The roundtable was held against the backdrop of the FTA negotiations. At the first business roundtable in June 2008, Trade Minister Tim Groser was the highest-ranking Minister in South Korea for the FTA talks.
This year, Prime Minister John Key made his first trip to South Korea to convey to President Lee Myung-bak New Zealand's commitment to maintaining the momentum of the talks to achieve an early and successful conclusion. At the roundtable opening ceremony that followed his meeting with President Lee, Prime Minister Key said "the free trade agreement was now within reach."
Political support for negotiations
In his remarks about the trade-enhancing value of FTAs, Mr Key noted they had the potential to take trading relationships to a new level. Trade with China, for example, had grown rapidly following the signing of an FTA with New Zealand. Since then, China has become our second most important trade partner. "FTAs with various countries in Asia," Mr Key said, "will position us well in seeking closer economic integration in the region."
Alluding to resistance to an FTA with New Zealand from South Korea's agricultural producers, the Prime Minister remarked that concerns over the threat posed by New Zealand exporters to Korean domestic producers are often overstated. Rather than making life difficult for South Korea's domestic producers, New Zealand's agricultural exports are competing with producers in Australia, the United States and Chile. He made the observation that it is often the consumers wanting to buy cheaper products that are forgotten in the debates on the effects of tariff reductions.
Mr Key talked about the potential to grow relationships between New Zealand and Korean companies on the basis of innovative partnerships, which can lead to synergistic business opportunities. He offered food safety and security in the agricultural sector as a clear example, along with opportunities for collaborating on renewable energy projects.
Following their discussions, Mr Key said that President Lee and he had tasked the officials with "taking the agreement to a new level" and "to bring the talks to conclusion as soon as possible." He said it was not unusual in the New Zealand experience for FTAs to require political intervention to bring them to conclusion, and the one with South Korea would be no exception. He said that because the FTA "would be a significant prize for both countries, I am 100 percent committed to concluding an agreement that is favourable to both countries."
Highlights of the roundtable discussions
The key themes of the second Korea-New Zealand Business Roundtable were innovation, growth and opportunity. Under this theme, the New Zealand delegation aims to develop a constituency of supporters within the Korean business community for an early conclusion to the FTA.
The conference was divided into two sessions; the first involved presentations by South Korea and New Zealand delegates under the theme of rebuilding the global economy and business implications from change in the global economic environment. Fonterra's Chairman, Sir Henry Van der Heyden, in his presentation said that while New Zealand's overall production of milk was small compared to other countries, as an important trader of milk powder New Zealand needed an FTA with South Korea before its agreements with the EU and the US were ratified. New Zealand is the world's second largest exporter of milk powder after the EU group of 27 countries.
The second session focused on innovation and opportunity, with some case studies of successful Korean and New Zealand corporations. Il-Yeon Cho of Hyundai Rotem spoke about his company's provision of electric railcars to Wellington's rail system. The first train is due to arrive in Wellington at the end of July, with trials being held in August to October, with the new trains scheduled to begin service in December.
Representatives of the New Zealand delegation's high-tech sector were keen to emphasise the opportunities their companies are discovering in the Korean market for collaboration with Korean partners.
Dr Peter Lee, CEO of Auckland Uniservices, talked about the University's current projects involving Korea's health-sector.
Collaboration with ETRI (Electronics and Telecommunications Research Institute) has led to the development of assistive robots for elderly patients requiring 24-hour care. Such has been the success of the technology in trials with patients that in some cases "the elderly patients prefer the robots [to humans] as they are more polite," Dr Lee said.
As with the first roundtable, the NZIBF stressed the complementary nature of the two economies. While New Zealand exports mainly primary sector commodities to South Korea (logs, aluminium, frozen beef, seafood and kiwifruit), Korea exports mostly manufactured items (petroleum oils, motor vehicles, telephone equipment and metal pipes) to New Zealand. Korean firms, however, currently face much lower tariffs on their goods imported into New Zealand than New Zealand products exported to Korea.
Korean exporters pay as little as NZD5 million in tariffs on goods sent to New Zealand whereas New Zealand exporters pay NZD195 million on their goods entering the Korean market. While the average tariffs on manufactured goods entering Korea are only 6.5 percent, average tariffs applied to agricultural products are 53.5 percent. Butter and skim milk powder, for example, face rates as high as 89 and 176 percent respectively. Kiwifruit (45 percent) and beef (40 percent) also face high tariff rates.
South Korea is currently New Zealand's seventh largest trading partner.
Background
The roundtable is organised in partnership with the New Zealand International Business Forum (NZIBF) and the Korea International Trade Association (KITA).
The New Zealand delegation included Chairs, Board members and CEOs of the following companies and organisations: Anzco Foods, Asia New Zealand Foundation, Auckland UniServices, Business NZ, Fonterra, GNS Science, Harmonic, Jack Links, Beef + Lamb New Zealand, New Zealand Trade and Enterprise, PF Olsen, Sanford, Snapper, Straker Software, Zespri. The Korean delegation included senior representatives of Daegu Technopark, Daesung Group, Dongwong Group, Hyundai Hysco, Ildong Food Is, Samsung, SBI Corporation, Korea Importers Association and Monalisa.
The New Zealand media was represented by journalists from Fairfax, TVNZ and NZPA (the latter sent Kate Chapman to South Korea with support from Asia:NZ's media programme).
Asia:NZ was represented at the roundtable by Asia:NZ Trustee Michael Park, Business Director James Penn and Young Leader Paul Vadim. The foundation contributed financial support to the NZIBF to cover some of the costs of running the event.
Detailed reports on the roundtable can be found on the website of the New Zealand International Business Forum, www.nzibf.co.nz
SOURCE: ASIA NEW ZEALAND FOUNDATION
