JOHN CARTER (Minister of Civil Defence) : The Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area was signed by New Zealand, Australia, and ASEAN parties on 27 February 2009. The Foreign Affairs, Defence and Trade Committee considered the treaty and reported back to Parliament on 8 April 2009. New Zealand is a small export-driven and trade-dependent economy. This is the source of much of our current and future prosperity. Improving market access for New Zealand firms through a progressive trade agenda, including through this agreement, will stimulate economic growth and help to create and safeguard the jobs of New Zealanders. The ASEAN-Australia-New Zealand Free Trade Area represents a significant economic and strategic achievement for New Zealand. One needs to look only at the statistics to get a sense of the scale of the commercial opportunities this free-trade area creates. New Zealand - ASEAN two-way trade was worth more than $12 billion last year, which was 85 percent greater than New Zealand trade with China for the same period. Meanwhile New Zealand exports to the ASEAN region grew at a staggering 24 percent per year over the past 3 years. The ASEAN-Australia-New Zealand Free Trade Area eliminates tariffs on New Zealand exports to this important market, facilitating even further export growth. Amendments to the existing New Zealand legislation are necessary, and they prepare New Zealand for this agreement’s entry into force.

The ASEAN-Australia-New Zealand Free Trade Area Bill seeks to amend the Tariff Act 1988 and the Customs and Excise Act 1996. Amendments to the Tariff Act 1988 are required to allow for the application of preferential tariff rates and to provide for traditional safeguard measures to be applied in certain circumstances to imported goods under the ASEAN-Australia-New Zealand Free Trade Agreement. Amendments to the Customs and Excise Act 1996 are also required to create a system for issuing bodies to be able to issue the necessary certificates of origin. In summary, these amendments will allow New Zealand to grant its ASEAN and Australian partners preferential access to the New Zealand market once they have opened their markets to New Zealand exports.

Hon Member: That’s wonderful, John.

Hon JOHN CARTER: I thought so.

JACQUI DEAN (National—Waitaki) : I rise to speak to the ASEAN-Australia-New Zealand Free Trade Area Bill, a good bill because it fits very well with this Government’s agenda of having a focus on growth and trade. The bill will enable two-way trade between New Zealand and ASEAN countries. This is good news, particularly for our agricultural exporters. The whole-of-Government approach is also good news. This approach is focused on productivity and growth, and it has turned attention to the provisions and requirements that the enactment of this legislation will have on various entities.

Firstly, I want to talk about New Zealand Trade and Enterprise. Minister Groser indicated to the Foreign Affairs, Defence and Trade Committee that New Zealand Trade and Enterprise would have a strong focus on enabling trade between New Zealand and its free-trade partners. Most pertinent to that is the legislation before us today, but it also pertains to our free-trade agreement with China. New Zealand Trade and Enterprise will be tasked to enable trade, and that is good news.

I also turn my attention to the New Zealand Customs Service. The excellent honourable member Maurice Williamson appeared before the select committee this morning and indicated that there would be a strong focus on behalf of the New Zealand Customs Service on implementing the provisions of this bill. It is all very well for Parliament to consider this legislation and put it into force, and excellent work has gone on behind the scenes for many years to bring this legislation to the House, but it is what happens next that is most important. It is very encouraging that submissions in support of the legislation were brought to the select committee from organisations such as Fonterra, the chambers of commerce, the Seafood Industry Council, and other industry groups.

Part 1 of the bill amends the Tariff Act 1988. Those amendments were necessary to bring the Tariff Act up to date to meet the requirements of this legislation. The amendments to the Tariff Act enable the application of preferential tariff rates under the ASEAN-Australia-New Zealand Free Trade Area and the application of transitional safeguard measures where appropriate. That is most important, and the select committee gave it good consideration. The application of transitional safeguard measures, where they are appropriate—they are not always appropriate, but in some industries and sectors they are—are on imports originating from ASEAN-Australia-New Zealand Free Trade Area party countries. Of course, this free-trade agreement is a two-way arrangement. It deals not only with exports from New Zealand and on behalf of exporters, but also with imports into New Zealand. That being the case, with tariffs being reduced, it is considered vital that there are transitional safeguard measures to protect New Zealand manufacturers and producers where it is deemed necessary. Part 1 also adds definitions to the Tariff Act relating to the agreement, including a definition of a specified ASEAN-Australia-New Zealand Free Trade Area party. It is a lot of words, but this legislation will have far-reaching benefits for New Zealand and in particular for the primary production sector, which is under some pressure in the current economic conditions. Thank you, Mr Chairman.

Hon MARYAN STREET (Labour) : The ASEAN-Australia-New Zealand Free Trade Agreement is much more exciting than we have been led to believe by listening to the two previous speakers. Although the acting Minister, John Carter, is in the chair, and I acknowledge that, a little bit of enthusiasm is justified, because this is quite an extraordinary achievement. I understand that the Minister in the chair is acting for the Minister in charge of the bill, but really and truly it is hard to imagine that something could be made to sound as dull as he made it.

However, the ASEAN free-trade agreement is hugely significant for this country. It is one of a kind. It is has set a benchmark, I think, for multilateral trade agreements in the rest of the world. It establishes an architecture around free trade that is novel, and for New Zealand it is of particular benefit because of the speed at which we arrive at zero tariffs. That is one of the things that is most significant.

I will give just a word on the ASEAN countries and New Zealand’s relationship with them. New Zealand’s exports to the ASEAN countries have increased by some 121 percent since 2000, to around $4.6 billion in 2008. This really is a free-trade agreement to get excited about. Over the same period, imports from ASEAN countries have increased by 244 percent, to almost $7.6 billion in 2008. This builds on what was already a dynamic relationship, but it secures for New Zealand some significant advantages over previous agreements. With the passage of this legislation, and with the passage of legislation in participating countries, we will be able to access a market of more than 566 million people, and that region accounts for some US$1,400 billion of global trade. That is total trade, not trade with New Zealand. That is $1.4 trillion, if anybody can get his or her head around those sorts of numbers.

Suffice to say that it is an extraordinary market. It is nearer to us than our traditional markets, which is an advantage, and these countries, despite the recession, have a growing and developing middle class that will be interested in the three things this free-trade agreement delivers. It delivers results in goods, it delivers results in services, and it delivers results in investment. In addition to that, some sort of people-to-people flow mechanism will also enhance our trade relationships. This is an exciting development, and it is something we can be very proud of.

Even in this Committee stage—I know this has been done before—I commend the Minister, Tim Groser, for bringing this agreement to a conclusion. I also commend his predecessor, Phil Goff, and before him Jim Sutton, who also contributed to the development and building of what I have referred to as this free-trade architecture. That is indeed what it provides for the future.

One of the things that New Zealand will benefit from, within 12 years, is the elimination of tariffs on 99 percent of New Zealand’s current exports to the four key export markets in the ASEAN grouping: Indonesia, Malaysia, the Philippines, and Viet Nam. That may be able to be said quite quickly, but the important thing about it is that when this agreement is fully implemented, there will be a saving of approximately $50 million, based on current trade alone—$50 million to New Zealand exporters, based on current figures alone. Of course, I anticipate that we will do much better than that.

TIM MACINDOE (National—Hamilton West) : This is my second opportunity to take a call as this important ASEAN-Australia-New Zealand Free Trade Area Bill continues its passage through this Committee, and, as the Hon Maryan Street has just acknowledged, it is good to speak on a matter that enjoys such broad multiparty, although not entirely unanimous, support in this House.

Part 1 focuses on the requisite updates to the Tariff Act 1988. Clauses 3 to 10, among other matters, amend the principal Act and add definitions relating to the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area to section 2. Importantly, the amendments in Part 1 create the legislative means to designate preferential tariffs for goods that are produced or manufactured by the agreement’s parties.

From New Zealand’s perspective, the practical effect of all this will be far-reaching, and full implementation in 2020 will see the absence of tariffs on 99 percent of New Zealand’s current exports to the four key markets, mentioned a moment ago by the Hon Maryan Street, of Indonesia, the Philippines, Viet Nam, and Malaysia. In turn, this development, based on current trade levels, will provide a total saving in duties to our country of NZ$50 million and will no doubt escalate in value to our producers and exporters over succeeding years.

There will be near-immediate benefits from the enactment of this measure, in that tariffs will be eliminated on $429 million worth of current New Zealand exports to Indonesia, Malaysia, and the Philippines as early as next year, and a further $435 million worth of exports to those countries, with the addition of Viet Nam, will have tariffs removed between 2011 and 2020. There are comparable benefits to our ASEAN trading partners in the provisions of Part 1, which will ultimately see all New Zealand tariffs on ASEAN products phased out altogether by 2020.

The bill provides for longer phase-out periods—and this is an important safeguard in the agreement—for sensitive sectors such as, but not restricted to, clothing, footwear, carpets, some textiles, and some manufactured products such as steel, wooden furniture, and plasterboard.

The overall impact of the enactment of Part 1 will be far-reaching and immensely valuable to this country, especially in this very difficult economic climate, when we must do all we can to increase the volume of our exports and, as my excellent colleague from Otago said in her comments, create in our economy the conditions for growth that will see an export-led recovery out of a global recession.

Stuart Nash: Well, Tim, why did you cut $10 million from the NZTE budget?

TIM MACINDOE: I had absolutely nothing to do with that measure, as I am sure Mr Nash is aware. It is a great shame that Mr Nash—who, I am sure, will stand up in a moment and speak eloquently in support of this bill—wishes to raise red herrings at this point.

Hon David Cunliffe: He hasn’t learnt collective responsibility—what are the whips doing?

TIM MACINDOE: This bill is a significant development, I tell Mr Cunliffe, for a new Government that is determined to support our productive sector and to facilitate significant and lasting growth in our economy. I can only assume from the fact that the Opposition members are barracking so loudly that they really do not have a clue how to achieve that, or how to overcome the obstacles to trade—I emphasise: the obstacles to trade—that hinder our exporters and drive up the prices paid by New Zealanders for our imported goods. Perhaps the Labour members might like to reflect on that benefit, as well, and listen to what is being said.

I would like to return to the more magnanimous approach that was adopted a minute ago, before the cherubs of the Opposition started to chirp, and acknowledge the outstanding leadership of the Hon Tim Groser. He stands foremost and pre-eminent right around the world, and he is highly regarded on the international stage for the superb work he has done over many years as a trade negotiator and now as our Minister of Trade. That is no mean achievement. He is an outstanding New Zealander, and we are so lucky to have somebody of that talent and experience in this House.

I acknowledge, as did Maryan Street, the former Ministers in the previous Government, and the officials, who have done such outstanding and challenging work. They have shown such tenacity in bringing this agreement to the stage where we have the opportunity to bring it into enactment.

Dr ASHRAF CHOUDHARY (Labour) : I am delighted to rise in support of this bill. It is not before time that we are concluding this agreement with the ASEAN countries—the 10 ASEAN countries, plus Timor-Leste, another country that wants to be a member of ASEAN, and of course Papua New Guinea, which is an observer country for the ASEAN region. I am really pleased that at long last New Zealand is concluding this agreement with ASEAN, because I have seen development in the ASEAN region for many, many years.

It was 30-odd years ago that I first travelled to the region, and a country like Singapore was pretty poor in those days. As the British would say, it was pretty much a coolie State. But I have travelled through Singapore for 35 years and seen it develop, almost every year, from a Third World, or Fourth World, country into a First World country. Its standard of living has now gone ahead of New Zealand’s, and the whole region—like Singapore, Malaysia, and Thailand—has made many strides in development and progress. I have had the opportunity to travel to most of the countries in the region. I think I have travelled to all the nine countries except Burma, and I have seen progress in all of them.

It is tremendous that we have this free-trade agreement, and there are over 560 million people in the region. It is to New Zealand’s advantage that we are developing an economic relationship, but it will also further promote people engagement, like diplomatic arrangements. In many different ways the two regions—New Zealand and Australia, and ASEAN—will develop into a major economic bloc, similar to the European Union and other regional blocs. It is important for us to see the economic development. There has been a 24 percent annual growth in trade. In the last few years there has been tremendous growth; it is more than our trade with China, in our agricultural products. From my experience in agriculture, in terms of growth in the standard of living of those countries, their annual growth in educational requirements, and all the amenities they have, New Zealand has a lot to offer. Over the years those countries have sent many students to study in New Zealand, and we started that with the Colombo Plan. In those days we used to give scholarships to those Third World countries, and it is interesting to see the development in those countries. A lot of students came from Singapore, Malaysia, and Thailand. Now, Singapore is offering scholarships not only to the region but also to New Zealand and to the countries surrounding Singapore.

There has been huge change, but if people have not travelled to the region they will not appreciate that or know what is going on. I have had the opportunity to see the development in many of those countries and to do some work over the years, on behalf of Massey University, as a consultant on agriculture. This free-trade agreement is not before time, and it is nothing to worry about. Often people worry that it will adversely affect a lot of things in New Zealand. But I do have one personal reservation. We have to be very mindful that a lot of our people have not travelled to those countries, and they often worry about the potential problems if a lot of people from those countries are travelling around New Zealand. They worry about the possibility of diseases being brought here, and about quarantine issues. We have to make sure that we educate our people, particularly on our side of the equation.

Dr PAUL HUTCHISON (National—Hunua) : I am delighted to have the opportunity to speak on Part 1 of the ASEAN-Australia-New Zealand Free Trade Area Bill. It was great to see Maryan Street so excited by this bill, and it is most unusual for the Hon John Carter to ever be remarked on as being unexcited. This bill is a sign that New Zealand is getting better and better, which is exactly what the Hon John Carter’s answerphone says.

As the Hon Maryan Street pointed out, this is an exciting bill. It is an extremely exciting bill for New Zealand, because it broadens our opportunities for trade enormously. The region has 12 countries, 566 million people, and, overall, a GDP of $700 billion. I am not too sure, again, where the Hon Maryan Street got the trillions from, but, undoubtedly, within the next few decades there will be trillions of dollars of trade within this free-trade agreement.

I too will mention those who have been responsible for the genesis of this bill and the culmination of it going through Parliament today. Obviously, the Hon Tim Groser has been incredibly instrumental, and it is quite right that he is given appropriate praise for his professionalism and skills. Before him, of course, there was the Hon Phil Goff and Jim Sutton. As I mentioned the other day, the real antecedence was the work of our current Speaker, the Hon Lockwood Smith, who spent a lot of time in the ASEAN region sowing the seeds for this agreement to finally come about. It was great work, and it finally has come about.

One of the quite impressive things about this bill is the work behind it, which was done, I understand, so that there would not be any amendments to the bill. It was unanimously agreed on by the select committee—

Hon David Cunliffe: What’s the bill about?

Dr PAUL HUTCHISON: Well, I hope Mr Cunliffe knows. After all, it is absolutely pivotal to New Zealand’s future. I would hope that he, of all people, would know. If the Hon David Cunliffe does not know, well, the leadership bid will be in a bad way. However, I wanted to mention that the national interest analysis was done extremely well.

Hon David Cunliffe: Is it quantitative?

Dr PAUL HUTCHISON: It is, actually. Several of the things that were pointed out were the areas where New Zealand would have opportunities that we do not have now. For instance, some countries do not have a sophisticated infrastructure in the electronic commerce area, but New Zealand, under an excellent National Government, is expanding broadband so that we will be poised to take advantage in that area. As well as that, the area of trade in services is something that will give New Zealand great opportunities for the future, and that has been widely commented on by the submitters.

I was quite interested to hear from the Seafood Industry Council. It said that we were not ambitious enough in terms of what we could do with our potential seafood prospects here in New Zealand. Unfortunately, our proportion of seafood trade worldwide is very, very small—it is less than 1 percent, I think—yet we have a vast economic zone with enormous potential to expand trade in the ASEAN region, and this bill provides the framework for New Zealand to do exactly that.

Undoubtedly, this bill will help New Zealand towards economic recovery in the short, medium, and long term. After all, there has been great concern about the present situation, and this legislation is one instrument that will help us to recover.

STUART NASH (Labour) : I stand in support of the ASEAN-Australia-New Zealand Free Trade Area Bill for many reasons. I would like to make it clear that we should give credit where credit is due—as should Mr Macindoe and Mr Hutchison. There is no doubt that Mr Groser knows a little bit about trade. I have never heard him speak on trade in the House, but I am sure he knows a lot about it. But let us face facts: this deal was negotiated by the Hon Phil Goff. The great thing about that is that the next Prime Minister of New Zealand will be Phil Goff. I should correct myself there: the next Prime Minister of New Zealand will be Bill English, but the next elected Prime Minister of New Zealand will be Phil Goff. Phil Goff understands the true value of international trade, because he is the man who negotiated this deal. He also negotiated the free-trade agreement with China and opened up the first step into a whole lot of other markets that New Zealand will have free-trade agreements with.

I ask those members to please give credit where it is due. Their smiles say they know it is true, and the public know it is true, and good on them. We also know that not just free trade but all trade is vital for the growth of New Zealand, without a question of a doubt. Trade is the only way that New Zealand will achieve sustainable economic growth. The last time we were in a recession we got out of it by trading our way out. We are a trading nation; we always have been and we always will be.

We face barriers to successful trading in the global economy. One of the problems is the tyranny of distance, so we must seek new markets with countries that are close to us. Unfortunately, the countries we are talking about and those within the ASEAN region have different languages, different business cultures, different legal systems, different ways of doing business, and a different mentality. That is why free-trade agreements that allow the opening up of those areas will make us so successful. Trade is the only way we will get into the top quartile of the OECD.

Let us get back to the bill. Without a question of a doubt, it is absolutely fantastic. The figures speak for themselves. Here is a market of about 500 million people who are entering the age of consumerism. That means they have discretionary money to spend on the products and services that New Zealand produces. As my learned colleague Dr Ashraf Choudhary mentioned, education is a huge portion of New Zealand’s export and import industry.

The ASEAN region is vital to New Zealand’s trade. It accounts for around 10 percent of all our exports at the moment, before this bill goes through, or about $4.7 billion, which is a hell of a lot of money. We also import about $7.5 billion worth of products and services from the ASEAN region, and $3.1 billion is in crude or non-crude oil. This bill will be good for the consumer, because hopefully the tariffs on oil will drop and petrol prices will be cheaper.

There are also some other surprising things. We bring in $42 million worth of caviar—Todd McClay will be happy about that; his caviar may come down in price, which will go down well—and the value has increased by over 50 percent. The people of Rotorua will be happy to know about that. As Mr Cunliffe said, this is one of our largest trading blocs and it is very, very important to us. That is why this bill is so important.

I have to say that $2.2 billion of the products we export to the ASEAN region are dairy products. We all know that the dairy industry is vital to New Zealand’s economy and that it is the backbone of our economy. The industry is innovative, geared up, incredible, and has good leadership, and it will really benefit from this agreement. One thing that worries me ever so slightly is that as a country we need to diversify. We need to get hold of our competitive advantages outside of dairy and agriculture, and diversify. The problem we have is that 97 percent of New Zealand businesses are small to medium sized enterprises. The vast majority do not have the ability, money, or resources to hire an international market development manager. They rely on the New Zealand Government through New Zealand Trade and Enterprise.

The CHAIRPERSON (Hon Rick Barker): Before I take the next call I remind members that this is the Committee stage. It is about the nuts and bolts of the bill; it is not a general debate or a second reading. I remind members that we are on Part 1 of the ASEAN-Australia-New Zealand Free Trade Area Bill

TODD McCLAY (National—Rotorua) : I would like to set the scene of Part 1 by going through some of the background to how we got here today. Today is an exciting day, and the bill is a very important and exciting one for New Zealand. Anything that does more for our trade is important. A previous speaker from the other side of the Chamber, Maryan Street, suggested that the acting Minister should be showing a bit more excitement when it comes to the ASEAN Free Trade Agreement. From where I was sitting, the acting Minister could hardly control himself. In his electorate, as in my electorate, there are many excellent dairy farmers. They will benefit directly from this bill, because from the moment the agreement enters into force there will be some $50 million worth of savings for the dairy industry for exports to the ASEAN countries. The reduction in tariff rates is a great thing for dairy farmers. The acting Minister is well aware of the importance of this agreement to rural parts of New Zealand. In rural areas excitement is often understated, but the smile on the acting Minister’s face suggests that he realises how important this bill will be for his farming community.

This is a very important day. I pay tribute to the many people who were involved in moving us to this point. We have heard about Minister Tim Groser and the Hon Phil Goff when he was Minister, and of course Minister Sutton. I will use the free-trade agreement as an analogy with a rugby game. All three of the people I mentioned have played a part. The Hon Jim Sutton, when he was Minister, was late to the game of rugby and therefore had to rush. At half-time Phil Goff as Minister had a little discussion with him and said “I think we’d better do a bit more work here. It’s not looking good. I don’t know how much longer we’ll have our jobs.” Minister Groser, of course, is the man who has kicked the ball between the posts and scored the winning points for New Zealand. Indeed, Mr Nash made mention of this.

Some of the changes in Part 1 are around rules for intellectual property. I say to Stuart Nash that I am not sure the part of the bill that looks at intellectual property applies to him. He suggested that the next elected Prime Minister of this country would be Phil Goff. There is not a lot of intellectual anything in that statement. It is important to recognise that all three of those people, as Ministers, played an important part in what is very important legislation and a great agreement for New Zealand. I pay tribute to former Minister Sutton, previous Minister Goff, and now Tim Groser, who has a lot more work to do in this area.

I will also talk a little bit about the officials. I have had the duty—I would like to say I have had the pleasure—to attend many trade negotiations over many years. They are not as much fun as they sound, and certainly not as enjoyable as a 5-minute speech in this House. The officials, directed by their Ministers, do the day in, day out work in the discussions. It is the detail that they put in and their hard work that gets us to where we are today.

Part 1, in particular, looks at preferential tariff rates and sets up changes to the Tariff Act. It is important that preferential tariffs can be applied, because not all countries we trade with have the same tariff rates applied to them at the same time. Indeed, when we look at the substantial increase in New Zealand’s export trade to these countries, we see that there has been a 121 percent increase—from memory—over 9 years, and over the same 9 years there has been a 244 percent increase in goods exported from Asian countries to New Zealand. For goods being exported to those countries, the tariff rates and the elimination of barriers will not be lifted to the same degree at the same time in all countries. But by 2020, over the next 12 years, our access will be much better.

When we look at some of the detail around preferential trade access and changes to it, we see there will be significant benefits to New Zealand businesses. I will focus for a moment on the agricultural industry. The debate on this very issue last night was interesting. I remember the many submissions we received from people in the agricultural sector and traders of primary products as a whole that, without exception, fully supported the bill and asked us to get it in force quickly because they know they can benefit from it quickly. I remember a member on this side of the Chamber suggested that, compared with the Opposition, National predominantly represents the agricultural sector of New Zealand. I did a little bit of work when I got back to my office and found that, with the exception of the odd farmer in Queen Street and down in Christchurch, where cows occasionally run around the airport, the people who have an interest in the agricultural sector are represented by members on this side of the Chamber.

The CHAIRPERSON (Hon Rick Barker): Before I call the next member I will reiterate my point that speeches are to be about the Committee stage, not a general second reading speech. Therefore, if I hear more second reading speeches I simply will put the question. Members are not complying with rules the members have themselves set for the House. This is the Committee stage.

PHIL TWYFORD (Labour) : I will direct my comments to some of the very specific provisions of the ASEAN-Australia-New Zealand Free Trade Area Bill and to the very specific benefits that will accrue to New Zealand exporters as a result of this legislation being passed. But I will first say, as a number of people have said before, that this bill has significant benefits for New Zealand producers and the New Zealand economy. We are talking about, over time, the elimination of $50 million in tariffs that are currently being paid by New Zealand exporters, and strengthening our relationship with a very significant market of 566 million people that accounts for $1.4 trillion in global trade. Whichever way we slice it, this bill is significant. It is not a panacea, but it is a very useful building block in the long-term engagement of New Zealand with that incredibly important regional market.

I will talk about some of the specific benefits for New Zealand and our firms. If we take, for instance, the dairy sector, by 2010 tariffs will be eliminated on whole-milk powder, butter, ice cream, and cheese in Indonesia, and on casein, milk powder, cheese, and buttermilk in the Philippines.

Hone Harawira: Our next Prime Minister.

PHIL TWYFORD: I would expect members on the other side of the Chamber to realise just what a significant benefit that is for New Zealand producers. It is not only the trade in dairy products. Let us talk about the meat and wool industry. Tariffs on key beef exports will be eliminated in the Philippines by 2012, and in Indonesia in 2020. Tariffs on sheep meat for the Philippines will be gone by 2010, and in Viet Nam by 2016. Let us talk about forestry. Over a 12-year period from 2010 tariffs on key products will be eliminated, including tariffs on fibreboard and paper in Indonesia, and on less-processed wood products for the Philippines. It is not only dairy, meat, wool, and forestry; a wide variety of horticultural products will benefit, with some global exports subject to early tariff elimination. For instance, apples and kiwifruit will benefit from the removal of tariffs in 2010 in Indonesia, in 2011 in the Philippines, in 2012 in Malaysia, and in 2016 in Viet Nam. In relation to manufactured goods, a key benefit of this agreement is that for our manufacturers, the rules of origin can be met on a regional basis. This means that New Zealand manufacturers will benefit from not only improved direct access but also the ability to include New Zealand materials in the origin assessment of goods manufactured and traded within the region. The trade in services also has important outcomes for New Zealand producers. This agreement will greatly assist in the expansion of trade and services between New Zealand and our ASEAN partners.

The free-trade agreement includes a trigger for negotiations on improving services commitments. If after this agreement comes into force any of the ASEAN partners negotiate a subsequent agreement on trade in services at some stage in the future, those benefits over and above this agreement will automatically be passed on to New Zealand. In addition to that clause, Viet Nam has committed to provide most favoured nation treatment to New Zealand for certain higher education services, including distance learning and Internet-based education services. Any improvements that Viet Nam provides to a future partner will be passed on to New Zealand. Those are valuable benefits to New Zealand exporters.

New Zealand business services that will benefit from this legislation include legal services for Indonesia and Viet Nam, accounting services for Malaysia, Burma, and the Philippines, and taxation services for Malaysia. The list just goes on and on: computer and related services, and research and development services with Indonesia. We are also talking about communications, such as telecommunications in Brunei, Indonesia, Malaysia, the Philippines, and Thailand. It is very significant and includes construction and related engineering services, and educational and environmental services. The other important area in this agreement is investment. The agreement delivers some fantastic protections for New Zealand investors.

• The question was put that the amendments set out on Supplementary Order Paper 27 in the name of the Hon Tim Groser to Part 1 be agreed to.

• Amendments agreed to.

• Part 1 as amended agreed to.

JACQUI DEAN (National—Waitaki) : I address Part 2 of the ASEAN-Australia-New Zealand Free Trade Area Bill, as is a requirement of this debate, and it will be easy to do so because the provisions in this part are exciting, even though they deal with amendments to the Customs and Excise Act. I have to say that a distinct lack of excitement has been shown by Labour members in this debate. That might well be explained away by the fact that not one of them represents agricultural interests, whereas the members on this side of the Chamber are good, provincial, electorate MPs—

Hon Steve Chadwick: I raise a point of order, Mr Chairperson. I point out that this is a serious bill and the Opposition is taking it seriously. We are not engaging in passionate debate about it .

The CHAIRPERSON (Hon Rick Barker): Points of order are about order. That was about the tempo. It is not a point of order.

JACQUI DEAN: I am seriously proud to belong to a party and Government that represents rural and provincial New Zealand amongst its ranks of MPs. That is why it is so exciting to have the opportunity to speak on Part 2, which amends the Customs and Excise Act.

The provisions of Part 2 allow the chief executive of the New Zealand Customs Service to designate certification bodies that are authorised to issue a New Zealand certificate of origin for goods to be exported to ASEAN-Australia-New Zealand Free Trade Agreement parties. The reason this is so exciting is that the New Zealand Customs Service will be focused on delivering good service to our exporters. I mentioned this in my Part 1 speech, but I think it needs to be said again: the New Zealand Customs Service will be focused on implementing Part 2 because it has a very important role to play in relation to the certificate of origin provisions and the certification bodies that are authorised to issue a New Zealand certificate of origin.

What our exporters and our primary producers need—those people who produce the goods at the farm gate, whom we represent—is a smoother process through the New Zealand Customs Service so they can take advantage of the excellent provisions in this bill. Part 2 creates criteria that the chief executive of the New Zealand Customs Service must measure applications for certification against. Again, those criteria are very important because the applications must be measured against them before a body is certified to issue certificates.

I want to address a submission made to the Foreign Affairs, Defence and Trade Committee by Fonterra, who note with regard to Part 2: “To ensure smooth implementation and maximise any tariff opportunities of the agreement, lessons need to be drawn from our experiences with the China - New Zealand free-trade agreement, in particular in regard to the operational and certification procedures.” I believe that the new provisions in Part 2, if implemented—and I am sure they will be—by the New Zealand Customs Service, will make the way through the New Zealand Customs Service process smoother for our exporters. That is entirely consistent with and in line with this Government’s desire to create growth and jobs.

Further, Part 2 enables the creation of regulations that will set prescribed terms and conditions for certification, set the criteria, and set the application forms and fees. Speaking of application forms and fees, I say that, again, there was a great deal of discussion at the select committee over application forms, which must be the bugbear of many New Zealand small businesses, many New Zealand producers, and many New Zealand exporters. So it is good news that focus and attention have been given to the matter of application forms and fees, which one might think is minutia but is not. I understand that my time is nearly up, so I commend this part of the bill to the Committee.

Dr PAUL HUTCHISON (National—Hunua) : Thank you, Mr Chairman, for the opportunity to speak on Part 2 of the ASEAN-Australia-New Zealand Free Trade Area Bill. As my colleague Jacqui Dean so aptly put it, Part 2 is about amendments to the Customs and Excise Act 1996, which are absolutely crucial to the smooth running of the new free-trade agreement. Indeed, the amendments will enable the chief executive of the New Zealand Customs Service to designate certification bodies that are authorised to issue a New Zealand certificate of origin in respect of goods for export to countries that are party to the agreement. A certificate of origin will identify the goods and certify that they are of New Zealand origin in terms of the ASEAN-Australia-New Zealand Free Trade Agreement. It is also important to point out that before designating a certification body the chief executive must be satisfied that the body meets any prescribed criteria, and a designation may be subject to terms and conditions prescribed by regulation or imposed at the discretion of the chief executive.

It is interesting that there were no amendments to this very well-crafted and well-drawn up bill. I must say I congratulate the Parliamentary Counsel Office on that. It is quite rare that we have a bill that has no amendments to it whatsoever. As the bill’s explanatory notes states, regulations may be made that prescribe “criteria to be met by bodies wishing to be designated as certification bodies: forms and fees and the manner in which applications for designation as a certification body must be made: terms and conditions of designations.”

This morning at the Foreign Affairs, Defence and Trade Committee we had before us the Hon Maurice Williamson. He pointed out to the select committee that modern technology was hugely important both to the importation and exportation of our goods. We have, unfortunately, over the last 12 years or so not kept up with the technology that is available worldwide. That technology will free up people by ensuring that the very important aspects of their jobs in ensuring the legality of both exporting and importing is right at the top. By embracing new technology, we will be able to free up those agents. It is very important that New Zealand does lead the world there, because some of the members of this free-trade agreement do indeed have far less sophisticated infrastructure. Countries like Singapore, which Dr Ashraf Choudhary was talking about before, are at the pinnacle of this technology, and trading with them will be extremely easy. We must keep at that peak performance otherwise we will find that we will lose our edge.

There is no doubt that New Zealand farmers are now required by European countries to be right at the top of traceability. Indeed, those requirements will more and more be imposed by the Asian countries that are involved in this free-trade agreement. I note that Fonterra in its submission said this: “We welcome the objective of the agreement to create customs procedures and practices that are predictable, consistent, and transparent and facilitate trade.” Surely this is indeed the very core of where this new National Government is going. Fonterra went on to say: “An excellent rules of origin outcome was achieved which gives exporters the flexibility of choosing between “co-equal” rules to qualify for tariff preference. However, to ensure smooth implementation … of the agreement, … lessons need to be drawn …”.

STUART NASH (Labour) : I am speaking in favour of this ASEAN-Australia-New Zealand Free Trade Area Bill—that I have made clear. I find myself in the very unusual situation of actually agreeing with everything that the last two Government speakers have said.

Hon Member: Very unusual.

STUART NASH: It is very, very unusual. In fact, if I had not had a big lunch I think I would probably find myself falling down in my chair and fainting.

This is a very important bill, and Part 2 is a very important part of this bill, as well. It sets out the amendments to the Customs and Excise Act 1996. If we go through a clause by clause analysis of this bill, we find that the first clause of Part 2, which is clause 11, states that the bill amends the Customs and Excise Act 1996. It sets out the regulatory environment that updates what is happening and brings us forward to the 21st century. Clause 12 sets out the purpose of Part 2. The purpose is “to amend the principal Act to provide for a system of issuing New Zealand certificates of origin in relation to goods being exported to countries”. When we talk about certificates of origin, rules of origin, etc., we bring in the Customs Service.

The member who just resumed his seat, Dr Paul Hutchison, talked about our need to have a very robust Customs Service, and I could not agree more with him. He said that this was a priority for the National Government. Well, I say that having a robust Customs Service has been a priority for every Government, and it has to be the priority of all Governments. When we think that our economy is based upon agriculture, forestry, and, a lot of the time, monoculture, we realise that if our Customs Service and our phyto—whatever that big long word is—

Todd McClay: Phytosanitary protection.

STUART NASH:—I thank Mr McClay—our phytosanitary protections are not up to date, then the harm that can be done to our economy is absolutely huge. It is a priority to have a robust Customs Service, which is what we do have, by the way. It is very efficient and is one of the best in the world. In fact, it had to be after 9/11. I think the Chairperson, the Hon Rick Barker, was responsible for turning our Customs Service into one of the best in the world. I fully support that, as well.

If we look at the rules of origin, we see that Part 2 is very important. The inclusion of robust rules around certificates of origin allows New Zealand exporters to effectively take advantage of the preferential treatment and conditions offered under the free-trade agreement for trade of goods without undue compliance costs. A free-trade agreement is about getting rid of undue compliance costs; in fact, it is getting rid of most of the compliance costs. The phrase “undue compliance costs” is almost an oxymoron, is it not? But we all know that there needs to be a certain level of compliance in order to allow for the provision of free trade, to make sure that we get it right, and to make sure that our laws and the host laws are obeyed.

This agreement also provides a mechanism through which originating goods can be cumulated across the parties. The export opportunities under this free-trade agreement are expanded, not only through direct access to New Zealand goods for ASEAN markets but also through the ability to include New Zealand materials and origin assessment of goods manufactured and traded within the region by Australian and ASEAN manufacturers and exporters.

As we have said before, one area that we really need to improve within New Zealand is our manufacturing sector. This legislation helps those involved in the sector, without a question of a doubt. It allows them to set strategic plans and strategic goals. We have heard about the fantastic Hawke’s Bay company called Future Products Group, run by a guy called Robert Darroch. He is the sort of New Zealand manufacturer who will do incredibly well out of Part 2. It means that he can plan with certainty. He can look at his markets, he can put together a strategic plan, and he can know with a high degree of certainty that on certain dates tariffs will be removed from the products that he is sending to all these ASEAN countries.

Dr Ashraf Choudhary: It’ll have the level of origin there, as well.

STUART NASH: Absolutely; the level of origin is most important. This will also allow other manufacturers, who are perhaps not in the export market at the moment but who want to get into those markets, to plan with certainty as well. It is very, very important that the New Zealand economy grows and reaches the top half of the OECD, as that will take us forward to 2011, when the next Labour Government will take over.

This agreement also provides co-equal or alternative rules for the majority of product lines. This means that manufacturers and exporters can choose between a change in tariff classification approach and a regional value content approach, with about 40 percent free on board.

TODD McCLAY (National—Rotorua) : It gives me pleasure to rise and talk on Part 2, which amends the Customs and Excise Act 1996. I think that the Customs Act 1966 was already amended, so when I talk particularly about Part 2, it is the 1996 Act that we are looking to amend.

I think that Stuart Nash, the member who has just resumed his seat, is right. I think there is consensus in the Chamber, because this free-trade agreement is a good thing for New Zealand. I think there is consensus on both sides of the Chamber over the importance of the New Zealand Customs Service, its rules, and the job it does, which is sometimes done in extremely difficult circumstances.

There are a couple of things that I want to pick up on before I look directly at Part 2. One of them is the role that different bodies within New Zealand play. The Customs Service is there to control the importation of goods, collect revenue through tariffs where tariffs are in place, and stop the importation of illegal goods.

The Ministry of Agriculture and Forestry looks at sanitary and phytosanitary issues to do with goods. The ministry looks particularly at food but also at other types of goods that might be imported into New Zealand and could do some of our industries a lot of harm, particularly our agricultural and horticultural industries.

The amendments to the Customs and Excise Act do not lessen the importance of the work that the Ministry of Agriculture and Forestry does—which is probably more important when I look at my electorate. Let us keep collecting the revenue. It has certainly stopped the importation into New Zealand of illicit goods and goods that could be used to make drugs. There would be great harm to many, many producers in my electorate of Rotorua if we flouted our sanitary and phytosanitary regulations and requirements and disease and pestilence were imported, particularly for the kiwifruit industry.

Part 2 amends the Customs and Excise Act by allowing the chief executive of the New Zealand Customs Service to designate certification bodies that are authorised to issue a New Zealand certificate of origin to goods to be exported to ASEAN countries. This is extremely important because we have a number of barriers to trade. Some of them are direct barriers, and some include tariff rates.

But there are indirect barriers to trade—or non-trade barriers. In cases wherewe do not have appropriate rules as to the origin and certification of our goods, and the goods arrive in another country, the officials on that side receive paperwork saying: “This good is of New Zealand origin.”, and that is not accepted or is not accepted quickly, then that becomes a non-trade barrier.That means that our exporters, our manufacturers, and our producers either have to wait longer until their goods are released to their markets or they do not get in there. So that is a barrier to trade.

The certificate of rules of origin will identify goods and certify that they are of New Zealand origin. This is important when we are exporting a finished good or a food product. We know that the 10 countries in the ASEAN bloc are growing economies. They will become much larger economies in the future. From memory, the ASEAN bloc is our third-largest trading group of countries for exports, so it is very important to us.

We know that as the incomes of those countries increase on a per capita basis, their desire to consume the many good products produced by our farmers will increase also. Therefore, good rules of origin—rules that certify that products leaving New Zealand and going into those countries are from New Zealand—will allow us to sell products to them not only to consume but also to manufacture, change, and produce further. That is because once this free-trade agreement comes into force, our goods can go into one ASEAN country and can then be transformed, changed, and exported to another, and the origin as far as tariff rates are concerned will largely and eventually remain the same.

Why is this important? Let us look at dairy products, for instance. Certainly, some dairy products could have much more value added to them in New Zealand, but in many cases they do not. A milk powder that is exported to Viet Nam, for example, could be turned into any number of other products. Without that country having to show that it has substantially altered the product from New Zealand, the sub-tariff line is changed automatically, so that it can continue to trade with its neighbours. That New Zealand product would be treated as if it was of Vietnamese origin, and there would not need to be any other work done around the rules of origin. I think that New Zealand producers will benefit directly and greatly from this.

I congratulate the Minister and the officials on the work they have done. To my knowledge, these are some of the most flexible and liberal rules of origin. Thank you.

TIM MACINDOE (National—Hamilton West) : I rise to speak in support of and to focus my comments on Part 2 of the ASEAN-Australia-New Zealand Free Trade Area Bill. Unlike most of the other Government and Opposition speakers on this particular measure, I did not have the privilege of sitting on the Foreign Affairs, Defence and Trade Committee as this particular agreement received detailed consideration and as the committee heard from those who had made submissions on it. But it was interesting to hear my colleague Dr Hutchison, a highly respected veteran of the committee, report that some submitters felt that the bill may not go far enough. That is probably understandable, given the perspective of the submitters, but it seems clear that there is pretty broad agreement that the bill—and, in particular, Part 2 of the bill—represents a job very well done and a great step forward for our country.

As we reflect in detail on the provisions of Part 2 of the ASEAN-Australia-New Zealand Free Trade Area Bill I acknowledge again the fine work of Ministers past and present and officials that has culminated in the agreement on this part, which was reached in Thailand in February this year. As has been noted by previous speakers, the purpose of Part 2 is to amend the principal Act to provide for a system of issuing New Zealand certificates of origin in relation to goods being exported to countries that are parties to the agreement that establishes the ASEAN-Australia-New Zealand Free Trade Area. They are important safeguards not only for New Zealand’s producers and exporters in authorising the chief executive of the New Zealand Customs Service to facilitate the authorised issue of New Zealand certificates of origin to goods that will be exported to our ASEAN-Australia-New Zealand Free Trade Area partners but also for those who will import those goods. This part of the agreement gives them the security and assurance of knowing that they can rely on the quality and origin of those products.

As an export-dependent nation, our reputation for quality and reliability is obviously paramount. We can stand up in our corner of the world and be very proud of our long-established record as an honest and quality-focused exporter of goods. Clause 13 of Part 2 of the bill focuses specifically on the issuing of New Zealand certificates of origin currently designated for goods for export to China. The value and projected future value of our exports to China is almost incalculable, and tremendous work has been done on developing those arrangements in recent times. Indeed, the Prime Minister led the mission to China just a few months ago, thereby underlining its continuing importance. I salute everybody involved with that mission for the development of the agreement. The provisions of clause 13 demonstrate how rapidly our trading arrangements are advancing and improving from our perspective.

Hon David Cunliffe: Is there anything the member disagrees with in this bill? Any science to add? Criticisms, perhaps? Why is the member here?

TIM MACINDOE: I say to Mr Cunliffe that I absolutely adore this measure. I am delighted to be here to speak in favour of it. I am so thrilled that he too is enjoying my speech, and I invite him to continue listening while I continue to explore the hidden depths, subtleties, and intricacies of this important measure.

Clause 13 of the bill amends the heading to section 64A of the existing Customs and Excise—

Hon David Cunliffe: It is good to see the member enjoying himself, anyway.

TIM MACINDOE: I am having a great time. I am glad that Mr Cunliffe is also enjoying my speech. It is heart-warming, as we come close to rising at the end of another sitting week, to know that the House is in such a degree of unanimity and agreement. Excitement about an important measure is definitely stimulating and rewarding for me.

We are amending section 64A of the existing Customs and Excise Act 1996 by omitting “China” and substituting the words “a party to free trade agreement”. I am sure that listeners in the crowded public gallery at the moment will be heartened to learn about the evolution of this aspect of the agreement. It creates the criterion that the chief executive of the New Zealand Customs Service must measure applications against before the Customs Service can certify a body to issue certificates. That is a very important provision. It also enables the creation of regulations that will set prescribed terms and conditions for certification, set the criteria, and set the application forms and fees.