Rt Hon John Key, Prime Minister - Speech to the Latin America - New Zealand Business Council

Stamford Plaza Hotel, Auckland

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Thank you for inviting me here today to talk with you.

Looking around the room I see a lot of people here with real passion for the New Zealand/Latin American relationship. Latin America is a vibrant part of the world and I'm delighted to be here to talk about the opportunities that are ahead of us.

I'm also keen to hear from you about your experiences in the region, and how the Government might be able to help you.

I'd like to begin today by talking a bit about New Zealand, and then move into how we can strengthen and develop our relationship with Latin America. The Government I lead has four major priorities this term:

First, to responsibly manage the Government's finances. In a world like the one we live in today, the state of our country's finances is all-important.

Our second priority is to build a more competitive and productive economy. That means an export-focused economy, which is selling more of what the world wants, at a competitive price, and is built on a solid base of innovation. Obviously this is the priority most relevant to you -and I'll come back to it shortly.

Our third priority is to deliver better public services to New Zealanders, within tight constraints. This is what I talked about last week when I announced a new results focus for our public sector. I also announced a new Ministry of Business, Innovation and Employment.

A single business-facing department will help strengthen the public service's ability to work on business policy, regulation and engagement. The Government will get a much more coordinated and focused resource, and it will be easier for New Zealand businesses to engage with Government, rather than dealing separately with a number of different agencies when they are seeking advice or support.

Our fourth and final key priority for this term is to rebuild Christchurch, our second-largest city.

New Zealand is a small, outward-facing nation reliant on exports. That's why the second priority I mentioned earlier- building a more competitive and productive economy- is so important.

As a country, we can't get rich simply by selling things to ourselves; we need to be competitive on a global stage and take advantage of international opportunities if we are to lift New Zealand's economic performance.

We have a clear and comprehensive economic programme to achieve that. Trade is very much at the forefront of our programme.

New Zealand's economy will continue to expand this year. It has grown in ten of the past 11 quarters despite a number of headwinds - including the European debt crisis, the Canterbury earthquakes and a high exchange rate.

Looking ahead, the earthquake rebuild will help drive domestic activity. Our two largest trading partners, Australia and China, are also forecast to maintain relatively high growth rates.

So compared to a lot of other countries, we're in pretty good shape.

But there's no getting away from the fact that there is still some uncertainty about how some of our developed country markets are tracking. There are some risks global growth could be weaker than the Treasury and others are forecasting, depending on how European policymakers manage their debt and economic challenges. We are closely watching these global developments.

The issues that affect developed country markets have led to a lot of commentary about the growing importance of emerging economies.

Our terms of trade will remain elevated on the back of demand for our major export commodities from emerging markets. So these emerging markets are important to us and there are tremendous opportunities in them. Which brings me to Latin America.

We've all heard that the group of countries known as BRIGS -which include Brazil, Russia, India, China, and South Africa- will be among the top global economies by 2050.

Certainly, it is hard to ignore a market the size of Brazil, which is already the sixth-largest economy in the world.

Three countries in the region are members of the G-20- Mexico, which is hosting the G-20 this year, Brazil and Argentina.

The involvement of these three countries in this pre-eminent economic organisation reflects the size of their economies. They are in their rightful place.

In this increasingly globalised world, the economies of our countries are more and more interdependent on one another- we can see that through the ripple effects of the Global Financial Crisis and the more recent developments in Europe.

Latin America proved reasonably resilient during the 2008/09 crisis, but weaker external markets and softer commodity prices could impact it more significantly this year.

The region is, however, generally well placed to weather this storm with generally positive economic momentum within the region itself.

Latin America provides important economic opportunities for New Zealand businesses.

Overall, our total exports to the whole Latin America region were worth NZ$1.36 billion in 2011. This includes some significant niche areas for members of this Business Council and this audience. New Zealand manufacturing companies are looking increasingly to the region and there are some impressive pockets of specialised and innovative manufacturing.

We have some major dairy markets in the region - particularly Venezuela, Mexico, and Cuba. Dairy exports to these countries were worth NZ$846 million in 2011. That's more than our total dairy exports to the United States that year.

On a smaller scale, we also export agricultural machinery, and have major investments in dairy farming production (particularly in Chile, Brazil and Colombia).

New Zealand businesses focusing on Latin America are already making a valuable contribution to our exports. The Government recognised this by refreshing our Latin America Strategy back in 2010. The strategy provides a plan to promote long-term economic links with the region.

But the truth is that our trade with Latin America is modest compared to our trade with other regions. Last year, for example, our exports to Asia were worth almost $21 billion, with $5.8 billion going to China alone. We can do more.

In refreshing the Latin America Strategy we drew on our engagement with those companies that are doing business with the region. I think this should be an ongoing dialogue- so I'd like to encourage you to tell us what you think we should be doing.

A significant range of New Zealand businesses have recognised that there is scope for cooperation and business partnerships with Latin America.

Interestingly, investment in Latin America as well as trade in services- for example education and consultancies - is worth significantly more to New Zealand than trade in goods.

More than 4,000 students, mainly from Brazil, Chile and Colombia, choose New Zealand as their study destination each year - mainly for English language training and secondary schooling. There is significant potential to grow the size of this market and to mature the relationship beyond English language training and secondary schools.

It's already clear that New Zealand is popular with young people from Latin America - I'm told that the visas for the Working Holiday Schemes we have with Chile, Argentina, Brazil, Mexico, and Uruguay are snapped up in a matter of hours, and our newest scheme with Peru is growing in popularity.

Promoting links between the young people of New Zealand and Latin America -through education and travel - lays the foundations for the kind of closer understanding that we need to build future business connections.

Tourism is another promising area in our relationship with Latin America. Last year more than 26,000 Latin Americans- mainly from Brazil, Argentina and Chile- visited New Zealand. We welcomed around 3,000 Argentines to New Zealand during the Rugby World Cup.

While there are direct airlinks between Auckland and both Santiago and Buenos Aires, an increase in the number of flights between New Zealand and the region would help to drive New Zealand as an education and tourism destination, as well as facilitate business links.

We are currently negotiating a new "open skies" Air Services Agreement with Brazil. It would be great to see an airline flying direct between New Zealand and Brazil.

I'd like to acknowledge the presence of airline representatives here today and urge you to focus on the opportunities provided by New Zealand's geographical location. Auckland is a convenient hub between South America on the one hand, and connections to Asia and Australia on the other hand.

I must emphasise here that this relationship is a two-way street. The Government has welcomed investment in oil exploration from Brazil's Petrobras.

Indeed, energy is an area of investment for a number of New Zealand companies, particularly in Chile.

The Government is facilitating efforts to promote New Zealand's geothermal expertise internationally. In Chile's geothermal sector, the work of New Zealand businesses, consultancies, education institutions and research agencies, strongly supported by Government agencies, has been an excellent example of NZ Inc co-operation.

I believe there are opportunities in front of us to expand our economic partnership with Latin America.

New Zealand companies could, for instance, look for opportunities around the FIFA World Cup to be hosted in Brazil in 2014, or the Olympic Games in 2016.

I'd like to finish by talking about one of the most exciting trade developments of recent times- the negotiation of a Trans-Pacific Partnership, known as the TPP.

This builds on the original P4 Agreement involving Chile, Singapore, Brunei and New Zealand, and now includes Malaysia, VietNam, Australia, the United States and Peru.

At the most recent APEC meeting in Honolulu, leaders outlined the ambitious agenda for the TPP. A core aim is to achieve "comprehensive market access"- including full tariff elimination and removal of other barriers to trade and investment amongst the nine negotiating countries.

TPP is also about mapping new ways to forge closer regional economic integration and tackling the practical issues facing businesses in the 21st century.

A third Latin country from the region - Mexico - has expressed interest in joining the negotiation. We welcome this and have begun consultations to determine if Mexico can meet the high-quality TPP objectives we expect.

This negotiation will ensure that New Zealand businesses operate on a level playing field in these markets. We are currently disadvantaged in the Mexican market, for example, against competing imports from NAFTA and other countries with FTAs with Mexico.

So to wrap up, it's clear that a country like New Zealand needs to be continually looking for economic opportunities around the world.

We must be prepared to seize opportunities when they arise, if we are to realise the competitive and productive economy that is one of my Government's top priorities.

There are opportunities for us in the exciting and diverse Latin America region.

I am planning to travel to the region during this term in Parliament. The Minister of Foreign Affairs, Murray McCully, visited South America in 2010 and plans to visit again later this year. The Minister of Trade, Tim Graser, has visited Brazil, Mexico and Uruguay. He will be back in April as part of the G-20 Trade Ministers' meeting in Mexico.

So you can be assured of the Government's support in your endeavours. Thank you.