Thank you Hugo, good evening everyone, thank you for the invitation to speak with you today. It's a real treat to be back in Nelson.
I’ve been Executive Director of the NZUS Council since November. I’ve been a fan of the USA for a lot longer than that, not least through my posting at the New Zealand Embassy in Washington DC in the first half of the 1990s. I’ve also got some significant personal history with the USA, having met the father of my children at the bar in the Embassy’s basement, and later meeting my future husband at an American Chamber of Commerce function in Auckland.
Themes of my remarks
I got back from the USA 10 days ago following a visit with Council Chairman Simon Power that included time in Los Angeles and Washington DC. I’m pleased to report that the bilateral relationship is in the best shape I’ve ever seen.
I’d like to share with you some reflections on the relationship leading up to the Council’s big event, the USNZ Partnership Forum at the end of June.
At the official level, New Zealand places a high value on its relationship with the USA. We share a deep and longstanding friendship – based on a common heritage, shared values and interests and a commitment to promoting a free, democratic, secure and prosperous world.
This heady sounding stuff (straight out of an MFAT brief) actually matters - some of the people we met with in Congress two weeks ago referred to this during our meetings with them. It’s part of the reason why these very busy people are prepared to meet with New Zealanders when we come calling, even though we can’t win them any votes in their home electorates.
We did of course hit a rather large speed bump in our relationship with the US regarding NZ’s anti-nuclear position in the mid 1980s. This led to a significant chill in the relationship for a decade. There were signs that the chill was starting to thaw when then Prime Minister Jim Bolger visited Washington DC in 1995, the first NZ Prime Minister to do so for 11 years. I was involved in hosting him in Texas, greatly enjoying the opportunity to swan about the countryside in cowboy boots with Big Hair.
It was therefore a source of great satisfaction to me when Mr Bolger was appointed as NZ Ambassador in Washington in the late 1990s, and then, on his return to NZ, as Chairman of the NZUS Council. He held that position until November 2014, when he stepped down after many years of great service to the bilateral relationship.
As I mentioned, the new Chairman of the Council is the Hon Simon Power, whom many of whom you will recall was a very successful Minister of Justice and Minister of Commerce amongst other portfolios during the first term of the Key Government. These days he is General Manager of Westpac Business Bank, Private Bank, Wealth & Insurance.
As a Minister, Simon was prodigious in his output of legislative proposals and if anything his work rate has increased in the private sector. I’m working hard to keep up with him. He has huge energy and enthusiasm for NZ’s relationship with the USA, he is an avid student of US politics and he is determined that the NZUS Council will do more than host cocktails and “add another very” to the very very good relationship that NZ now enjoys with the USA.
I think the gradual improvement in the bilateral relationship with the USA has been one of the great foreign policy achievements of successive NZ governments since the turn of this century. I won’t rehearse all the steps that contributed to that gradual warming but there are three milestones that are worth mentioning.
The first is the role of the NZUS Council and our counterpart in Washington DC, the USNZ Council. Around the mid-2000s, there were occasional signs of thawing in the relationship (like PM Bolger’s visit) but no clear pattern of improvement. We needed to give it a nudge in the right direction. So the Councils initiated the USNZ Partnership Forum idea leading to the inaugural Forum in Washington DC in 2006.
The Partnership Forum brought together well disposed senior leaders from the Congress and Parliament, the business sectors and the wider community to advocate in favour of normalising the bilateral relationship. Some former members of the US Administration were particularly helpful advocates as they could say things that they had been constrained from saying publicly while they still held office.
The Partnership Forum is a fine example of so called “Track 1.5 diplomacy”. That’s a fancy way of saying that the Forum is an unofficial channel for dialogue and problem- solving, bringing together public and private sector representatives to build relationships and encourage new thinking that can inform the official process. It has worked really well for the NZUS relationship.
We are now in the lead up to our 6th Partnership Forum taking place in Auckland at the end of June. It’s great that we are no longer talking about how to fix the relationship, but rather how to leverage the excellent relationship that now exists. I’ll talk more about this shortly.
There are two other key milestones at the official level that are worth recalling.
When the USA decided to pay more attention to the Asia Pacific region around the mid-2000s, New Zealand emerged as a willing and able partner with many shared regional objectives. As a result, in 2010 Secretary of State Hilary Rodham Clinton came to NZ and signed the Wellington Declaration – a new strategic partnership between NZ and the USA¹.
I have to say that when I saw the signing ceremony on the 6 o’clock news I actually shed a tear because it represented the culmination of a huge amount of work by successive governments as well as the NZUS and USNZ Councils and many other stakeholders to get the bilateral relationship back on track and heading in the right direction.
A couple of years later the bilateral relationship was further strengthened by the signing of the Washington Declaration. This agreement sets out areas of closer bilateral defence and security cooperation including increasing cooperation in the south Pacific and working multilaterally to build capacity in peace keeping, humanitarian assistance and disaster relief.
There is now a huge amount of effort underway by officials on both sides to build on these two Agreements with practical initiatives and collaborative efforts. While in Washington we heard how the official relationship has deepened in many areas, from foreign, trade and security policy to police cooperation, immigration, collaboration between the Customs services and new connections in science and innovation. This has really taken NZ’s official relationship with the USA to a new and very exciting level. It doesn’t make the headlines but it’s happening.
The Trade Relationship
The US is now New Zealand’s third largest trading partners in terms of NZ’s exports, imports. In 2013 NZ exports to the US were worth over $4billion dominated by frozen beef, casein and whey products, lamb and wine. A really interesting and comparatively new part of our export trade story has been the growth of NZ services exports to the USA particularly in the IT sector (eg Xero, Orion Health, Vista Entertainment and others).
We imported more than $4billion worth of goods from the US, mainly aircraft and aircraft parts, turbo jets and medical equipment. The US is also an important source of foreign direct investment into NZ.
You’d think that was all good news, but a few short years ago, the US was actually our second largest trading partner after Australia. It slipped to third behind Australia and China after NZ signed its Free Trade Agreement with China in 2008. This goes to show what gains can be made from good quality Free Trade Agreements.
It’s high time that NZ and the US signed a Free Trade Agreement too, something that the NZUS Council has been pushing for since we were set up in 2001.
Our best opportunity to secure an FTA is through the Trans Pacific Partnership that is currently being negotiated amongst 12 countries including NZ and the USA.
Happily it looks as though we are close to the end stages of these negotiations. Congress is very close to tabling its fast track legislation (or Trade Promotion Authority) that would enable President Obama to conclude the TPP negotiations safe in the knowledge that Congress can’t unpick the deal. But he will still need to get TPP through Congress later this year, a fact which shapes the position of the US negotiators.
The negotiations have been tough for all concerned and I pay credit to the NZ Trade Minister Tim Groser and his team of negotiators led by MFAT Deputy Secretary David Walker for continuing to drive for the most ambitious and comprehensive deal possible in the NZ national interest.
FTAs are about the art of the possible, we are unlikely to secure all our desired objectives, but as long as we achieve progress in most of our key areas it will still be a deal worth having. The TPP member economies comprise 40% of global GDP.
According to estimates by Prof Peter Petri, a US academic, and his colleagues, New Zealand will achieve NZ $3.1 billion gains from trade growth by 2025 as a result of TPP or NZ $4.7 billion when gains from investment growth are included.
This will be boost New Zealand’s economy with positive impacts for job creation, more high paying jobs and increased exports. In addition it looks like TPP will have strong chapters on the environment and labour standards, which are often lacking in other lower quality FTAs. What’s not to love about that? (Perhaps some of you might tell me when we get to the QA&).
The TPP deal is likely to come together very quickly. Once Japan and the US reach bilateral agreement on market access (perhaps by the end of this month), the rest of the TPP members will need to lay their cards on the table on market access. We think that will happen in May and June. We’d like to think the TPP deal will be done in time for the Partnership Forum at the end of June. We shall see.
Defence and Security
As I mentioned earlier the defence and security relationship is much improved. This is a good thing because, as someone senior said to me in Washington recently, in the US “security trumps everything”.
New Zealand’s contribution of special forces to Afghanistan from 2001-09, and our contribution of military engineers to Iraq from 2003-04, and now the deployment of military trainers back to Iraq this year, has been noted at very senior levels. Amongst the 62 countries contributing forces to the coalition effort in Iraq, New Zealand’s contingent of 162 people over two years represents the biggest per capita contribution.
2015 USNZ Partnership Forum
We’re well advanced in planning the next Partnership Forum. Our theme will be Pacific Partners - the next generation. This refers to both the people involved and the issues to be discussed.
We’ll be bringing together current and emerging leaders from the American and New Zealand Governments, business communities and academic institutions; people who will be advocates for the bilateral relationship over the next two decades.
We’ll also try to diversify in terms of engaging beyond the traditional Wellington/Washington nexus. Now that we’ve resolved most of our political differences we think it’s time to look “beyond the beltway”, to foster economic, political and personal ties more broadly between the two countries. So we’ll be encouraging participants from the West Coast and other key states.
Hopefully we’ll get some Texans too, given Air New Zealand’s announcement this morning that it is setting up direct flights to Houston later this year. This new route is likely to be the fastest way for kiwis to get to popular East Coast and Mid-West destinations such as New York and Chicago.
At the Forum we will discuss emerging trade and investment opportunities particularly in the fast growing services sector. We will be seeking to impress on US Government representatives the need to improve New Zealand’s access to US business visas – currently the single biggest impediment to our growing services trade with the USA.
We’ll discuss what new trade agreements like TPP can do to advance our economic interests and the potential size of that prize – Professor Petri whom I mentioned earlier has agreed to come over to address the Forum on that topic.
We’ll also consider our shared responsibilities on the United Nations Security Council. In a happy coincidence the second day of the Forum is 1 July, the day that NZ assumes the Presidency of the UN Security Council. So the Forum will be a great opportunity for the NZ Government to set out its priorities as UNSC Chair. We will also discuss how we can collaborate to meet the challenges of the fast evolving international security situation.
In conjunction with the Forum, we are also planning to create the option for the US delegates to visit Christchurch to witness the post-earthquake rebuilding effort. This is important because the US Friends of NZ group raised $5 million in assistance following the earthquakes, so we want to express our thanks to the US and show them how their assistance has contributed to the recovery in Christchurch.
The biggest risk I see for the NZ US relationship is in resting on our laurels and taking each other for granted now that we enjoy a very positive relationship. If we do that we will miss out on many new opportunities in the trade and economic sphere and other important areas, and we won’t future proof the relationship so that we can weather any future disagreements that may arise.
The challenge is to find ways to develop the relationship even further now that a resumption of full relations has been all but achieved. I’m optimistic that the next Partnership Forum will make a constructive contribution to that process.
¹ Under the Wellington Declaration the two countries agreed to pursue practical cooperation in the Pacific region and enhanced Dialogue on the bilateral relationship as well as a range of international issues such as climate change, nuclear proliferation, and extremism.