New Zealand Executive Government Speech Archive

SATURDAY 11 MAY 1996

ADDRESS BY

RT HON J B BOLGER
PRIME MINISTER

ASIA-PACIFIC ENGAGEMENT:

THE KOREAN AND NEW ZEALAND EXPERIENCES

ASIA SOCIETY CONFERENCE

HOTEL SHILLA, SEOUL, KOREA

Mr Chairman, ladies and gentlemen.

I was delighted to receive the Asia Society's invitation to address this prestigious conference on Asia goes Global: Korea and the Region.

Though New Zealand and the Republic of Korea are geographically distant and culturally distinct, our countries share common interests in the growth, stability and security of the Asia-Pacific region.

We are also embarked, each in our own way, on parallel paths of policy reform aimed at liberalising our economies, maintaining strong rates of growth and providing greater security and cohesion for our countries and the region to which we belong.

In New Zealand's case, our reforms have led to strong growth, low inflation, sustained fiscal surpluses, tax cuts and the rapid repayment of external debt. In trade and investment terms we have become a more open and useful partner, particularly in the Asia-Pacific region. The Asia-Pacific is now, without doubt, the most dynamic region in the world, representing:

Our region is economically interdependent as never before. In New Zealand we rely on the Asia-Pacific for some 70 per cent of our foreign trade and most of our foreign investment.

Korea conducts 70 per cent of its foreign trade in the Asia-Pacific, which is also the source of, and destination for, 77 per cent of Koreas total investment offshore.

This pattern is not confined to New Zealand and Korea. The United States now exports 60 per cent more goods to the Asia-Pacific than to Europe. And in a few years, on current trends, US trade and investment flows across the Pacific will be double the trans-Atlantic volume.

The reality for all of us in the Asia-Pacific is the enormous and growing economic stake that we have in continued prosperity and stability throughout the region. It is in each of our national interests to pursue these goals on a region-wide basis, because our futures are now dependent on one another. The challenge we face is to preserve stability throughout the Asia-Pacific as a basis for continued economic growth.

More positively, we have an opportunity to further enhance the Asia-Pacific's economic prospects through further regional trade and investment liberalisation, and by example, to encourage greater global liberalisation. New Zealand attaches priority to both these objectives. The strengthening of our ties with Asia is a relatively new phenomenon.

The initial impetus was economic. Countries around the Pacific rim now provide eight out of New Zealand's top ten export markets. The dynamic growth of our bilateral relationship with Korea is a case in point. We have long recognised the broader strategic significance of the Korean peninsula in Asia-Pacific security. Our participation in the Korean War reflected that reality. This year marks the 25th anniversary of the establishment of our embassy in Seoul.In recent years the links between our two countries have grown tremendously.

The Republic of Korea is now our fifth largest export market and, if present trends continue, may soon overtake Britain, our most important trading partner only a generation ago. The relationship goes far beyond commodity trade. Tourism and migration have increased rapidly in recent years. New Zealand now has a significant Korean population which enriches our economy and culture with new ideas, capital, skills and diversity.

Their presence in New Zealand contributes in turn to the dynamism of the bilateral relationship. Our Government is keen to broaden these links further by building up the political relationship to a level more befitting the importance of Korea to New Zealand. My visit, although brief, is a tangible step in that direction.

I was delighted this morning to meet with President Kim to discuss first hand a range of regional economic and security issues; and ways to further develop our bilateral links. Now the worlds 11th largest economy and 12th largest trading country, Korea has grown to be an economic power whose growth and stability is of international significance.

New Zealand welcomes Korea's move towards greater participation in the global arena, in particular, through its commitment to segyehwa. Koreas membership of the World Trade Organisation and its current membership of the UN Security Council are both important demonstrations of this commitment. We also look forward to Koreas imminent membership to the OECD.

The Republic of Korea, in short, is a nation moving to assume its rightful role as a prosperous and leading economy in the Asia-Pacific region. Like many of Korea's friends New Zealand has watched with supportive interest the reforms and deregulation introduced here in recent years. Such reforms are not easy; but they do deliver real benefits. New Zealand too has undergone significant reforms in recent years.

Over the last decade, New Zealand has transformed itself from a protected, insular economy reliant on a small number of trading partners into a highly competitive, outward-looking trading nation. A key part of our economic reform process has been the achievement and maintenance of stable macro-economic policies. Such policies have given confidence to investors that has led to much higher levels of growth.

We have exposed our economy to international market forces through the reduction of border protection, the virtual elimination of internal subsidies; and the deregulation of sectors such as transport, banking and telecommunications. These overall reforms have seen New Zealand ranked eighth overall in 1995 World Competitiveness Report, up from 18th in 1991, and third in government efficiency.

Standard and Poors and Moodys have recently upgraded New Zealand's sovereign credit rating this year to AA+ and AA1 respectively. Stability and confidence allows New Zealand businesses to invest, expand, employ more people and reinforce economic growth. And, in the process, we have been able to provide direct benefits to the people of New Zealand through increased social and health spending and deep cuts in rates of personal income taxation, to return to working New Zealanders higher incomes and purchasing power.

What New Zealand has shown in the last few years is that economic reform actually works. Good policies, a steady nerve and sensible government can turn a country back from growing external debt and recession to deliver growth, and an increasing social dividend. Each country faces its own special challenges in the reform process. Korea will, I am sure, continue to define its own means and pace as it continues down the path of reform.

But I believe that the fundamental elements of New Zealand's economic liberalisation are relevant to all our regional partners. Like Korea with its policy of segyehwa, my Government is encouraging increased openness and an outward-looking stance in New Zealand society. Closer ties with our Asia-Pacific neighbours is central to this strategy. We have established an Asia 2000 Foundation, as a major government initiative, to promote a generation of New Zealanders who will be more comfortable and competent in their dealings with our Asia-Pacific neighbours.

The Foundation aims to foster increased language skills and cultural familiarity with the Asia-Pacific region. In this regard, we are fortunate indeed to have Dr Kim Kak-Choong, Chairman of Kyungbang Limited, and former Foreign Minister Professor Han Sung-joo as honorary board members of our Foundation. Not only are they deservedly well respected in Korea, they are both genuine friends of New Zealand. As partners in the Asia-Pacific, New Zealand and Korea are both highly dependent on increased trade and investment as engines of growth.

For both our economies, secure access to markets and trade rules conducive to effective and efficient trade are of critical importance. In pursuit of these aims, the process and institutions of Asia Pacific Economic Cooperation - APEC - are a key development. In the space of a few years APEC has become the foremost regional organisation for bringing together governments in economic dialogue on the trade and investment issues confronting the Asia-Pacific. Three years ago, President Kim and I joined other APEC leaders meeting in Seattle to map out a vision for free trade and investment in the Pacific Rim.

A year later in Bogor, we achieved a timeframe for this vision: free trade and investment by 2010 for developed and 2020 for developing economies. Last year at Osaka, leaders agreed to bring forward plans for national action to remove trade and investment barriers in the APEC region. This new approach to trade liberalisation from the top down is based on the personal commitment of leaders. This gives the political impetus and, I believe, sets the test of credibility sufficiently high, to drive the APEC process forward. A sign of New Zealand's commitment is the meeting of APEC trade ministers, to be held in New Zealand in July this year.

This important meeting will help set the political agenda for a successful APEC leaders meeting in Manila in November. The Christchurch Ministerial will also consider what initiatives APEC members might take into the new World Trade Organisation when it meets for the first time at ministerial level in Singapore in December.

I believe that the coordinated push towards trade liberalisation by APEC prior to the conclusion of the Uruguay Round helped to produce a successful result there. Similarly, the APEC and WTO meetings this year provide an opportunity to give a clear message on the direction we believe the multilateral trading system should take as we approach the year 2000.

The continuing prosperity of Asia-Pacific relies to a great extent on continuing stability in the region. For all the understandable euphoria over the economic prosperity of East Asia and the Pacific, there are security concerns. Any increase in tension on the Korean Peninsula, confrontation in the South China Sea or breakdown in relations in the Taiwan Strait, to take three examples, could jeopardise what we have achieved as a region.

Events over recent months have underlined the need for structures which can strengthen political as well as economic security in North East Asia. From a global perspective it is noteworthy that this region remains the one area in the world where Cold War legacies and contradictions remain starkly apparent. Without underestimating the difficulties involved, the time has surely come to make a more concerted effort at breaking down - in a peaceful and stable way - such tensions and mistrust as remain in the region. Many of the building blocks required are already apparent.

The increased trade, investment and economic interdependence that has occurred in recent years within the region is a powerful engine for peace. Economic interdependence does not, of course, guarantee political stability - but it does create powerful incentives to avoid hostility and encourage political cooperation. For these reasons alone, all APEC participants, and their business sectors, have a responsibility to press ahead with achieving, on a progressive basis, the liberalisation goals agreed by APEC leaders. Secondly, we have - and should welcome - the powerful stabilising influence arising from a continued and enlightened United States presence in the region.

In this context my Government has welcomed the recent initiatives taken by Presidents Kim and Clinton to offer ongoing negotiations, without preconditions, between the parties directly involved on the Korean Peninsula, with the aim of achieving a permanent peace settlement.

New Zealand, for its part, has made a long term commitment to assist the Korean Peninsula Energy Development Organisation, as a signal of our concern to see a peaceful resolution of the current situation on the Peninsula. We urge others to do so as well. Similarly, we have welcomed the recent reaffirmation by President Clinton and Prime Minister Hashimoto of the United States/Japan security alliance. In a broader context, as we have welcomed Korea's current membership of the UN Security Council New Zealand also supports Japan taking up a seat on the Council in the elections to be held at this year's General Assembly. Within the framework of an enlarged and reformed Security Council we support the objective that Japan should become a permanent member of the Security Council.

We believe that the participation of countries in the region is important in bringing a greater East Asian democratic perspective to bear on the management of global security concerns. Thirdly; we can and should welcome the prospect - if current growth rates continue - of China becoming a global economic power by early next century. How China chooses to manage that responsibility, and how the rest of the world adapts, will have an important bearing on the future security and prosperity of the Asia-Pacific region and the international economy as a whole.

New Zealand is firmly of the view that concerted efforts should continue with a view to China assuming the responsibilities and benefits of full membership of the WTO in the near future. The security of reciprocal trade and investment access such membership would entail, and the WTO's mechanisms for the peaceful resolution of disputes, would have direct benefits for China and its trade partners.

It would also benefit the broader economic and political security on which all our prosperity depends. Fourthly, we can and should build on the political structures that are now evolving to address regional security issues.

The region needs to develop habits of consultation and cooperation on such issues now while conditions are favourable. In just the third year of its existence, the ASEAN Regional Forum in Brunei last year provided the unique opportunity for all the regional powers to discuss security issues at the same table. The fact that our Foreign Ministers were able to discuss, in a non-confrontational way, the sensitive issue of competing claims to the South China Sea represented a considerable achievement.

The first stages - where we are now - involve confidence-building and preventive diplomacy. I hope that we will be able to move in the years ahead, to develop enhanced frameworks for regional conflict resolution. Finally, I should note that the longer term security question that faces us all is how to secure a world free of nuclear weapons. New Zealand breathed a sigh of relief when France agreed to stop testing for all time in the Pacific. That decision was reached after years of persuasion, protest and debate. We urge China to follow suit and cease its testing programme.

We have also welcomed the decision of France, the United States and the United Kingdom to agree to sign the Protocols to the South Pacific Nuclear Free Zone Treaty. That Treaty, and a network of similar agreements now in place for South East Asia, Latin America and the African Continent, mean that the vision of a southern hemisphere free of nuclear weapons, is now in prospect. New Zealand will continue to work towards achieving that goal, as a step towards global nuclear disarmament. We also strongly support the signing this year of a Comprehensive Test Ban Treaty.

New Zealand has also made submissions to the International Court of Justice, calling on the Court to declare that the use or threat of use of nuclear weapons should be illegal at international law. I raise this important security issue at this Asia Society conference because of my growing concern - which is shared by many others. That is, if the five existing nuclear powers do not commit themselves to actively work towards first significant further reductions and second the elimination of their nuclear arsenals then other nations - some of them here in Asia - may decide that they too should acquire nuclear weapons.

That would be disastrous. Any expansion in the number of nuclear states is a threat to everyone, and would be contrary to the stability and prosperity that we seek in Asia, and elsewhere. There is much work to be done in this area of international policy and New Zealand will work with other countries who seek to make progress. Mr Chairman, as we consider the topic of Korea and the region, I want to salute Korea's emergence as a leading and successful participant in the global trading economy, and President Kim's role in consolidating the process of democratisation.

We all have an interest in the progressive and successful liberalisation of Korea's economy by President Kim and his government. My own country's experience demonstrates that a bold and farsighted programme of reforms can, and will, generate economic and social benefits. But no country - however large or small - can achieve this task alone. The pursuit of open international rules for trade and investment, and the resolution of underlying security and political tensions, are tasks which involve us all. I am confident that Korea and New Zealand will play their role in the pursuit of these common objectives.

They are, in fact, objectives that bind us all together in our Asia-Pacific community.
Ends

Home || Ministers || Policies || Speeches || Departments