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The Government welcomes the report of the Foreign Affairs, Defence and Trade Committee on its inquiry into New Zealand's relationship with Latin America.
The Government responds to the report in accordance with Standing Order 253.
The report is supportive of the Government's efforts to build up the relationship with the region and the efforts underway under the Latin America Strategy to develop links in three main areas (political and foreign policy, trade and economic, and people-to-people). The report makes it clear that the writers of submissions received are aware of the opportunities Latin America offers while at the same time appreciating that the effort to raise New Zealand's profile in the region is, of necessity, a long term one. The recommendations in many cases relate to areas in which Government action is already underway or under consideration; in some others, recommended action is of a medium-term nature and will be given consideration in due course: this is reflected in the responses below.
Recommendation 1: That New Zealand representation in Latin America should be supplemented beyond existing New Zealand embassies in Brasilia, Buenos Aires, Mexico City and Santiago by the establishment of an additional post, possibly in Peru, in the next five years.
Response: This recommendation is by its nature a medium-term one, and one with resource implications: opening a new post involves considerable resources. The government will keep under review the question of representation in the region and whether a further post should be established, bearing in mind resource implications and overall priorities.
Recommendation 2: That the Government give priority to appointing honorary consuls in those countries (Cuba and Paraguay) where it has accreditation but no representation.
Response: An Honorary Consul in Paraguay was appointed in December 2005. There are no current plans to appoint an Honorary Consul in Cuba.
Recommendation 3: That the Government bring together organisations with an interest in Latin America for the purpose of developing an appropriate structure and potential timetable for a foundation dedicated to enhancing New Zealand's relationship with Latin America.
Response: The Government plans to facilitate a meeting of organisations with an interest in Latin America (including the New Zealand Centre for Latin American Studies and the Latin America/New Zealand Business Council) to enable them to discuss better alignment and synergies of current activities and the desirability of acting collectively if the circumstances require, and to exchange views on medium-to longer-term strategies for promoting links with Latin America. As the report notes, the current funding available for the Latin America Strategy would not be sufficient for the establishment of a "New Zealand Latin America Foundation" along the lines of the Asia New Zealand Foundation, nor is the current level of business interest in the region at a level which would enable substantive business contributions to be made to such a body.
Recommendation 4: That the Government develop proposals to reinvigorate the dialogue on opportunities for linking CER and MERCOSUR trading zones, building on consultations late in 2004. .
Response: The Government is currently making arrangements for the next session of the CER/MERCOSUR officials' dialogue, to be held in Wellington in March this year. It is planned that the dialogue continue as an annual event.
Recommendation 5: That the Government initiate cooperation agreements between New Zealand Trade and Enterprise and equivalent government trade agencies in Latin America.
Response: The Government notes that New Zealand Trade and Enterprise (NZTE) already has a Memorandum of Understanding with ProChile (the Chilean Exports Promotion Bureau) and with its Mexican counterpart (Bancomext). In the context of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEPA), NZTE will be looking at opportunities to build on the ProChile relationship within the framework of each agency's respective functions, in areas of mutual economic interest. NZTE will also investigate and consider similar cooperation arrangements with other equivalent government agencies in Latin America where there is clear mutual economic benefit in doing so.
Recommendation 6: That the Government survey companies exporting to Latin America to determine whether obstacles to trade result from inconsistent application of sanitary, phytosanitary, or other customs regulations and nontariff barriers.
Response: Government agencies, especially the Ministry of Agriculture and Forestry (MAF) and NZTE, have some information on potential trade barriers and non-tariff barriers (including several sanitary and phytosanitary issues) facing New Zealand companies exporting to Latin America. This is often provided, on an ongoing basis, by relevant New Zealand exporters. The Government will give further consideration to the question as to whether a comprehensive survey as recommended here would be of value.
Recommendation 7: That the Government develop proposals to expand customs cooperation arrangements with trading partners throughout Latin America.
Response: The Government is currently renegotiating a number of Customs cooperation arrangements with different trading partners, mainly associated with New Zealand's programme of negotiations for Free Trade Agreements. An arrangement with Chile is currently being renegotiated as both administrations recognised that it was timely to review the scope of the agreement, and it is intended that the revised arrangement will support the provisions of the TPSEPA. Developing further arrangements with other trading partners, including other Latin American countries, will be considered after current negotiations have been concluded.
Recommendation 8: That the Government give consideration to ways of enhancing trade and economic relationships with Latin American countries, in particular through pushing for a Closer Economic Partnership with Mexico, New Zealand's largest market in the region, by building on the recently established Joint Experts Group dialogue, and through seeking ways to remove barriers to trade with Peru, possibly by encouraging Peru to accede to the Trans-Pacific Strategic Economic Partnership Agreement, and with MERCOSUR members Brazil, Argentina, Paraguay and Uruguay by reinvigorating the CER-MERCOSUR dialogue.
Response: Enhancing trade and economic relations with the region, as recommended here, is one of the key objectives of the Government's Latin America Strategy. Over the coming period the Government will be giving priority to implementing the new strategic economic partnership with Chile (under the Trans-Pacific Strategic Economic Partnership Agreement), working through the Joint Experts Group with Mexico to continue to push for a Closer Economic Partnership with Mexico, and seeking ways to enhance economic relations with Peru and with MERCOSUR members. The idea of Peru's possible accession to the TPSEPA has already been raised with Peruvian officials.
Recommendation 9: That the Government develop strategies for expanding the development of double taxation agreements (DTAs) with Latin American countries.
Response: In the past few years, the Government has concluded negotiations for DTAs with Chile and Mexico. The recently concluded agreement with Spain is also relevant, as Spain is considered a key entry point for investment into Latin America. For resource reasons, the Government is only able to negotiate one or two DTAs per year, and strict prioritisation is accordingly needed. Whether further agreements are negotiated with Latin America (where the next priority countries would be Argentina and Brazil) will depend on priorities in other regions, as well as other factors.
Recommendation 10: That the Government survey the export community to identify which Latin American economies have the most promise for developing and pursuing the liberalisation of bilateral trade in services and either capturing these in new FTAs and CEPs or encouraging such economies to consider acceding to the Trans-Pacific Strategic Economic Partnership Agreement.
Response: The Government recognises that there may be opportunities for potential FTAs with further Latin American countries. A survey aimed at identifying the Latin American economies with the greatest potential for growth in New Zealand's services exports could be helpful in deciding which countries to pursue trade agreements with in the Latin American region. However, in order to develop a comprehensive framework for evaluating opportunities for FTAs in Latin America, the Government would also need to identify economies with significant potential for growth in trade and goods and investment, and the actual barriers to trade in each of these economies (including SPS and TBT). This would be a major piece of work which would be beyond the capacity of existing resource allocations. The Government will give further consideration to developing a framework for identifying potential FTA partners in Latin America once the current round of FTA negotiations is completed.
Recommendation 11: That the Government develop projects to ensure that positive tangible outcomes occur as a result of the taxpayers' investment.1
Response: The Government shares the Committee's concern that projects funded by official development assistance (ODA) result in positive and tangible outcomes. This concern underpinned a review to assess how New Zealand might engage effectively in Latin America that in turn informed a new strategy to guide ODA funding decisions in the region until 2009. The Government approved the new strategy in November 2004 during latter stages of the Committee's Inquiry.
The new strategic approach will ensure that the ODA programme in Latin America is more coherent and focused than its predecessor, and delivers and demonstrates impact through:
NZAID is currently funding multi-year projects that will strengthen pro-poor policy development in Central America and the Andes and improve food security and incomes for poor communities in Nicaragua. In 2006, NZAID will:
Recommendation 12: That Auckland University be encouraged to utilise all existing linkages, including the local Latin American community, and available input from the business sector to consolidate its role as a basis for Latin American education and research.
Response: The Government welcomes efforts by Auckland University, particularly through the New Zealand Centre for Latin American Studies, to develop and promote New Zealand's links with Latin America. Through the Latin America Strategy Fund, the Government has contributed to specific activities undertaken by the University, including the recent conference on Links with Latin America, which also received support from the business community. The Ministry of Foreign Affairs and Trade is an ex officio member of the Advisory Board of the Centre.
In addition to the work of the New Zealand Centre for Latin America Studies, Auckland University, other New Zealand Universities and educational institutions have in recent years deepened their linkages with counterpart institutes in the region. The Government welcomes this.
Recommendation 13: That the Government undertake to publicise the current working holiday and visa waiver schemes, so that they may be used to their full potential.
Response: The Government will support, through the Latin America Strategy Fund, a series of presentations to be organised during 2006 by the Latin America New Zealand Business Council, to publicise to young people the opportunities offered by the Working Holiday Schemes with Argentina, Chile and Uruguay. Negotiations on Working Holiday Schemes are continuing with Brazil, Mexico, and Peru.
Both the working holiday schemes and the visa waiver schemes are outlined on a range of New Zealand websites and on other websites and directories used by travellers and travel agencies worldwide. Detailed and up-to-date information on entry requirements is provided on the New Zealand Immigration website.
Recommendation 14: That the Government consult with interested groups to formulate proposals for promoting interaction between indigenous peoples of Latin America and New Zealand.
Response: The Government is already promoting interaction between indigenous people of Latin America and New Zealand. Through the Latin America Strategy Fund, the Government has supported, and will continue to support, various activities encouraging such links. In addition, as part of the Government's consultation with the private sector (including Maori commercial organisations) it will, where appropriate, raise awareness of the economic and business opportunities and benefits associated with Latin America per se and specific indigenous links.
Recommendation 15: That consideration be given to including in the annual inter-parliamentary travel programme provision for a select committee to travel to a Latin American country once every parliamentary term.
Response: The Government is supportive of developing further interparliamentary links between New Zealand and Latin American countries. The Ministry of Foreign Affairs and Trade is consulted when the annual interparliamentary travel programme is being planned, and makes recommendations to the Office of the Clerk on priorities for visits in support of foreign policy objectives. The recommendation for inter-parliamentary travel to Latin America is noted and will be considered by the Speaker and the Office of the Clerk in future travel planning.
The recommendations above, as well as the body of the select committee report, confirm the multi-faceted nature of the opportunities offered by Latin America, as well as the challenge of building on those to move forward into a sustained and close relationship with key countries in the region, as envisaged in the Latin America Strategy. The report is a welcome contribution to the ongoing development of the Strategy.
1 This recommendation includes an additional word, "better" , before "projects" in the summary of recommendations. In the body of the committee report (page 21), however, it is worded as above.
