By Heidi Putscher
PROFECTUS: Were expectations at the end of the negotiations fulfilled, for example, for the dairy industry?
CK: If you look the comments of the New Zealand´s dairy sector, no, all expectations were not fulfilled. The New Zealand dairy sector would like to be able to compete on a level playing field in its key markets with the domestic producers of those markets. All trade in agriculture is complicated, because there are sectors that countries feel very protective of. Our dairy industry is aware that the process of removing barriers to dairy trade is a long process. What has been achieved through the TPP, in the US market in particular, is really significant for us. There will be considerably more tariff-free access for the New Zealand dairy industry than there was before the TPP started, that’s a net gain, but our dairy industry is ambitious and what it would like to see is no protection on trade in dairy products anywhere in the world. That´s a goal is going to take some time to achieve.
PROFECTUS: New Zealand to Mexicans is an unknown country. Do you think that the TPP will help to promote New Zealand to the Mexican people, not only for its goods and services, but also for its heritage and culture?
CK: I hope so. I think the New Zealand government has work to do as the agreement is implemented. We have to make sure that our own business people know about the opportunities in Mexico, which are enormous, but also that Mexican business understands the opportunities in New Zealand. At the moment, there is quite an imbalance in the way our countries know each other. For example 10,000 New Zealanders visit Mexico a year as tourists, while only 400 Mexicans are visiting New Zealand a year. The government is leading the way, it has negotiated a FTA with Mexico through the TPP and now is up to New Zealand business to discover what the opportunities are in this country. If there is more of New Zealand´s commercial presence here, the country in general will be better known in Mexico.
Although I have to say, I´ve always been impressed on how much Mexicans do know about New Zealand. This is a very big important country and we are a small distant country, but most Mexicans have heard of New Zealand. They know a little about what it looks like because they´ve seen “The Lord of the Rings”, they know it was made in New Zealand, they know that New Zealand is a producer of agricultural products, they know that New Zealand has a very beautiful natural environment and is a strong promoter of environmental standards. Mexicans already know some important things about New Zealand, the TPP will continue that process definitely.
PROFECTUS: Where should New Zealand or Mexican investors look to invest? Which goods or services are in demand from Mexico or from New Zealand?
CK: My personal opinion, is that AGRITECH (Agricultural Technology) is an area in which New Zealand and Mexican companies can work together. Mexico has an extraordinary agricultural capacity, it is becoming a world power in agriculture. New Zealand is also a world power in agriculture and I think there is enormous capacity for our two sector to work together, particularly in dairy production and meat production that is based on pasture rather than grain. The dairy sector in the south of Mexico, where there is pasture based dairy farming, where there´s a lot of rain fall, that’s an area where New Zealand companies should invest in, not just in production, but in processing, in consultation, in provision of advice and technology to the industry.
At the moment New Zealand investment in Mexico is more in the manufacturing sector, taking advantage of Mexico´s extremely strong position in the US market and also of a very well educated work force. Mexico produces 150,000 qualified engineers a year and apparently they are extremely good engineers. New Zealand companies have invested in the manufacturing sector to take advantage of the proximity to the US market, a low cost production environment and also of highly trained engineering capability. There are more NZ companies interested in Mexico as a base for their world production, a lot of manufacturing worldwide has relocated from China to Mexico, because of the proximity to the US market, because of the NAFTA, because of the TPP, because of strong trade relationship, but also because of cost. New Zealand companies are beginning to realise this too and more are becoming interested in considering re-location in Mexico.
There has been also New Zealand investment in the financial industry, which I was surprised to learn about. New Zealand companies are quite innovative and they come out with innovative products. ICT companies are also starting to realise that they can sell the products they design for the US market in Mexico. Mexico too, is a very entrepreneurial culture. A lot of the New Zealand companies that are operating here, talk about the New Zealand - Mexico hybrid, that New Zealand and Mexican companies together, develop a particular type of hybrid working business culture that´s been very successful for selling NZ goods and services in Mexico but also to other countries.
In terms of where Mexican investors should invest in New Zealand, I think the food and beverage industry would be a very interesting investment for Mexican companies, especially in dairy research and production. We have very advanced research and development in all the agricultural sciences. Some of the big Mexican dairy companies could be very interested in production in New Zealand and also in access to the preferential trade arrangements that we have in Asia. Basically all our Asian markets are covered by FTAs. China is a good example, but also the other Asian countries. We have 40-50 years of experience of focusing very hard on Asian markets and a lot of Mexican industries are now looking to develop those markets for themselves and partnerships with New Zealand companies could work really well.
The tourism industry in New Zealand is another area where Mexico has extremely important expertise. Proportionally, tourism is actually growing all the time, we only have 4, 5 million people, we are starting to receive 3 Million visitors a year, so it´s a successful industry for us. Mexico has an extremely important tourism sector. New Zealand could benefit enormously form Mexican investment and participation in our tourism sector.
Education is another area where we could do a lot more. Something that is an interesting phenomenon is that Mexican high school students are going to New Zealand for their last year of high school. We attract students from all over the world to our education sector, but it is interesting to me, since I´ve been here, that the numbers of Mexican youngsters going to New Zealand to study is really increasing. It doesn’t need to be one- way traffic obviously. More New Zealanders would study in Mexico if they knew more about the strengths of Mexico´s Universities and the Mexican expertise in teaching Spanish, where Mexico could look to promote itself in New Zealand.
At the moment, there isn´t a lot of active promotion in New Zealand of Mexico as a destination for tourism or business. But this is changing - last year Pro Mexico opened an office in Melbourne, Australia, with very capable staff and part of their mandate is also to work on the New Zealand market. As Pro Mexico gets to work in New Zealand, we´ll see much more interest from New Zealand in Mexico. People ask me about this a lot: Are New Zealanders put off coming to Mexico because Mexico´s reputation as something of a dangerous place? I have to say “no”, they are not. We´ve got 10,000 people coming here a year as tourists, they are not put off by Mexico´s reputation. My personal opinion is that´s an unfair reputation, yes Mexico has its problems, but fewer of them than a lot of countries of the region. Mexico is a very exotic place for New Zealanders, but even so they don’t realise until they get here, just what a wonderful, beautiful and culturally rich country it is.
What New Zealanders import from Mexico is beer and mezcal, those are Mexico´s biggest imports to New Zealand and to Australia as well, but exports of cars, car parts and other manufactured products is really growing. There´s no barriers to the entry of products to NZ. But the whole point of negotiating agreements is to increase trade and when a market becomes familiar and easier to operate in, it becomes more interesting to operate in it and I imagine that this will just be a process in broadening our range of what we import from Mexico.
PROFECTUS: With this agreement a wider, regional economic integration through liberalization is expected. However, certain groups in New Zealand stand out feeling that their rights are jeopardized and left behind by the big players. Last week, protestors against the TPP took the streets of Auckland. Certain issues were raised such as New Zealand´s sovereignty being compromised, restrictions over generic and subsidized medicines, no limits to laws on land sales, foreign investors and corporations seeking in the future damages from countries who brake the TPP through the Investor State Dispute Settlement Mechanism or ISDS. Is this a consequence of fear or misinformation, with such positive numbers?
CK: These issues are always raised in discussions of international agreements, particularly in respect of trade. Debate is healthy, I think it´s good that people are aware of this agreement and thinking about it and what the implications of it are.
There are groups in New Zealand (and in the world) which for ideological or environmental reasons don´t agree necessarily with an economic model geared towards economic growth and think it’s unsustainable. Some people would like to restrain economic growth because of the impact it has on the environment, that´s a feeling that perhaps is not a very easy one to articulate, but there´s a lot of genuine concern, particularly because in New Zealand we have a strong cultural attachment to our natural environment.
Every country has its own specific situations to take into account in international treaty negotiation. An example of one of ours is that the indigenous Maori people are partners of the government. The Treaty of Waitangi, which is the founding document of our country, guarantees the Maori people rights to their lands and other resources. Some people worry that the TPP will compromise the ability of the government to discriminate in favor of Maori, to ensure that their rights under the Treaty are preserved. The TPP does not compromise this, because the government’s ability to take measures to ensure the rights of Maori under the Treaty of Waitangi has been preserved in every trade agreement that New Zealand has ever negotiated.
People have similar concerns that the government will amend domestic legislation in a way that´s harmful to the interests of New Zealanders. For example, by removing rules and limits on investment, but this is something the government wishes to avoid, it doesn´t want to negotiate an agreement that is detrimental to New Zealanders.
Biggest concerns that many people have in respect of the TPP are around the funding of medications. New Zealand´s tax payers pay for the public health system and unless you feel that you need private health insurance, you can entirely rely on the public health system in New Zealand. This is an issue we all feel very strongly about, that access to quality medical care should be free and available to all citizens.
The government funds the provision of pharmaceuticals to the health system and the government agency that does that funding, PHARMAC, has to make some very complex decisions on how medicine is funded and which pharmaceuticals are subsidized by the government. It is a worldwide respected system that seeks to deliver the greatest benefit to the greatest number of people through its funding decisions.
Some New Zealanders are worried that the PHARMAC system may be compromised by the TPP negotiation, thinking that pharmaceutical companies will have more power to lobby PHARMAC to purchase their drugs and that the balance that we currently have would be altered. But it’s not the case. The government didn´t want that balance altered, the government believes that the balance that has been struck in the negotiations is a fair one, is a good one and does not compromise the PHARMAC system, it does not introduce wider costs for consumers.
The government, as it always does on any negotiation, whether on trade, climate change, law of the sea, preservation of the environment, agrees to some obligations and in the process cedes a degree of sovereignty, but it looks for a balance of benefits. The government has negotiated an agreement that preserves that balance, achieving a greater market access and new protections in some very important markets, preserving at the same time the legislation and other protections that New Zealanders believe are most important.
PROFECTUS: What would it mean for New Zealand not to be part of such an Agreement?
CK: It’s an extremely important question and one that the government considered during the negotiation: what is the opportunity cost of not being in the TPP?
To be outside the TPP would have mean not having this trade agreement with some important markets and we would be disadvantaged in those markets relative to other countries. If we´ve been outside the TPP we wouldn´t have gained any new and improved market access. Nor would we be part of this dynamic process of economic integration in the Asia-Pacific region. The government decided that the balance of benefit had been achieved in the negotiation was in New Zealand´s favor.
PROFECTUS: You as New Zealand´s Ambassador, accredited to Mexico, are in one of the most interesting moments. How do you feel about it and about the future of your country?
CK: The TPP is certainly an extremely important trade agreement for New Zealand and for our relationship with Mexico. It is a very interesting moment indeed. Mexico and NZ have a very strong and active relationship and I only see it growing further.
The future for New Zealand is strong, we came through the global financial crisis very well, because we have strong banking regulation, we never had a crisis in the housing sector that other countries had, so New Zealand wasn´t exposed in the same way other countries were. We have a diversified economy, we need to have diversified markets and at the moment New Zealand does have a concentration in the Asian markets and we are always looking to develop new markets. To develop the TPP was to establish a free trade relationship with the Americas, so we began the process.
New Zealand has some real natural advantages. We are able to produce food, and countries that have this ability are going to be in a strong position in the world. We can feed 50 times our own population. We have abundant water and that´s going to become more important. However, we are facing the same challenge everybody else is with climate change. Our country is three little islands in the middle of an enormous sea, so we are more impacted by climate change than many other countries. We are not suffering as badly as some of our Pacific neighbors who are literally in danger of being swamped, but we are facing a lot of challenges and we are still measuring or assessing the impact that will have on our ability to go on doing what we´ve traditionally done well. That is an issue that occupies a lot of the government’s time, attention and resources. We have to be extremely alert to the changes in our environment.
There are benefits and advantages to be on the edge of the world. We’re a long way from a lot of the world’s trouble spots, but it also means we have to work pretty hard to be considered in the world and to be part of it. Whereas for example, European countries make up a huge continent, they have an enormous market that they can access very easily, they have joined together to form a union that allows them to pool their resources. There are a lot of benefits from being part of a big group like that, too.
When we look how other countries function and what they do well, we tend to look, for example, at Denmark, Ireland, and Singapore. They are small successful countries of a similar size to us. Ireland has just turned around a very difficult financial situation and recovered extremely well from the global financial crisis by taking tough measures. Denmark is an economically successful country, it preserves its environment, has a highly educated population, a very extensive social welfare system. Singapore has made itself one of the world’s most successful countries, creating one of the most technologically advanced societies in the world, with a small territory, the sea, very hard work and smart policies. When we look at this countries, we think about whether there´s anything in their example that we can emulate.
New Zealand at times feels small and distant, but there are benefits to isolation and some of the problems bigger countries have don´t necessarily come on our way. We have a pretty independent foreign, economic and trade policy. We´ve made the decision to embrace the rest of the world and be as much part of it as we can, while steering our own course.
Go to Part 1 of the Interview.
Go to Part 1 of the Interview.
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