Source: New Zealand Government
Kia ora and good morning everyone.
Before I start, can I acknowledge the Wellington Chamber of Commerce for the opportunity to speak to all of you this morning.
It comes at a difficult time for the global economy, with rising rhetoric, escalating tariffs, and the prospect of further retaliation to come.
I had originally planned to take this opportunity to speak about my Government’s plan for economic growth – to create jobs, lift incomes, and put more money back in the wallets of Kiwis.
I will still touch on that.
It’s my Government’s top priority and it frames just about every decision we take here in Wellington as we focus on improving the lives of all New Zealanders.
But with markets rocked and exporters facing uncertainty, I know there’s one topic front of mind for many businesses and many households.
So this morning I want to take some time to speak to those events and make the case for free trade and the rules-based international order.
Trade is the lifeblood of the New Zealand economy.
Whether it’s our incredible farmers and growers, our outstanding tourism industry, or our burgeoning tech sector, Kiwis businesses thrive when we compete on the world stage.
Our success isn’t an accident – and it didn’t happen overnight.
Successive generations of trade negotiators and political leaders have invested in relationships offshore, and worked hard to complete deals like CER, the China FTA, the CPTPP, and the more recent EU, UK, UAE and GCC FTAs.
Business leaders have moved rapidly, too – finding fresh opportunities for growth in emerging markets, and developing outstanding products back home that put New Zealand on the map.
Our rural economy in particular represents the very best of open and competitive trade – selling into difficult markets, with no direct financial support, and consistently coming out on top.
I could – and often do – speak at length about the contribution exporters make to the domestic economy.
But trade goes both ways.
Yes, export growth will be critical to improving New Zealand’s economic prospects in the coming years.
But the removal of New Zealand’s own trade barriers and embrace of goods and services imported from offshore has also led to a major improvement in our quality of life in recent years.
Our clothing is more affordable, our cars are more reliable, our diets are more diverse, and our holidays in Bali and Europe are a nice contrast to summers at the lake or the beach.
Free trade of goods purchased from offshore has also supported growth in productivity.
Kiwi exporters rely on the trucks, tractors, jet engines, computers, and smart phones we buy from overseas that make their businesses tick.
And it’s not realistic to expect that in a country of just five million people, we could make everything we need here at home.
Political leaders have tried that before in New Zealand – and it didn’t end well.
Older generations will remember the efforts we went to.
Governments imposed strict import controls and encouraged cars and televisions to be assembled here at home.
And like today, conflict offshore occasionally helped to send prices spiralling – but the response looked very different.
In the late 1970s, politicians imposed “carless days”, with stickers on your vehicle dictating which days you could drive to work, and which days you caught a ride with a friend or just walked into town instead.
There was no “work from home” in 1979.
Agriculture, today the backbone of our economy, was heavily subsidised and much less productive, much less diverse than the efficient and entrepreneurial sector thriving in New Zealand today.
Those failed policies weren’t just foolish economics.
They reflected the best efforts of political leaders to insulate New Zealand from an era of major social and geopolitical change.
History shows those best efforts were a mistake, that required years of difficult choices and careful recovery.
New Zealanders paid the price then.
I don’t intend for them to do so again.
Which brings us to today.
The events of recent days are the most significant challenge to the rules-based trading system since the General Agreement on Tariffs and Trade (GATT) was formed in 1947.
Action, reaction, and response have shocked financial markets.
As the Minister of Finance highlighted earlier this week, the direct impact on the New Zealand economy from the US tariffs announced last week is likely to be around $900 million or roughly 0.2% of GDP.
But the second order consequences of a region and a world retreating from trade and increasingly uncertain about its economic future will be more significant, despite the welcome news of de-escalation this morning.
I know for many businesses keeping an eye offshore and for those New Zealanders watching their KiwiSaver accounts, that could be confronting.
The exporters I’ve spoken to in recent days remain buoyant, rightly confident in the quality of their product, and their ability to navigate choppy waters.
But for countries whose prosperity is underpinned by global trade, the months ahead will be challenging for their economic interests.
Many commentators will see these events as just the next step in a longer-term trend towards economic security and national resilience, as countries insure themselves against emerging geopolitical threats.
Others have gone further, declaring an end to the era of free markets, free trade, and free people, and the rules-based international order underpinning it.
For my part, I’m not ready to throw in the towel quite yet. Kiwis have worked too hard and for too long, to give up on the values and institutions which have seen our country and the region we live in thrive.
So, for as long as I am Prime Minister, New Zealand will keep making the case for trade as a cornerstone of our prosperity.
Yes, we are a small country – but stature has never been a barrier to our success.
Take the P3 – a proposed trade agreement which began life under negotiation at APEC between New Zealand, Singapore, and Chile in the early 2000s.
Three small countries, practicing what we preach – and doing everything we could to create opportunity for our people through trade.
Today, that agreement lives on as the CPTPP and covers a dozen countries, including New Zealand and Australia, Canada, much of Asia, and most recently the United Kingdom.
In total, that’s roughly 15% of global economic activity, or $13 trillion USD – a long way from where we started just over twenty years ago.
The United Kingdom might be the most recent accession, but I expect they won’t be the last.
New Zealand will continue to work with like-minded countries to promote free trade as a path to prosperity and explore the role of the CPTPP in strengthening that vision.
One possibility is that members of the CPTPP and the European Union work together to champion rules-based trade and make specific commitments on how that support plays out in practice.
My vision is that includes action to prevent restrictions on exports and efforts to ensure any retaliation is consistent with existing rules.
Collective action, and a collective commitment, by a large portion of the global economy would be a significant step towards preserving free trade flows and protecting supply chains.
Clearly though, efforts at collective action won’t be enough to support New Zealand’s economic interests.
As Prime Minister, I have a responsibility to do everything I can to both bolster the existing rules-based order and to further strengthen New Zealand’s position offshore.
It’s why I have put so much emphasis on deepening our relationships with partners around the region, with visits throughout South-East Asia, Korea and Japan, the United States, and to India last month as we commenced negotiations for a free trade agreement.
It’s why my Government has worked so hard to close out fresh agreements with the UAE and GCC that enable additional trade and investment.
It’s why we hosted an Investment Summit in Auckland, making the case both for New Zealand as an outstanding place to do business and for the opportunity to enter long-term infrastructure partnerships.
It’s why on Monday this week the Minister of Defence and I launched the Government’s Defence Capability Plan, that lifts defence expenditure to 2% of GDP and ensures New Zealand pulls its weight for many years to come.
It’s why I will be on the phone later today to world leaders comparing notes on world trade, and testing what we can do together to buttress the rules-based trading system.
And it’s why I will be heading to the United Kingdom later this month to meet Prime Minister Sir Keir Starmer, to talk trade, security, and the geopolitical backdrop in Europe and the Indo-Pacific.
We can’t make the case for New Zealand sitting at home.
We have to position ourselves as advocates both for our own economic interests and the institutions that underpin them.
I’m very lucky to lead a Government with so many Ministers dedicated to that task, whether that’s the Foreign Minister, the Minister of Trade, or the Minister of Defence, each of whom having already made a number of significant achievements supporting New Zealand’s interests offshore.
Back home, the volatility offshore is a fresh reminder of just how important our focus on economic growth will be in the coming years.
As I said recently at our Investment Summit in Auckland, New Zealand can be a shelter from the global storm.
That brings a serious opportunity from ensuring our business environment is as welcoming as possible for investment and growth.
We are making serious inroads into that task.
Earlier this year, Minister for Economic Growth Nicola Willis published our Government’s Going for Growth Agenda, which outlines a range of actions we are taking to get the New Zealand economy moving and realising its vast potential.
Each of those actions fits into one of five pillars we have identified as critical to lifting economic growth and improving New Zealanders’ standard of living:
Developing talent,
Encouraging innovation, science, and technology,
Introducing competitive business settings,
Promoting global trade and investment,
And delivering infrastructure for growth.
Across each of those pillars, we have Ministers working day and night to drive through reform – in transport, tourism, aquaculture, construction, advanced aviation, mining, energy, agriculture, and horticulture.
In just the last few weeks, we have presented our plans to replace the Resource Management Act, fix our broken health and safety laws, and make nation-shaping investments like the Northland Expressway.
We have introduced the Fast Track regime, streamlining the consenting process for projects of regional and national significance.
We are re-writing the Overseas Investment Act, so major investments from offshore are consented faster and more reliably.
We are tearing down the barriers to fresh investment in renewable and non-renewable energy, by repealing the oil and gas ban and ushering in new consenting rules for wind, solar, hydro, and geothermal.
And we are doubling down on efforts to showcase New Zealand to the world, promoting our tourism and international education sectors offshore so we can attract even more people to spend their money here.
I know there’s more we can do.
Growth has now returned, and the economy has turned the corner, but our reform agenda will need to continue at pace for us to out-run the challenges to growth facing us from offshore.
The challenges to the rules-based international order are intense and the strategic environment my government has inherited is more difficult than it has been for many years.
For New Zealanders who grew up watching events unfold in Europe and the Middle East, it will be confronting to watch strategic competition and the deterioration of rules-based trade come to our neighbourhood, the Indo-Pacific.
But the response for New Zealand cannot be retreat.
New Zealanders are at our best when faced with adversity and we thrive when we compete on the world stage.
To quote my friend the Foreign Minister, this isn’t our first rodeo.
Our export sector is jam-packed with talented, sharp New Zealanders who make great products – and create jobs here at home while they do it.
Farmers, growers, wine makers, and start-ups from all around the country investing in our nation’s future because they have confidence that better days lie ahead.
I’m not ready to call time on the rules-based trading system.
And I’m not ready for New Zealand to give up on our efforts to advocate for it on the world stage.
We’re not in this alone.
The same institutions that have served New Zealand so well for so long, also underpin the prosperity of so many of our friends and partners, many of whom are also continuing to make the case for free and open trade in recent days.
My government will keep making the case – overseas, here at home, with a strong voice and a consistent message.
Free trade works.
It lifts incomes.
It creates jobs.
It builds partnerships.
And it secures peace.
I think that’s worth fighting for – and I’m up for that fight.
Thank you.
