Murray McCully
Minister of Foreign Affairs

27 May 2011
Speech

Nikkei Shimbun “Future of Asia” conference, Tokyo, Japan

On 4 September 2010 a magnitude 7.1 earthquake struck New Zealand’s second largest city, Christchurch, causing widespread damage.

Fortunately on that occasion there were no casualties.

Then on 22 February this year, a violent aftershock struck the city centre at lunchtime.
Among the 181 victims were many students from the Asia-Pacific region, the largest number coming from Japan.

I take this opportunity on Japanese soil to express our deepest sympathies to the families who lost their loved ones.

Serious as New Zealand’s losses were, Japan has suffered even more.

New Zealanders watched in horror as the devastating earthquake and tsunami hit the Tohoku region on 11 March with massive loss of life and damage.

Japan’s terrible tragedy placed our own challenges in perspective.

We extend our heartfelt condolences to those who suffered the loss of family and friends and to those who now face the struggle of piecing their lives back together.

The immediate response of our partners in the Asia-Pacific region was critical to the rescue operations in Christchurch.

New Zealand sent a search and rescue team to be at Japan’s side, as Japan had been at ours, as well as funding to assist the survivors.

Our thoughts also go to the Japanese Search and Rescue team, who had done such a tremendous job in Christchurch, and returned home to face such devastation.

I want to take this opportunity today on behalf of the Government and people of New Zealand to thank our friends in Japan and the wider Asia Pacific region for the incredible generosity that was shown to us in our time of need.

The way in which partners from the region helped New Zealand and Japan highlights the fact that as a region we share both challenges and opportunities.

This brings us to the theme of today’s Nikkei Shimbun conference: the “Future of Asia” and “stronger ties and greater growth: keys to overcoming Asia’s challenges”.

Let me say that I am delighted to be invited to speak on this topic and honoured to share a stage with so many distinguished speakers.

Asia is of pivotal importance for New Zealand and today’s theme of stronger regional ties and facing common challenges could not be more timely.
Over the past 50 years, Asia has changed dramatically.

The region is now more developed, more stable and more prosperous than ever before.

There has been substantial political evolution, providing a framework for development and growth and assuring greater stability.

Japan, China, India, South Korea, Indonesia and Australia are among the world’s top 20 economies.

ASEAN is on track to realise ambitious economic integration and connectivity goals.

Hundreds of millions of people have achieved higher levels of income, health and education. Poverty has been substantially reduced.

But as the Millennium Development Goals process highlights, there is more work to do.

There is also more work to do to address common challenges, including climate change and environmental degradation; sustainable access to renewable energy resources; adequate fresh water supply; health challenges; and infrastructure development.

There also remain security challenges.

Some countries remain under authoritarian rule.

Some others are involved in conflict or pose a threat because they have not embraced the norms that most countries in the Asia-Pacific region adhere to.

Violent extremism remains a major challenge for us all.

And there is work to do on the human rights front also.

So, strong progress has been achieved over the past half century, but we have much more work to do.

I am going to focus on four areas, and practical suggestions for action in the short term:

Outcome oriented evolution of the regional architecture

Accelerated cooperation on disaster management

Increased coordination in development assistance to achieve stronger outcomes

Deeper regional trade and economic linkages.

Why those four areas?

Well I think they are areas where as a region, we can make progress quickly.

And I think they are areas where the results will be most helpful to the largest number of people in our region.

Since the establishment of ASEAN in 1967, countries in our region have been thinking about how we can best come together to address the challenges of the day.

New Zealand greatly values the opportunity to work with ASEAN and other partners in the region to support the political, economic and security agendas of ASEAN itself.

The intense policy debate that takes place within APEC ensures that APEC also will continue to be a vibrant part of our regional architecture.

We recognise the important role Japan played as chair of APEC last year, in creating a vision for future work on regulatory cooperation, green growth and regional economic cooperation.

The other key body is the East Asia Summit, established in 2006.

This has brought together the ASEAN countries, with Japan, China, India, South Korea, Australia and New Zealand for engagement on a wider agenda.

With the formal admission of the Russian Federation and the United States at this year’s EAS Summit in Bali in November, there is a lively debate underway about the future of the EAS and regional architecture.

The need to ensure that the agenda is meaningful for all participants and the need to manage busy leaders’ diaries will no doubt see the meeting structures evolve in the years immediately ahead.

We welcome the current debate and the prospect of evolution.

We see benefit in identifying a relatively short list of priority areas for work in an EAS context.

Having observed the massive growth in work around regional and international processes, we strongly believe any development of the EAS agenda should first and foremost be outcome oriented.

We believe the expanded EAS needs to get runs on the board.

To achieve this, the EAS agenda needs to respond to issues of common interest to all EAS members.

Disaster relief is perhaps the best example.

It should also look into critical regional security issues – including maritime security and nuclear proliferation in Asia.

By sharpening our focus; by ensuring we have clear results in mind; and by getting the support mechanisms right, I think the EAS has potential to deliver substantial benefits for the Asian region.

Both New Zealand and Japan also want the EAS to continue the careful work underway to deepen economic integration.
Along with Japan, New Zealand wants to realise the vision of a Comprehensive Economic Partnership in East Asia – or CEPEA.

New Zealand is committed to the CEPEA vision because it would deliver enhanced prosperity for all economies involved.

And because we recognise that enhanced economic integration is a powerful force for regional stability and security.

I am delighted that ASEAN Leaders recognised the importance of moving this concept forward at their most recent meeting.

The Economic Research Institute for ASEAN and East Asia (ERIA)- an initiative promoted by Japan- and supported financially by New Zealand, has proven itself critical in developing practical ideas for enhancing the region’s economic connectivity and we are keen to further consolidate this role.

We hope it will develop even stronger capacity to support regional initiatives.

Distinguished audience, the reality is that we live in a disaster prone region

Many of us live on the ring of fire.

Others face serious climate related impacts, including floods, droughts and major storms.

There are risks such as oil spills or nuclear accidents.

If we are to maintain economic growth in our region, we need to work on a coordinated regional response in disaster, risk reduction, management and recovery.

I believe we need to streamline systems and establish protocols to remove unnecessary red-tape.

The regional bodies and associations we have already established, provide a framework for innovative solutions to our region’s common challenge.

However, in order for them to be effective, we need to have better coordination among the various processes and between the many institutions working in this space.

That means having a clearer picture of what assets are held, where they are located and how easily deployable they are.

It may also mean partnership initiatives to hold disaster relief assets in strategic locations.

When faced with natural disasters, we need to ensure that we can get rescue teams on the ground as fast as possible and once there, ensure that they are well coordinated and can operate effectively, without being held up by bureaucratic processes.

We agree that the EAS can make a difference by setting regional objectives and guiding the work of the region’s forums to deliver enhanced emergency response services.

We will continue to support efforts to establish the ASEAN Humanitarian Assistance Centre where New Zealand has been working alongside Indonesia and ASEAN to operationalise its activities.

We look forward to a final decision being taken by ASEAN Ministers soon to ensure the Centre is fully operational.

The work being conducted in the ASEAN Regional Forum, East Asia Summit and the ASEAN Defence Ministers Meeting-Plus grouping on disaster prevention, relief and mitigation is important.

I believe that regional coordination of disaster management is essential to enhancing our common security, and indeed maintaining prosperity.
New Zealand recommends this be an early focus in the next phase of regional dialogue.

I’d now like to turn to the role of regional coordination in another area: namely, supporting economic development in the Asia Pacific region.

I believe we can achieve stronger outcomes for the region if we improve our coordination on development assistance.

We want to work with Japan and others to ensure our development assistance is more coordinated- specifically that we add value to each others’ activities.

We strongly encourage all donors to the Pacific island states to become closely engaged with the Cairns Compact on Strengthening the Coordination of Development in the Pacific

New Zealand is hosting the 40th Pacific Islands Forum meeting in Auckland this September.

As the Chair of the Forum for the next 12 months, we look forward to working with partners in the Asia Pacific region to strengthen donor coordination and to enhance the security and wellbeing of our region.

The Forum’s dialogue process with donor countries, including Japan, is an important part of this process.

We want to use the Dialogue to build productive links between donors and recipient Pacific Island countries and to achieve a combined sense of purpose on development issues.

Providing stronger leadership on development challenges in the Pacific region is a key priority for the New Zealand Government.

Japan is a generous donor in the region that engages regularly with Pacific nations.

I have attended previous PALM dialogues between Japan and the nations of the Pacific Forum.

But we have yet to establish a pattern of strong partnerships between our two countries in development initiatives in Pacific nations.

This is an omission I hope we can rectify soon.

We are also both involved in development partnerships in South East Asia.

Again, there is potential for partnership between our two countries.

This is something I am keen to progress.

I have talked already about the critical role that APEC, the EAS and CEPEA play in our regional architecture.

The conclusion of the Doha round and ongoing work at the WTO also remain highly important for our region.

At the same time, Asia must continue to enhance its growth prospects through an ambitious trade agenda that will place our countries in a competitive position in the new supply chains that are developing.

New Zealand and Australia concluded the enormously successful Closer Economic Relations Agreement in 1983.

In the last decade we’ve concluded Free Trade Agreements with Singapore, Chile, Brunei, China, Malaysia, the ASEAN region and Hong Kong.

We have commenced negotiations with others, including India, Russia and the Republic of Korea.

The obvious absence of Japan from this list is something I shall return to shortly.

New Zealand will continue to be highly dependent upon our capacity to earn foreign exchange.

The government, led by Prime Minister John Key, aims to lift exports as a share of GDP from 30% to 40%.

We are pursuing this objective vigorously.

I know that many of our friends are in a similar space – dependent on trade and looking for more opportunities.

Most of us are pursuing bilateral FTAs, but we’re also searching for something more.

We want to identify a mechanism that will deliver even greater and more immediate benefits for our economies and put us ahead of the international game.

We see the next regional challenge being the conclusion of a high quality Trans-Pacific Partnership Agreement.

The TPP partners, which include New Zealand, aim to conclude a high quality and comprehensive 21st century agreement that could eventually include all the APEC economies.

It’s part of the evolving architecture of the region – a potential building block to a larger Free Trade Area of the Asia Pacific (FTAAP), a pathfinder initiative that will enhance regional integration.

It’s a key step to including the United States into Asia-Pacific trade integration.
TPP will be a ground-breaking agreement.

We are working not only to eliminate tariffs but also to address a wide range of regulatory issues that make it difficult for businesses, large and small, to operate seamlessly in different markets in the region.

Japan remains a major economic force in our region.

We were greatly encouraged by Prime Minister Kan’s announcement last November of his government’s commitment to trade and regulatory reform to improve Japan’s competitiveness and fiscal position.

The reform agenda that Prime Minister Kan has outlined opens the way to Japanese participation in the TPP process.

Mr Kan has explained why he sees deep reform as critical for Japan’s own long – term competitiveness and reconstruction.

Japan has now faced a major disaster, and recovery and reconstruction is an enormous job.

We too are dealing with the aftermath of a natural disaster, so we understand that.

Our own approach is that recovery requires growth in the economy and to achieve that New Zealand is keeping up the pace on its trade agenda.

It is my view, for Japan to make progress into the next decade, and to ensure a successful reconstruction post 11 March, it will to need to embrace globalisation across all sectors.

It is our strong hope that the reform process will advance to the point that Japan can take a decision in the near future to seek to join the negotiations for a Trans Pacific Partnership agreement.

We would be keen to see Japan take a place inside an expanded TPP grouping, negotiating high quality outcomes across the full range of the agreement, not only elimination of tariffs, but also wider regulatory issues.

Japan used to be among our top three trading partners, but its ranking has slipped.

This is partly a function of expanding new markets, but New Zealand wants to see economic relations with Japan advance.

Japan was our first major economic relationship in Asia, and we want to see Japan remain a prominent trading partner.

A high-quality FTA would certainly assist that.

Japan is the only major regional economy with which we do not have an FTA concluded or under negotiation.

New Zealand certainly recognises that there are sensitivities on both sides.

But our experience is that liberalisation for sensitive products can be carried out in a staged manner that will help to promote adjustment.

We envisage a FTA that is trade enhancing and win-win for both countries.

Indeed, we see an FTA with Japan as a way towards more competitive agricultural and food industries in both our countries.

For example, through the combination of technologies and capabilities, FTA partners can build supply to third markets, creating platforms for additional growth.

We also see this joint effort as a way to enhance food security, by guaranteeing a reliable, consistent supply of safe and high quality food from trusted partners.

You may ask why New Zealand places so much emphasis on bilateral and regional free trade agreements.

It’s very simple.

Firstly, we believe they are essential to regional growth.

And secondly, we think they enhance our region’s political cohesion, security and stability.

For us, the architecture provided by such agreements plays a strategic role.

The region’s history is one of conflict and mistrust, shifts in economic power and frequent natural disasters.

However, we now enjoy increased regional stability and security.

Which in turn has led to, or indeed resulted in, the region’s tremendous economic growth and integration.

Whichever way you see it, the region’s economic growth and its stability are linked.

So closer economic engagement between Japan and New Zealand will not only benefit our economies, it will also be another part of the web of arrangements that draw the region more closely together.

In conclusion, I am bullish about Asia’s prospects.

We have made great strides over the past half century.

For New Zealand this is critical.

For most of our history our geographical location has been our great strategic
disadvantage.

Now, as we enter the Asia Pacific century, it is our greatest advantage, linked by geography, as we are, to the region that will be the powerhouse of the world economy for as far ahead as we can see

We face many substantial challenges in the years ahead, but we also enjoy many opportunities.

As I have outlined, a close focus on getting the most out of new regional architecture is essential.

So too is making the most of existing processes and opportunities, including APEC and the full range of ASEAN and ASEAN – associated processes to take our shared interests and agenda forward.

Ensuring better coordination will deliver results, be it in relation to the challenges we face in the Asia-Pacific, in the management of disaster management and relief efforts; or in relation to development.

New Zealand is committed to this work.

It represents an investment not only in the region’s future, but in our own security and
prosperity.

We want to be a strong partner of Japan in this work.

We have worked well together for decades and need to take the relationship to the next level.

May I thank you once again for the invitation to participate in this prestigious conference and to share some views on the way ahead.

ENDS

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