Thank you very much, Mr. Chair.
Members of the committee, thank you very much for making the time to hear my presentation. The chair has already commented on how close our countries are, which is probably the first page of my remarks, so thank you very much for that.
I'd like to start by saying that Canada is one of New Zealand's closest friends, and we want to make this relationship even stronger. We share a Commonwealth heritage. Our shared values and world view are underpinned by our common parliamentary, legal, social, and defence traditions.
New Zealand and Canada are co-operating on some of the toughest issues facing the international community today, including cybersecurity and the international response to ISIL. Our business communities enjoy working with each other. Our trade statistics are almost perfectly balanced. Last year New Zealand exports of goods and services to Canada surpassed $1 billion in New Zealand dollars. Our services trade is growing even more rapidly than our goods trade.
Canada is consistently one of the top foreign direct investors in New Zealand. Two years ago Canada was the number one investor in New Zealand.
Our people-to-people linkages are also very close. Kiwis love to travel to Canada, and we know that Canadians love to travel to New Zealand. In fact, over 50,000 Canadians visited in the last 12 months.
What's missing from this relationship is a trade deal. Just before I go into the detail of TPP, I want to explain why trade is so important to New Zealand.
We are 4,000 kilometres from Australia, our nearest neighbour. We have a small population and a small manufacturing base. Around 30% of our GDP comes from exports. That's a sizable chunk, but we aspire to do even better than that. With 4.5 million people, we're too small to produce everything we need. We have to import medicines and medical technology, vehicles and agricultural machinery, and we like to enjoy seasonal foods. We like to travel in Bombardier planes. We like to use the latest smart phones, and on Netflix we like to watch TV episodes that are made in Canada.
To pay for those imports, we need to export. Our biggest export sectors produce more than we can possibly consume. For example, our dairy industry exports 95% of its entire production. Our sheep farmers export about 90% of their meat. Wine, of which Canadians are drinking their fair share, will earn New Zealand a record $1.5 billion this year.
The people who work in these sectors need to secure access to much larger markets than just New Zealand. We say this a lot, but it deserves repeating: New Zealand will not prosper selling to ourselves. For this reason, New Zealand was a founding member of TPP. In fact, the trans-Pacific partnership was the culmination of an export-orientated trade strategy that New Zealand followed since the 1980s, after the U.K. joined the European Economic Community.
Once we no longer had that special trading relationship with the motherland, we were forced to make some drastic changes to our economy. We removed all our agricultural subsidies in the 1980s and tore down tariff walls protecting our sensitive industries. Some industries prospered; others were left behind or moved. We decided there was no point trying to make cars, because the Japanese or Koreans could do it much better, more cheaply, and more efficiently. Our farmers began to run their farms like businesses, investing in new machinery in the good years and cutting inefficiencies and waste during the bad years. We became highly efficient producers of food, and we need consumers.
The TPP will be worth at least $2.7 billion to New Zealand per year by 2030. Tariffs will be eliminated on 95% of our current trade with our TPP partners. Yes, there are some costs in the agreement. We would have preferred a higher level of ambition, particularly when it comes to dairy market access, but the costs and concerns are significantly outweighed by the benefits.
Members of the committee, over the last decade New Zealand has signed multiple trade agreements with countries around the Pacific Rim, from the ASEAN region to Hong Kong, Singapore, Korea, Thailand, and of course China. For the first time, our isolated geography became our advantage. We can ship goods more quickly to Asia than to Europe, and we aren't competing with the French and British farmers. We have become an essential part of the supply chain in Asia. As we see Europe putting up protectionist barriers, New Zealand businesses continue to look to Asia.
TPP is important for New Zealand, but it is also important for Canada's future prosperity.
I could recite the statistics. The key ones you know, I am sure: combined GDP of $27.5 trillion, nearly 40% of the global economy, 800 million consumers, and annual global income gains estimated at around $300 billion by 2025. These are pretty compelling numbers, but in our view, the real reason TPP is important to Canada is its geostrategic significance. Before joining TPP, Canada will have had only one trade agreement with an Asia-Pacific country. TPP will increase that number to eight.
We know that trade diversification is vital for Canada. Successive governments here have acknowledged that. You never want to be beholden to one market, because when they sneeze, you catch a cold. New Zealand learned that the hard way.
Being able to access multiple markets gives our exporters options. We know that Japan is a big drawing card for Canadian beef and pork farmers, but we also believe there will be plenty of other niche market opportunities. The Canada brand is very strong in Asia.
The trans-Pacific partnership is also an historic opportunity for Canada to set an ambitious trade agenda with the fastest-growing economies on the planet. It is a chance for Canada’s small businesses to integrate themselves into key supply chains and markets in the Asia-Pacific. TPP provides an excellent stepping stone towards even more free and open trade agreements in the Asia-Pacific. TPP was always conceived of as a living agreement that will continue to evolve over time, both in substance and in membership.
Members of the committee, New Zealand certainly welcomed Canada’s decision to join TPP. There is no doubt that the reasons for negotiating TPP and bringing it into force remain the same today as they were at the very beginning. It is clear that TPP marks a new frontier in the Canada-New Zealand economic relationship. It offers an unprecedented opportunity to grow Canada-New Zealand trade and investment and it will enable our businesses to co-operate more closely together, directly and in partnerships around the Pacific Rim.
TPP places our two countries at the centre of a unique platform for deeper integration in the Asia-Pacific region. We know that deeper economic ties and a strong, modern architecture are essential building blocks for prosperity, security, and stability.
Of course, it is not the role of diplomats to question domestic policy in their host country. The advice I would give, though, is that if Canada concludes that it is in your interests to be part of TPP, then you should move ahead with ratification, regardless of action in other countries.
Canada has an opportunity to demonstrate leadership on the global trade agenda and encourage economic links that increase prosperity and create jobs. Not being part of TPP will not make Canadian farmers better off. Canada is a major producer and exporter of quality food backed with integrity. You export much more agriculture produce to the other TPP members than New Zealand does. Non-participation in TPP would threaten Canadian farmers' viability and undermine their competitiveness.
To conclude, TPP provides an excellent stepping stone towards even more free and open trade arrangements in the Asia-Pacific. It provides New Zealand and Canada the opportunity to develop greater economic links with a fast-growing part of the world.
New Zealand encourages Canada to ratify the TPP agreement. We look forward to working with Canada to implement the TPP in the spirit in which it was negotiated.
Thank you.