Speeches and Articles
Peace, prosperity and democracy - moving forward with the United States
06 August 2008
Address by Stephen Jacobi to the NZ/American Association, Wellington.
It’s a pleasure for me to be with you this evening.
I must congratulate your Association for the fine work you do in promoting interest in the United States and bringing together New Zealanders and Americans here in Wellington.
“New Zealand and the United States, Kiwis and Americans, have a long history of partnership. It is one that is grounded in common interests, but it is elevated by common ideals”.
These words of United States Secretary of State, Condoleezza Rice, in Auckland a few weeks ago are full of significance.
They mark a return to a relationship which is no longer defined by things on which we disagree but which captures and draws value from the range of things we have in common.
They are confirmation indeed that today the relationship is, to quote Ambassador McCormick, “the best it’s been in decades”.
This evening I’d like to share some thoughts with you about the relationship as it is today, about the outcome of Dr Rice’s visit and about how we can move ahead with the United States in the future.
I do so from the perspective of the NZ US Council, a non partisan organisation funded by both business and the Government and dedicated to fostering the strongest possible relationship between New Zealand and the United States.
The relationship today
There’s a story about a tourist in Balclutha who asked how to get to New Plymouth and received the answer “well if I were you, I wouldn’t start from here”.
Maybe that same story can be told about Texas and Wyoming !
In a similar sort of way if we are wanting to assess the development of New Zealand’s relationship with the United States, a lot depends on where you start.
Perhaps we might be tempted to start somewhere between 1945 and 1984 when New Zealand, as a member of ANZUS, was a fully fledged ally of the United States.
Our relationship today is clearly not the same as it was then, although arguably in terms of trade and investment it is even closer.
Or maybe we would start even earlier in 1839 when the United States established its first consular post in Russell.
From that starting point we have certainly come a long way !
International relations rarely develop in a progressive, linear fashion: they follow the twists and turns of a nation’s own political development and reflect major changes in the global environment.
The same is true of New Zealand’s relations with the United States.
In a period of over forty years we have moved from ally – with a large A – to “very, very, very good friend” and now, in the language used most recently by the Secretary of State, to “friend and ally”.
This is not to hide the fact that at times the relationship has not been as warm as it is right now.
But even when our differences of view were most pronounced, New Zealand has always had a fundamental interest in the closest possible relationship with the world’s remaining super-power and largest consumer market.
That interest starts, as the Secretary said in Auckland, from the ideals we share.
What are these ideals ?
In her speech Dr Rice praised New Zealand as a “place where peace and democratic values are flourishing … a place that hasn't been content to just have peace and democratic values for itself, but is insistent that those values should be for all human beings, and that New Zealand, like the United States, will not rest until peace, prosperity, and democracy are common across our humanity.”
Common ideals like peace, prosperity and democracy – this is the glue which holds this relationship together and always has.
This does not mean that we are always going to think the same way about everything.
A superpower in the Northern Hemisphere and a small country in the South Pacific are always going to see the world somewhat differently.
But that need not stop us working together where this flows from our common ideals and serves our common interests.
Our difference of view about nuclear weapons should not and does not stop us from working closely together to prevent nuclear proliferation in North Korea or Iran.
In practical terms if New Zealand wants to see progress made on those global issues we care deeply about, we need the United States to be actively engaged on those issues and sympathetic to our points of view.
We also see clearly the significance of the relationship with the United States in the economic sphere.
The US is New Zealand’s second export market overall and the largest export market for dairy products, beef, and seafood, the second largest purchaser of manufactured goods and among the top five markets for sheep meat, forest products, fruit and vegetables.
Alongside the volume of trade needs to counted the United States as a source of investment capital, business ideas, entrepreneurship and strategic alliances for the growth in new business in global markets.
As well as academic and scientific exchanges, promoted so successfully by Fulbright NZ celebrating its 60th anniversary this year, there is the role of the United States as a generator of thinking, scholarship, research and innovation.
And not least there are the shared interests of both countries in free and open trade and the spread of the rule of trade law which gives rise to extensive co-operation between the two in the World Trade Organisation and APEC.
This relationship is big - very big - like our partner country itself, but despite all the good news a closer analysis of statistics reveals a less than comforting picture.
The value of trade between our two nations has grown at a slower rate than with the rest of the world: this means that each country has effectively lost market share in the other.
New Zealand’s declining market share of US imports means that New Zealand firms have not grown their business in the US as fast as firms from other countries.
For New Zealand, the economic relationship is sized at about $7 billion or about 4% of domestic GDP.
This compares to an economic relationship with the US of 10% of GDP in the case of Australia, 11% of GDP in Denmark, 7% of GDP in Finland, and 16% of GDP in Sweden.
The stock of investment is a major driver of the difference in the size of the economic relationship.
Australia has US$50 billion of FDI in the US, Sweden has $23 billion, compared to New Zealand at US$270 million.
So however much the relationship has changed over the years, however happy we are at the way things are today, there is more work to do if this relationship is going to contribute all it can to New Zealand’s future prosperity.
The Secretary’s visit
Let me turn now to Dr Rice’s recent visit, the first visit by a Secretary of State for 10 years and only the second in over 20 years.
That the Secretary should have come at all – especially since she had met Foreign Minister Winston Peters in Singapore just days before – was a sign that the relationship has entered a new phase.
A lot of attention was focused on the Secretary’s use of the word “ally” in her press conference with Winston Peters.
I have no doubt that the word was used deliberately but I don’t think it was meant to signal a desire to return to the allied relationship of the past.
For a start, as the Prime Minister has pointed out, the world is different now than in 1945.
From a purely New Zealand perspective threats to national security come as much from terrorism and international crime as they do from nation states.
What’s more it would be quite unrealistic to expect that the use of the word ally was intended to reflect some reconciliation about the issues which only too recently divided us.
New Zealand remains as opposed to nuclear weapons as ever and the United States continues to regard them as a vital component for its national defence.
Nor are we entirely reconciled about Iraq although this has not been a barrier to co-operation to address Iraq’s reconstruction or to enhance security in the Gulf or on counter-terrorism more generally.
I think what the Secretary was pointing to was that broad alignment of ideals and interests I highlighted earlier – peace, prosperity democracy.
As NZ US Council Chairman Jim Bolger said at last week’s reception, it is this alignment which leads the United States to find in New Zealand, “no better ally” whether in promoting the spread of democracy or achieving more open markets internationally.
The Secretary’s visit represents also a significant milestone in the process of relationship building to which the two Governments have committed themselves in recent years.
The process is one that has been worked on carefully and deliberately by officials and politicians of both countries with the active support of business leaders.
That commitment first became evident at the first ever US NZ Partnership Forum organised by the NZ US Council together with our Washington-based counterpart, the US NZ Council, in Washington DC in 2006.
And it was encouraged and assisted by the second US NZ Partnership Forum which was held in Auckland in September 2007.
These two seminal events which have brought together government, business and community leaders have played their part in creating the ideal platform for each government to express their commitment to work towards a stronger relationship.
The first Forum identified an important new constituency for New Zealand in the United States and the second Forum consolidated the progress made.
The second Forum was the most significant meeting of American and New Zealand government and business leaders ever to have taken place – over 100 delegates in total.
Whereas at the first Forum in Washington the differences between us were very much “the elephant in the room”, by the time of the second Forum in Auckland there was a surprising but welcome request from the American side that the next Forum should also include discussion of the security situation in Asia and the Pacific.
That alone showed how far we had travelled in the intervening period.
The Auckland event also resolved that a Forum will be held in Washington in 2009 – this will be an opportunity to engage with the new Administration that will have taken office.
The Secretary’s remarks in Auckland not only captured the sense of momentum that has been established by the Partnership Forum but they served to move it forward.
Prime Minister Helen Clark’s successful visit to Washington in March 2007 had already resulted in an agreement with President Bush to move around what have been called “the rocks in the road” in the relationship.
Dr Rice’s visit demonstrates the extent of the road-building that has been achieved.
When asked by the press for her thoughts on the future of the relationship in the light of past differences Dr Rice had this to say:
"The relationship is not stuck in the past and there have been a lot of changes in the world since that time. And if there are remaining issues to be addressed then I think we have got to find a way to address them because the relationship between New Zealand and the United States is such a beneficial one and such a fruitful one for co-operation along a wide range of issues."
Moving ahead with the US
I’d like now to look at how the relationship might be further developed in the future.
I want to look at two areas – defence and trade.
On the question of defence, and more particularly the restrictions that continue to apply, at least in theory, to New Zealand troops exercising with their US counterparts, the Secretary’s remarks give rise to hope that the present restrictions in the form of the Presidential directive might be lifted at some point.
New Zealand has always been careful not to seek to push the envelope too far on this issue not wanting for obvious reasons to re-open the old debate about nuclear ship visits.
Today of course these restrictions are a lot less significant.
Several waivers have already been granted to allow exercises to take place – one such event will occur in New Zealand this coming September in which upward of 30 American personnel will take part.
Such exercising makes sense in the context of the operations that New Zealand and the United States undertake in Afghanistan and in the Gulf as part of the Proliferation Security Initiative.
At the right time the removal of the Presidential waiver is something which could logically flow as a consequence of a close relationship between friends and allies.
In the case of trade, there is as I mentioned earlier a lot of scope to move forward and New Zealand remains keenly interested in a future free trade agreement.
An FTA with the United States could be expected to focus unprecedented commercial attention on New Zealand as a trade partner and lead to even greater trade flows and investment in both directions.
Already our two competitors, Australia and Chile, both have FTAs with the US and they are using these agreements to develop their economic relationship even further.
If the trade relationship is to be the best it can be, we need access to the US market at least equivalent to our competitors.
In February 2008 US Trade Representative Susan Schwab announced that the United States wanted to join negotiations on financial services and investment with the P4 group of countries including New Zealand, Singapore, Chile and Brunei.
The P4 countries are joined in a free trade agreement known as the Trans Pacific Strategic Economic Partnership which some see as a template for future trade liberalisation in the Asia Pacific region.
What’s more Ambassador Schwab also announced that the US would begin a detailed exploratory process to see whether it would seek to join the P4 agreement as a whole.
An announcement on this is expected before the November elections.
It is still within the power of this Administration to decide to join P4 and thereby achieve the goal of an FTA with New Zealand.
That’s why the time to promote this outcome is now and why the NZ US Council has developed a strategy to support the P4 process.
It is sometimes claimed that the reason New Zealand did not secure an FTA at the time Australia did in 2004 was because of those rocks in the relationship.
In reality the picture is more complicated: as well as political differences, New Zealand’s market is small and there is likely to be opposition on the part of some US sectors, especially dairy farmers.
The size argument can be overcome by concluding a high quality deal which could be a future template for trade liberalisation in the Asia Pacific region.
That angle has become even more fruitful in the light of this week’s failure of the WTO talks in Geneva.
The issue of sectoral opposition can only be overcome if the US Administration were to decide to override these domestic concerns in favour of a deal with New Zealand.
That’s why the Secretary’s remarks – and that reference to New Zealand as a “friend and ally” – are so significant.
It is precisely this sort of language that can help remove political obstacles to the FTA because it puts the relationship with New Zealand in a broader strategic context.
Rather than being on the periphery of US interests, New Zealand is seen as a reliable and valued partner, even if we don’t agree on everything, and where closer economic alignment is a logical consequence of increasing political co-operation.
It is too early to be counting our chickens – we should not under-estimate the suspicions about the impact of trade agreements in the United States at a time when the economy is under pressure.
But the Secretary of State’s visit provides further reassurance to us that those old political differences, while not forgotten, will not be a deciding factor in whether P4 moves forward.
Conclusion
In his concluding remarks at the Partnership Forum in Auckland last September my colleague and friend John Mullen, President of the US NZ Council, quoted that old Bing Crosby song: “You’ve got to accentuate the positive, eliminate the negative, latch on to the affirmative, don’t mess with Mister-In-Between”.
There is much in today’s relationship that is positive – most notably the expanding sense of partnership between the two countries in global affairs.
In economic terms we are closer than ever, although our performance leaves room for improvement.
The important thing is that Dr Rice’s visit has helped us move beyond the “in-between” – not back to the status quo ante of 1984 but to being friends and allies once more.
There are some steps to take to bring the relationship more fully into the 21st century and the Secretary has said that where there are barriers we should talk about them.
We at the NZ US Council have no doubt that a future free trade agreement would help address the gaps in the economic relationship and put us on a level playing field in the American market alongside our key competitors Australia and Chile.
Finding ways for our military to exercise together more frequently can only help as we address the peacekeeping and peacebuilding challenges around the world.
As Dr Rice said in Auckland, “New Zealand and the United States, Kiwis and Americans, have a long history of partnership. It is one that is grounded in common interests, but it is elevated by common ideals”.
When we think about working with the United States we know very well where we start from – from common ideals of peace, prosperity and democracy and from our common desire to build a relationship which serves these noble aims.
