A stepping stone for the Pacific
On Dec. 20, 2015, New Zealand and Korea marked a significant milestone in our relationship, as the Korea-New Zealand Free Trade Agreement (FTA) came into force.
New Zealand and Korea already have a strong bond - its foundation forged on the battlefields of the 1950-53 Korean War, where over 6,000 New Zealand servicemen fought and 45 New Zealanders fell. Since then, we have developed close ties, built on shared interests, values and cooperation.
The Korea-New Zealand FTA opens a new chapter in our relationship. It will strengthen both of our economies, and will create new opportunities for trade and investment that will benefit our businesses.
Before negotiations started, economists estimated that a comprehensive agreement would add nearly 6 billion U.S. dollars to Korea’s economy and 4.5 billion U.S. dollars to New Zealand’s by 2030. I believe it will perform much better than that. For New Zealand, all our FTAs have performed stronger than forecast, and there are good reasons to be optimistic the Korea-New Zealand FTA will do the same.
The FTA will encourage new business partnerships between our economies. Many of New Zealand’s products are already used by Korean manufacturers, and these will become cheaper as tariffs are gradually removed under the FTA. This means there will more opportunities for collaboration between our businesses, including in selling products to third country markets.
In addition, the improved protections and certainty for investors will help encourage greater investment flows between our two countries.
Both of our countries’ small and medium-sized enterprises (SMEs) stand to benefit from the FTA. New Zealand’s high levels of consumer purchasing power, but modest size, make it a manageable market for Korean SMEs wanting to reach smart, engaged Western consumers with new products and services. In short, New Zealand is an ideal stepping stone for Korean SMEs seeking to export to the world.
New Zealand SMEs will have the opportunity to benefit through the trendsetting nature of Korean culture as Korea’s influence continues to sweep the Asia-Pacific region and beyond. Once a product becomes popular with Korean consumers, it won’t be long before it is watched, worn, downloaded, used or eaten elsewhere, too.
The Korea-New Zealand FTA is also positive for our two countries’ innovators and creative sectors. Both of our countries recognize that innovation is a key driver for economic growth, and there are already exciting areas in which collaboration is happening between New Zealand and Korean scientists and researchers. Much of this is focused on the commercialization of new products.
An example of this is in the agricultural technology area, where New Zealand’s kiwifruit marketer, Zespri, is developing new varieties, such as gold kiwifruit, which are now grown by Korean farmers in a cooperative venture on Jeju Island. As a result, Korean consumers enjoy year-round supply of quality kiwifruit, and Korean growers are beginning to export kiwifruit to other markets.
Finally, the FTA will help increase the flow of people between our two countries, which will further strengthen our countries’ close ties. Under the FTA, the number of places for young Koreans to come to New Zealand under the popular working holiday scheme will increase from 1,800 to 3,000 each year.
There will also be new short-term English language training opportunities for young Koreans from rural communities and opportunities for highly-skilled Korean workers seeking temporary employment in areas where New Zealand has a real need for their skills.
Tens of thousands of Koreans already travel to New Zealand each year to study, work and holiday - attracted by the high quality of our education system, our natural beauty and our friendly people. And more than 30,000 Koreans have settled in New Zealand - one of the largest expatriate Korean communities in the world on a per capita basis.
I would argue that it is also one of the most successful overseas Korean populations, with multiple high achievers such as women’s golf world No. 1 Lydia Ko and Member of Parliament Melissa Lee being among our Korean-Kiwi leaders.
In summary, I believe there are a lot of reasons to be excited about the Korea-New Zealand FTA, the opportunities it will create for both of our countries and the future of our relationship.
*The author is the prime minister of New Zealand.
by John Key