New Zealand Minister of Agriculture, Fishing, Forestry and Biosecurity, Jim Anderton, on his recent visit to Chile considers that engaging in joint ventures to enter third markets is the meaning of the P4 Agreement for small countries and exporters, such as Chile and New Zealand.
Below is a free translation of extracts of Minister Anderton’s interview to Sabine Drysdale of Revista Campo, El Mercurio.
Chile is very close to ratifying the Transpacific Strategic Agreement of Economic Partnership Agreement, P4, that includes New Zealand, Singapore and Brunei. Anderton considers that once the Agreement has been approved by Congress, it will open innumerous business opportunities between Chile and New Zealand. Anderton is emphatic that the Agreement will not only broaden the possibility of commercial trade between both countries, but what is more interesting in the opportunity to form joint ventures between Chilean and New Zealand companies to enter third markets.
- Do you believe that P4 will be ratified by the Chilean Parliament?
Yes, I believe it is very likely. The ministers with whom I have spoken have much confidence that it will be. And I believe that ratification will be very quick.
- How will P4 benefit Chile?
A FTA is not a magic wand. It opens opportunities, but people have to seek and seize these opportunities. FTA’s are as good as the creativity of the countries that invest in them. So, if NZ and Chilean exporters don’t make an effort, not much will happen. If we make an effort, we are going to see interesting returns. As once you remove the trade barriers, the good businesspeople are going to take advantage. Inevitably, companies with strategic plans are those that will benefit from these opportunities. Those companies who are not interested in the future, will not concern themselves and that means they won’t have much future.
- In what areas or products, does Chile have opportunities?
Chile is a little like New Zealand. We have the same profile, except for copper. We have an agri-food base that comes from our land and sea resources. To an extent that makes us competitors and that may be one of the concerns among Chilean companies, especially in the dairy industry. What we see is an intelligent appreciation of possible competition, but also of the opportunities that can be taken. One sees Fonterra, for example, working together with the Chilean dairy industry to expand business and production, for the benefit of both, Fonterra and Chile.
The New Zealand dairy industry has developed operations in Australia, United States, in China and in many countries of the world, where they process raw materials from that country and increase their expertise and production for the benefit of that country, at the same time as Fonterra benefits. This is not a one way street. Nor is it exploiting a country. Because if that were so, it would not work well. When there is a mutual benefit, the commitment of both parties’ increases…I don’t believe that the reputation of Fonterra in Chile is that it has robbed the local dairy industry, but that it has worked together with it.
- And what about the forestry industry?
In forestry, Chile has much to teach New Zealanders. A large percentage of our wood is exported in log form and processed at its destination. Chile, on the contrary, export little logged wood and process all its production. The manner in which Chile has achieved this, in so far as it has overcome the barrier of raw material, that we still have, is something that can be taught. The majority of New Zealand constructions are done on the basis of wood, as we have a large domestic market and we export between 30 and 40% of our wood. Chile can teach us much about marketing of commercial strategies, of processing.
- How can we transform this into business?
I believe that the big problem of exportations is the development of markets and how to access them. It may be that one country has access to a market, but doesn’t have the products to satisfy it. New Zealand has Radiata Pine plantations and much Douglas Fur, in exchange Chile has hardly any Douglas Fur and much eucalyptus. So, you can make a mix. And when a market is too big for one country, such is the case of China, if both countries are in development; we can send a much broader variety of wood products and a much greater volume.
- Exporting from New Zealand?
- It may be between both countries. If you look at Zespri (entity that produces, sells and markets kiwis), they have licenses to cultivate gold kiwi in many parts of the world. And what that does is open the market for fruit for 12 months of the year. Joint ventures are very important. We are small countries.
- Chile wishes to convert itself into a food power. Do you believe that P4 is the platform to achieve it?
I’m not sure what a food-power means. You’re the first exporters of salmon, a global force. We are number one in various products, such as milk and meat. But we remain small in the global market. It may be that we are number one in dairy exports, but we hardly have 1 – 2% of the global market. Because the world produces much milk and they are many self-sufficient countries. Only some export, Chile is one of those. But a company such as Nestle is working in Chile to develop its industry. If we look at another country such as Nestlé, they come from Europe, but they are in all parts of the world and they look for joint ventures in all countries. It is a company that comes from a European country but has global reach, thereby benefiting from the development of the dairy industry in diverse countries. If that is done with considerable mutual benefit, then there is nothing wrong. Countries benefit from global market access which Nestle has and which small countries could never have.
- Do you see New Zealand investments in Chile, outside of Fonterra?
Yes, I hope so. Equally I hope that Chile invests in New Zealand. There is a mutual interest.
- Are there plans to invite more countries to P4?
- I have just discussed that with Minister of Foreign Relations, Alejandro Foxley and we believe that there is potential for Peru to join. Chile has intentions that it enter, I don’t see any reason as to why P4 can not expand.
- Why Peru?
In part, because Chile and Peru have good relations. And one has to start with countries with good will. I also understand that your minister is studying the entry of Australia. I believe that any opportunity to expand the P4 to P5 or P6 has positive connotations.
To explore business opportunities in New Zealand and obtain economic information about New Zealand, contact:
Pifor Asesores Ltda. (56-2) 233 9385 and NZTE (56-2) 426 0070.
Minister Anderton also visited Argentina. Click here to access his speech made at Exposición Rural, Buenos Aires, Argentina, on 21 July, 2006.
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