Hon SHANE JONES (Associate Minister of Trade) on behalf of the Minister of Trade: I move, That the New Zealand-China Free Trade Agreement Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Foreign Affairs, Defence and Trade Committee, with an instruction to the committee that it present its report to the House on or before 30 June 2008, notwithstanding Standing Order 291(1). I also intend to move that the committee has the authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day in which there has been a sitting of the House, on Friday in a week in which there has been a sitting of the House, and outside the Wellington region on a day on which the House is sitting, despite Standing Orders 192, 194(a), and 195(1)(b) and (c).

The Free Trade Agreement between the Government of New Zealand and the Government of the People’s Republic of China has been negotiated with the overriding objective of opening up economic opportunities for New Zealand business in China. China is New Zealand’s fourth-largest export market for goods, with current exports to China totalling $2 billion. It is also a growing market for New Zealand’s services exports. The agreement represents New Zealand’s largest bilateral trade agreement since the Closer Economic Relations—or CER—with Australia in 1983.

The agreement is China’s first free-trade agreement with an OECD member. Being first assists New Zealand exporters through the removal of tariffs, thereby giving them an initial competitive advantage over other exporters. It has also helped by raising the commercial profile of New Zealand companies in China. The agreement will liberalise and facilitate the trade in goods between China and New Zealand.

Tariffs on 96 percent of New Zealand’s current exports to China will be eliminated by 2019. This equates to an annual duty saving of $115.5 million, based on current trade. Tariffs on over $200 million worth of current exports will be eliminated on the coming into force of the agreement, and two-thirds of all of New Zealand’s goods will be tariff-free within 5 years.

The agreement encourages cooperation between relevant officials, regulators, and technical experts to remove non-tariff barriers to trade. This will also make New Zealand’s exports more competitive in the Chinese market. The agreement sets up a framework for both countries to work towards accepting each other’s technical regulations as being equivalent, and includes a mutual recognition agreement on electrical and electronic equipment that will make it easier for New Zealand exporters of these goods to have their products accepted in advance of arrival as meeting Chinese standards. It will also make it easier for New Zealand regulators to monitor and enforce the electrical safety and compatibility of imported Chinese products.

The agreement also retains New Zealand rights under the World Trade Organization (WTO) to take actions against unfairly traded imports from China, and contains prohibition against export subsidies. The agreement contains measures relating to customs procedures and cooperation that are designed to reduce barriers to doing business between New Zealand and China. Goods entering China under the agreement are required to be released within 48 hours of arrival, and exporters may apply for advance rulings in respect of origin.

The agreement establishes procedures designed to resolve sanitary and phytosanitary issues when they arise, and a framework to avoid such issues arising. In the area of intellectual property the agreement incorporates WTO rights and obligations, so that they can be enforced in a bilateral context. China has also agreed to establish and maintain transparent intellectual property right regimes and systems so as to provide greater clarity.

New Zealand will benefit from China expanding its commitments in services, including education and environmental services. New Zealand will also benefit from provisions to facilitate the movement of business people in China.

In the area of investment, New Zealand will benefit from enhanced national treatment and investment protection provisions, as well as from a most favoured nation non-discrimination provision, to ensure that New Zealand investors remain no worse off than the investors of any other countries. The agreement also provides New Zealand investors with access to binding, third-party arbitration procedures if the Chinese Government breaches the investment provisions.

Legally binding agreements on labour and the environment were concluded in association with the free-trade agreement. These agreements will enhance communication and cooperation on these issues and will help towards meeting the objectives of raising working standards and improving environmental protection.

The agreement supports New Zealand’s objective of broadening and deepening relations with China and its wider trade policy interests in strengthening economic integration in the Asia-Pacific region. The bill enables the agreement to be brought into force. It does so by amending the Tariff Act 1988, the Customs and Excise Act 1996, the Fair Trading Act 1986, the Electricity Act 1992, and the Radiocommunications Act 1989.

Amendments to the Tariff Act 1988 will enable the implementation of preferential tariff rates on imported goods of Chinese origin, and they will enable transitional safeguard measures to be applied in appropriate circumstances on such imports. Amendments to the Customs and Excise Act 1996 will create a system for issuing certificates of origin for goods exported from New Zealand to China. Amendments to the Fair Trading Act 1986, the Electricity Act 1992, and the Radiocommunications Act 1989 will enable compliance by New Zealand with the conformity cooperation agreement, which is an integral part of the agreement.

The Foreign Affairs, Defence and Trade Committee is considering the New Zealand - China free-trade agreement under the international treaty examination process. It will report back on its examination by Friday, 6 June.

To conclude, the agreement represents a significant economic and strategic opportunity for New Zealand. It enjoys strong support from the business community, as illustrated by the delegation of over 200 business and community leaders that joined the Prime Minister and the Minister of Trade in Beijing to witness the signing of the agreement. The Government would like to see the bill enacted by 24 July so that the agreement can enter into force on 1 October 2008, and so that New Zealanders exporters can benefit from tariff cuts effective from that date. I commend this bill to the House.

Dr WAYNE MAPP (National—North Shore) : National will, of course, be supporting the New Zealand-China Free Trade Agreement Bill into law, through all its stages. I suggest it is the most significant bill that this Parliament will be passing during its 3-year period. Would this not be the opportunity that the Government should have taken to sketch out just how significant this agreement will be for the nation, when we are in Parliament with the Minister essentially talking about New Zealand breaking ground on a global scale by being the first OECD country to sign a free-trade agreement with China? In fact, members on this side of the Chamber were very disappointed with Mr Shane Jones’ speech, and disappointed in him for not lifting his vision but simply focusing, in a first reading speech, on minor technical detail.

It is not often that Parliament has the opportunity to pass law that will add hundreds of millions of dollars—even billions of dollars—to the wealth of our community. Virtually everyone in the nation will win on this agreement; almost no one will lose. The reason, of course, is that the growth of China has been the transformative event of the 21st century. Members should remember that barely 20 years ago China was a closed society coming out of the Cultural Revolution and was one of the poorest nations per capita on the globe. Our trade with China 20 years ago was a bare $600 million. Today, in the space of just one generation, China has become a great economic power. It will be a crucial factor in New Zealand’s economic future—of course, not just New Zealand’s but that of the entire planet. China has already overtaken the United Kingdom as our fourth-largest export market. I suggest that as a result of this agreement China will soon be No. 2, or maybe No. 1. It is already the second-largest source of imports into New Zealand. China is, in fact, the second-largest economy in the world. It is the world’s leading manufacturer of consumer goods, electronics, steel, textiles—it is literally the factory to the world.

New Zealand has made a fundamental judgment with this agreement; we accept that China is a free and open market economy. With that freedom—and I want to point this out to those who oppose the agreement—there is a much greater level of personal and social choice for the Chinese people. I am not going to suggest that China is a free society, but it is self-evident that the Chinese people are vastly freer than they were two decades ago. They can buy property, they can travel, and they have a level of access to international media. No one can seriously pretend that China is essentially a closed society. That is why National supports the agreement. We recognise that the economic and social progress in China is sufficient for it to be credible for New Zealand to enter into a free-trade agreement with it.

I remind members that 10 years ago New Zealand was the key promoter of China’s entry into the World Trade Organisation (WTO). That was the most significant gain out of the APEC conference in Auckland in 1999. Who could possibly doubt today the value of China’s admission into the WTO? As a direct result of that, in the last decade there has been an unparalleled increase in global trade and living standards, and China has been the engine that has driven that. So the growth in our country has been crucially dependent on China’s growth. China’s demand has driven up the price of virtually every export commodity. Our dairy farmers are directly wealthier as a result of that. Even Solid Energy, in one mine—Stockton—will generate $600 million of revenue this year. Not one bit of that coal goes into a dirty coal-fired power station; it is all about smelting steel, and members should know that the only way one can actually smelt steel is with coking coal. So our exports do not in any significant way add to carbon dioxide emission increases where there are other options.

We have been hearing the submissions presented to the select committee, and one of the things that struck us is the wide level of support for the agreement. It does not come just from the leading business and agricultural organisations; it comes from right across the board, including virtually every Māori business organisation. One would like to think that the Māori Party, in particular, will have taken that on board. Māori business organisations—mostly iwi based—know that the free-trade agreement with China will boost the wealth and incomes of Māori people. Even the trade union movement understands that important value. The Council of Trade Unions knows that New Zealand’s wealth is dependent on international trade. So why would one vote against an agreement and therefore harm trade? That is what some parties will do today. They will vote against this agreement, and that will harm trade and harm the prosperity of ordinary New Zealanders.

Obviously there are some concerns about the agreement, particularly on political issues surrounding Tibet. I would ask this question to people who oppose the agreement: do they, by their vociferous dissent, want to reinforce Chinese xenophobia? That is the implication, actually, of isolating China. Surely we want to have the opportunity of bringing China more in to the framework of global society. Of course China is not democratic in the way we recognise democracy. Of course it has difficulties in understanding the legitimate aspirations of the Tibetan people. The free-trade agreement does not stop New Zealand raising those issues with China. In fact, I would suggest that it makes it easier for us to raise those issues, because now New Zealand has a privileged level of access with China, and we have greater opportunities to raise those issues with the Chinese Government.

If China follows the pattern of much of the rest of Asia—South Korea, the Philippines, Indonesia, Taiwan, Thailand, and Singapore—it is likely that as China becomes wealthier and as its middle class grows, there will be a greater demand for freedom and democracy. We have seen that happen right throughout Asia, and China, I know—I have spoken to many of its officials and parliamentarians—is looking carefully at the democratic models that those countries offer. China is looking to see whether it can make a transition to a more open, democratic society without endangering its stability. I suggest that the Chinese are learning lessons from South-east Asia in that regard. The constructive engagement of New Zealand with those South-east Asian countries during that time, in the 1990s especially, helped speed up that process, along with that of other countries.

This free-trade agreement sends a much bigger signal than being just an agreement between a country of 1.3 billion people and a country of 4 million people. The New Zealand - China free-trade agreement offers a historic opportunity for the whole Asia-Pacific region. We should bear in mind that this is China’s first free-trade agreement. Everyone accepts that it is a high-quality agreement covering all sectors, agriculture included. After only a 12-year period we will have a full free-trade agreement across every sector. We all know that China is already in negotiations with Australia. They will come to fruition within, maybe, 2 or 3 years. At that point we will have an agreement between 1.3 billion and 25 million people, and, indeed, some of the wealthier nations within the Asia-Pacific region. How long, then, can it be before Japan and Korea find the economic and political need to enter into such agreements? Indeed, that is exactly what the Prime Minister is negotiating this week.

So I ask members to imagine a network of free-trade agreements in the Asia-Pacific region. It will act as an impetus for the full promise of APEC. APEC did have the promise of a comprehensive free-trade agreement covering all economies. This agreement will accelerate that promise. That is the strategic opportunity that this agreement offers. It is not about just New Zealand and China. This agreement is the pathway to liberalising and revitalising free trade throughout the globe, and I suggest that it is that promise over the last decade that has driven prosperity to a higher level than in any other time in the history of the world.

MARTIN GALLAGHER (Labour—Hamilton West) : First of all, I acknowledge the previous speaker, who is, of course, the deputy chair of the Foreign Affairs, Defence and Trade Committee. As chair of that committee, I know we are meeting again this afternoon to continue with hearings with regard to the free-trade agreement, and it is obviously with pleasure that I rise this afternoon to speak in the first reading debate on the New Zealand-China Free Trade Agreement Bill. I also commend the Minister Shane Jones for what I think was a very good, forward-thinking speech.

Hon Tau Henare: Give me a break! Come on!

MARTIN GALLAGHER: I can understand why people, when they watch television or come to the gallery, say that not even on this issue can we be free of the banter. I also acknowledge that there are obviously other parties in the House that have a different point of view, but unlike a particular member at the back and opposite, they are listening with respect to views that they will not necessarily agree with.

I just note the key summary as we see it on this side of the House, and I emphasise what Shane Jones said. The Free Trade Agreement between the Government of New Zealand and the Government of the People’s Republic of China has been negotiated with the overriding objective of opening up economic opportunities for businesses in New Zealand. China is New Zealand’s fourth largest export market for goods, with current exports to China totalling $2 billion. It is a growing market for New Zealand services and exports. Indeed, this agreement represents New Zealand’s largest bilateral trade agreement since the Australia and New Zealand Closer Economic Relations Trade Agreement in 1983, and it is China’s first free-trade agreement with an OECD member. I think that the Minister summed up the huge importance of this bill very well.

I also acknowledge Dr Mapp’s fulsome praise for the New Zealand Council of Trade Unions. That was nice to hear, and I acknowledge that obviously the council, and others, are having to work intently and look at some of the issues affecting workers and industry in this country. As I come from the Waikato, the huge potential for our dairy industry is not lost on me, and I note the support of Fonterra. However, as the chair of the Foreign Affairs, Defence and Trade Committee, I say—and I know that the deputy, who is opposite, would agree—that in our role during the hearings process, notwithstanding that the two major parties in the House are supportive of this bill and the free-trade agreement, we will acknowledge that there is a variety of views, which we have to listen to respectfully, and we have to include some of those views in terms of the report back to the House.

Before I conclude, I just say that this morning we heard very interesting and fulsome submissions from the Seafood Industry Council and from groups such as the Business Roundtable. We also heard from Dr Norman from the Greens, and from Amnesty International. Those are just some examples of the variety of views we are hearing. We will do our best to report those views and nuances back to the House. Also, as a committee we look forward, to use the vernacular, to rolling up our sleeves. Mr Assistant Speaker, you are on that committee as well, and you are doing the hard yards to have this bill reported back, acknowledging that there will be a variety of views in this House with regard to this free-trade agreement and this legislation. Thank you, Mr Assistant Speaker.

JOHN HAYES (National—Wairarapa) : On 7 April this year the Governments of China and New Zealand signed a free-trade agreement that I believe is of absolutely historic proportions, because it demonstrates to the rest of the world that China is willing to drop its trade barriers if other countries will do so as well. New Zealand is the first country to do this with China, and I say to Mr Shane Jones that that is why this is of such historic proportions. I hope that he will pass that on to his friends in New Zealand First. This is an excellent agreement that gives an extraordinary amount to New Zealand in the context of the size of our economy.

I particularly thank the Secretary of Foreign Affairs and Trade, Simon Murdoch, for doing an outstanding job in leading the overall team that has led to this agreement. I acknowledge David Walker and his team for doing the job day by day in many, many long, tedious negotiations.

I think it is worth noting that China is a country 36 times larger than our own—36 times larger. It has a population 300 times the size of ours, and it has growth rates that see its economy double nearly every 7 years. Boy, if only we could have those growth rates in the economy of the Wairarapa, which I represent! By some calculations China is on track to become the world’s largest economy by 2020. But it is still a developing country; China’s economic growth over the last 25 years is probably the largest and most sustained period of wealth creation in the history of the world. In the year 1800—and I want Mr Woolerton to listen to this, because this is why we are signing up to the agreement—China generated 25 percent of the world’s industrial output, but by 1975, with the “head in the sand” policies that the member would have us follow, output dropped to 1.5 percent. Although China is growing rapidly, it is still an immature market. The real prize is 30, 40, or 50 years out from now, and beyond.

I would like just to comment on the question of foreign policy in the context of those people who oppose this legislation today. Foreign policy does not belong to any individual political party. It does not belong to any Prime Minister or would-be Prime Minister, or to any Government. Foreign policy belongs to the public of New Zealand and should, as far as possible, be driven by a considered evaluation of the community’s evolving interests and not by narrow perceptions of domestic political advantage.

In this context we face an immediate challenge in this country of improving our economic performance to retain a greater share of our brightest and best in this country, and they are departing our shores in ever-increasing numbers. We have to stop the relative decline in living standards between New Zealand and our OECD counterparts. To do this—because the Government’s provincial development policies and many other policies are failing—we have to take advantage of our single biggest asset, which is our location on the Asia-Pacific rim, the powerhouse of the world economy. If we are sitting on the rim of the fastest growing part of the planet, and we cannot turn that geographic position into a significant advantage, then there is no one else to blame but ourselves.

The freeing up of international trade over the past 40 years has been a key driver of New Zealand’s economic growth. Global negotiations on a new round of trade liberalisation have been a significant focus and we have been expecting the World Trade Organization Doha round to deliver commercially meaningful outcomes. I personally do not believe that that will happen. Therefore I think we will watch New Zealand move away from global multilateral arrangements, and we will see countries moving into individual free-trade agreements. I say to Mr Woolerton and his colleagues that if they are engaged in an agreement with me, everybody else in this House is excluded; when everybody in this House is excluded, they get no benefit. I tell that member that the single biggest threat to this country is that we are excluded from other free-trade agreements between other countries. This means that at a regional grouping level New Zealand must contribute to the creation of a free-trade area of Asia-Pacific, which is the 21 members of APEC, and to a comprehensive partnership in East Asia, which is the 10 ASEAN countries, plus Australia, China, India, Japan, and Korea. With Australia we must pursue a free-trade agreement between CER and ASEAN. That leaves a major gap in our trade policy architecture at a bilateral level, which is the lack of free-trade agreements with our major trading partners. So this arrangement with China is great and National supports it, but New Zealand needs to establish similar agreements with the USA, Japan, and Korea.

We have to pursue these possibilities with all the energy and resources we can muster, including drawing on the efforts of our research institutes, universities, and businesses. I tell Mr Woolerton that the task will be long and daunting, and will be achieved only by a coordinated “New Zealand Inc.” approach or partnership. Our future well-being depends on it, and that means the future well-being of that member’s, and our, grandchildren. I hope he will start to support this arrangement. Viewed against this background, it should be obvious why the National Party has unambiguously supported the negotiation of this free-trade agreement, and supported its signature.

China’s economic growth for three decades has been exceptional. Millions of people have been lifted out of poverty—and, boy, I have a few to lift out of poverty in the Wairarapa—because China’s pragmatic reforms have unleashed the entrepreneurial drive of the Chinese people. How can we get drive in this country when 75 percent of our families are on family support? What happens when the boss says: “Let’s go and do some work on Saturday and Sunday because we’ve got an export order to fulfil.”? The workers say “No, no—we cannot go on and work on Saturday, Sunday, or any other such time.” Why? Because they will lose the money they get from family support. This Government’s policy is killing entrepreneurship, killing drive, and killing initiative.

Let me come back to China. As China grows, it will need resources to fuel its economy. It will need timber, food, and energy. My colleague talked earlier about Stockton coal. This free-trade agreement underpins China’s growing presence in our region, and I think there is something there to be cautious about and to be aware of. Members will find it in today’s Trans Tasman, which I will seek leave to table at the end of my speech. Let me quote some comments concerning China and its diplomatic trade activity in Fiji: “China is pouring development money into Fiji on a scale which dwarfs New Zealand and Australia. Significantly, the aid is accompanied by assurances of understanding of Fiji’s political situation.” I think we have to embrace China and to work with it in the Pacific, and we have to work with it in our own backyard.

Let me conclude. We have to look at how the Irish interacted in Europe; we can see how they benefited. This free-trade agreement with China will give us access, on reasonable terms. But that is no guarantee of success; like the Irish, we still need to get our tax levels competitive, our infrastructure up to scratch, and our education system delivering graduates. We want to turn trade access into economic success, and that is why my colleagues in this party are supporting this bill with every fibre of their soul. Thank you.

R DOUG WOOLERTON (NZ First) : New Zealand First opposes the free-trade agreement with China. Just in case people do not know, our policy is to oppose free-trade agreements with low-wage economies wherever they may be found. That is for a very simple reason. I have to say we admire China greatly, and we admire the Chinese people greatly. One of the reasons we admire the Chinese is that they know how to look after their people, and they are doing just that. They do not elect governments over there—in fact, they do not elect governments at all—that see their role as looking after New Zealand, Australia, England, Germany, or anywhere else; they know what their job is, and that is to look after China and Chinese people. New Zealand First respects that view, absolutely. We also understand that China sees its job as getting products into China at the lowest cost possible—below world prices in most cases.

When a country forms a free-trade agreement with a low-cost economy it is essentially looking at an emerging market, and those markets do not return the highest value to New Zealand. The countries that return the best value for our products, which are mainly agricultural products at the top end of the scale, are Europe and America. That has always been the case; it is the case now, and it will be the case for years to come. New Zealand First believes that New Zealand should make every endeavour to open up the markets in China, and work has been going on around that. But they are emerging markets, and that means they will cost money to develop. It is all very well to say that New Zealand will have a huge advantage with China, but we will not have that unless we work for it. That will not happen, unless we put money into the market and unless we earn it. There is no free lunch here.

I might point out to people that—

John Hayes: That’s really perceptive!

R DOUG WOOLERTON: It is perceptive, actually. It is something that Mr Hayes missed. It is a fact that New Zealand lowered barriers to China nigh on 20 years ago. So China has had a half a free-trade agreement with us for nearly 20 years. This free-trade agreement is playing catch-up. I point out, before everybody becomes too excited, that it is close to 17 years before China will lower the barriers to a significant degree for our agricultural products going into China.

Pita Paraone: How long?

R DOUG WOOLERTON: It will be nigh on 17 years before that happens. So I do not know what people are getting so excited about. We suggest the work that is being done by our agricultural producers would produce a positive result in that time, anyway. Otherwise they would have been wasting their money. So we believe the free-trade agreement with China is in China’s interests. Before anybody jumps up and down and says that obviously New Zealand is a small player in world markets, I say we know that. We know the trade balance between China and New Zealand. We also know the trade balance between Singapore and New Zealand, and Thailand and New Zealand, and we know that they are growing. The trade balance deficit in the case of trade between New Zealand and China will grow as well, just like with those other two free-trade agreements, because it is simply easier for those countries to get their cheap products into New Zealand than it is for us to get our expensive products into their low-wage economies.

We in New Zealand First are not presuming to comment on anything internal in China. We are not commenting on anything internal in China, be it Tibet or anything else. We are talking just about the advantages that New Zealand is perceived to have with this trade agreement, which are not nearly as great as is painted. If we were to have a free-trade agreement with America, which—dare I say it—my leader is working on as we speak, then we would be trading with an economy that can pay the sort of money that we need for our agricultural products, and likewise with Europe. Then we would be really applauding an agreement such as that. However, we have this agreement with China and we must make the best of it. New Zealand First is putting up its reasons for opposing it and we will be proved right again, but we are not going around slagging off the agreement. We are not putting spokes in the wheel, and if I can say so, to use Martin Gallagher’s words, we are opposing it with respect, because we do not believe it will be in New Zealand’s interests.

We do not believe we are elected here to forge agreements for some wider purpose that might help world trade and that others would take advantage of. We need to forge alliances that make this country wealthier—not open up world trade for China, or anything else. When one looks at what China would seek to gain from this agreement—and it has been touched on by other speakers when they talked about its influence in the South Pacific—we see that it is that here in New Zealand we are a microcosm of an almost ideal little democracy. What we give China, and have always given China—let nobody make any mistake about it—is respect. We give China face. That is what we do for China. It is not about trade as far as China is concerned, because China can pick up, and is picking up, trade everywhere in the world. Mr Hayes himself mentioned that China has something like 25 percent of world trade. We know that. So why is China forming a free-trade agreement with New Zealand? It is because we give China face. This little democracy at the bottom of the South Pacific gives China face. Maybe it is not face to be used in America, maybe it is not face to be used in Europe, but it absolutely is face to be used in the South Pacific. Mr Hayes knows that and so do we. That is what China gets from us. It is not about money; it is about respectability, and it is, more important, about respectability in the South Pacific, which is the area where we have some influence. It is the area where we have huge respect, and it is the area where China intends to make a mark and is doing so.

I think that we will watch this free-trade agreement grow, and we will see that New Zealand First is right. That will not make any difference to anybody. Years from now people will be saying what a wonderful thing the agreement is when our trade deficit has grown by huge percentages. We will not knock the agreement; we will go along with it, but we will point back to these words we have spoken today.

KEITH LOCKE (Green) : The Green Party will be voting against this legislation to implement the New Zealand - China free-trade agreement. On the surface, this bill enabling the New Zealand - China free-trade agreement to go ahead would seem to be a good democratic implementation similar to some of the other legislation we pass in this Parliament. But that is not actually true.

If we look at the reality, we see that the treaty itself—and I have a copy here—is about 10 centimetres thick, and that it has memorandums associated with it; the bill itself is a small, 15-page bill. The average person would ask himself or herself how such a small bill can implement such a huge document. The truth is that although it might technically bring the treaty between New Zealand and China into compliance and enable it to proceed, it does not cover any of the substantive issues in the treaty—the issues that we have been debating in the Foreign Affairs, Defence and Trade Committee this morning, and that we will continue to debate this afternoon.

This bill is just a technical bill specifying definitions of certificates of origin, and with a couple of bits on electrical safety standards, whereas the select committee this morning had the Business Roundtable along to discuss the phase-out of tariffs to zero. None of that is covered in the bill. It is a very controversial, debatable area—in the Greens’ view—in terms of how it will affect what is left of our industry, and how it will undermine what is left of our industry. Then the select committee had members of Amnesty International along, and they did a profound analysis of the inability of this treaty to address in an adequate way labour standards in China; either to improve them or to stop the products of prison detainees—either actual prisoners, or dissenters detained under the “re-education through Labour” scheme that is run in China—from being imported into New Zealand.

Then Russell Norman, the co-leader of the Green Party, presented a submission from the Green Party addressing the fact that the provisions in the investment chapter of the treaty undermine New Zealand’s sovereignty. Such matters as the emissions trading scheme, which Parliament has been debating this week, could be defined under this treaty as indirect expropriation, if it were deemed that the decision of this Parliament on the emissions trading scheme undermined the profits of a Chinese investor here in New Zealand. That matter would go to an international tribunal, which could rule that New Zealand had to pay many millions of dollars of compensation etc. for affecting the profits of that company. As was pointed out this morning in the select committee, the phraseology in the treaty is that measures by the Government of New Zealand that are disproportionate to the public interest can constitute acts of indirect expropriation. There are other provisions about how any State action—or parliamentary action, in this case—has to be reasonably justified. If it is not, a party that considers that it has been offended against—in this case, the Chinese Government—can run off to an international tribunal, which can make decisions that override the sovereign powers of this Parliament.

These are very profound questions, but members will not find anything about them in this legislation that we are debating today. I think New Zealanders will actually be quite upset that their democratic rights are being undermined; that this treaty, which is not actually being voted on by this Parliament, contains penalties for this country, and can directly affect the welfare of the people of this country. It does add insult to injury that we will not have a vote on it. I had a member’s bill on this matter—the International Treaties Bill—a few years back. It was finally defeated in Parliament in 2002. It would have given Parliament the power to approve treaties, which is not the case now.

Annette King, who is in the House today, was answering a question for the Minister of Trade a few weeks back, just before the treaty was brought before the House. I was quite pleasantly surprised at her answer. In my question I said: “the House will not be approving this treaty, because treaties are approved by Governments according to our system, and in that although there will be some implementing legislation, we will see, as was the case with past free-trade agreements like the Thailand - New Zealand free-trade agreement, for example—where the legislation was minimal, and it just stated there would be a preferential tariff and the details would be worked out by Cabinet later—that any select committee involvement is purely advisory?”. The Hon Annette King replied: “No, I do not agree with the member. This House will decide on whether there is a free-trade agreement … at the end of the day. I believe that most members in this House will vote for it.” I thought: “Oh, good, we’re going to get a vote on this treaty.” But when I asked the Minister of Trade, Phil Goff, the same question a few days later, he reiterated that the procedure would be that the Government would decide. He said that all that would happen here would be that the select committee would have a look at the treaty and come up with some report. This very thin legislation is the only chance we have actually to decide anything.

I do not think that is good enough. I think Doug Woolerton, the previous speaker, was quite right. This treaty is about saving face for the Chinese Government. In practice, that is what it is. That might not be the intention of the New Zealand Government, but in practice this treaty provides some credibility to the Chinese Government at a time when it is facing criticism around the world about, particularly, its repression in Tibet. I find it strange that Wayne Mapp in an earlier speech said that criticising what the Chinese are doing in Tibet only creates xenophobia. A chap called Adolf Hitler accused people of xenophobia when they criticised the lack of democracy in his country. I do endorse the good things that the Chinese Government does. I moved a motion yesterday in this Parliament praising the Chinese Government for mobilising support for the victims of the recent earthquake in China. We have to be even-handed, but we must recognise that China is a one-party State that crushes all opposition.

This treaty is about supporting the business elites. It is not about supporting the Chinese people. In the case of the international tribunals that can override our sovereignty, it is the business elites that will be deciding, and will be overriding the diversity of viewpoints in both this Parliament and the world community. Those business elites have a viewpoint that is not necessarily the view of many people on this planet—people in the Green Party, for example, on genetic engineering. If New Zealand’s continuing to ban genetic engineering affects the profits of a Chinese firm in New Zealand that is in favour of genetic engineering, that would be defined by the business elites around the world as being, in the words of the treaty, not reasonably justified, or disproportionate to the public interest.

The treaty that this bill technically implements is not democratic. We need a much more thorough discussion of the implications of this bill and of the treaty as a whole. We may not do that this year, but I think that as the parliamentary process continues, and as the debate on addressing this democratic deficit in our system continues, we perhaps will become more like some other countries where Parliament does approve treaties. That democratic process perhaps would come up with a better outcome than we seem to be heading towards with this treaty. Thank you.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) : Tēnā koe, Mr Assistant Speaker. Kia ora tātou katoa e te Whare. Tēnā koe, taku teina. A few weeks back I got an email that said: “It is very gratifying to hear that the Māori Party will not be supporting the free-trade agreement with China. It is good to know that the Māori Party is actually putting New Zealand first.” That was from a Pākehā lady. And another one has just come in, about half an hour ago. It goes like this: “Tēnā koutou e ngā rangatira”; Greetings to you, o chiefly ones. “He mihi nunui ki a koutou mō ō koutou tautoko i te kaupapa o Tibet.” Very special greetings to you for your ongoing support for the issue of Tibet. “Ehara tō mahi i te mahi ngāwari, heoi anō, ka taea te kite nā koutou i hāngai ki te kaupapa kia tautoko ai ngā tangata o te whenua.” We know that your job is not an easy one, but we can see that you stand fast in support of indigenous people. “Pērā i te kōrero nei,” Just like that old saying: “ ‘he aha te mea nui o te ao?’ ” What is the most important thing of the world? “He tangata, he tangata, he tangata…” It is people, it is people, it is Māori Party people! Tēnā koe.

And that has been the tenor of many of the comments that we have received from around the country on our stand against the free-trade agreement, and from relations of Tau Henare, Shane Jones, and Parekura Horomia on numerous occasions. It seems that after 20 years of privatisation and promises about the so-called benefits of multinational trade agreements, New Zealanders are finally waking up to the fact that although business might prosper, ordinary Kiwis are being squeezed out as businesses up and move offshore to take advantage of lower wages and lower work standards—ordinary Kiwis who worry about the long-term security of employment here in Aotearoa rather than profits in Beijing, ordinary Kiwis who care about the future of manufacturing and processing here in Aotearoa, ordinary Kiwis who are concerned about the lowering of standards of sanitation, biosecurity, and the environment, and ordinary Kiwis who just want a future where their children live in an Aotearoa that they actually still own.

After talking to a few Māori unionists around the country, I believe that it seems there has been a bit of a rebellion within the working class against their union masters for blindly supporting Labour’s free-trade agreement with China when there are clearly no benefits for New Zealand workers in the deal. In fact, when I was talking to Angeline Greensill, the Māori Party MP for Hauraki-Waikato chosen last week, she reminded me that every Māori in this House would most likely be able to record the costs and the casualties when forestry jobs were slashed, when rural post offices were shut down, when the railways were sold and stripped, and when the country’s Crown jewels were flogged off in the early days of corporatisation and privatisation. That turned vibrant communities into ghost towns, devastated generations of hard-working men whose economic futures were wiped out in a flash, forced families to split up for work, and launched the exit to Australia that has turned into a veritable flood of talent away from our shores.

Heck, even Mike Moore, a former Labour Prime Minister and the recently retired director-general of the World Trade Organization, thought so poorly of the way in which the country was being run that he described the Government as being in “a state of disrepair, its dysfunctional and the problems systemic.” He also added, without a drop of sarcasm: “I cannot think of another country in the world which would have a Foreign Minister who opposes what his Prime Minister says is a big deal, the NZ/China Free Trade Agreement. Another Minister says he supports the deal but will boycott a reception.” That is hardly a vote of support from the Government’s primary coalition partners.

Let me repeat what we have said on numerous occasions: we recognise and acknowledge the fact that for some Māori business groups—mainly those in the primary sector—there will be substantial benefits arising from this free-trade agreement, and we encourage them to make the most of the opportunity to grow their asset base. We know of Ngāi Tahu’s successful entry into the Asian markets, of growing Māori farming and fisheries exports to China, and of Māori investigation of Chinese aquacultural practice to assist their own development here. That is great—good luck to them—and we wish those Māori well in their efforts to generate positive dividends for their shareholders.

But what about the other Māori, the great majority of whom are neither business owners nor shareholders? What about them? What about those Māori who work in the manufacturing and processing industries that are already under the gun from Asian competition? What about those Māori who work in the fishing industry and who are already under pressure from Asian workers being paid low wages by Māori fisheries interests? And what about those Māori communities who do not benefit from the trickle-down theories of economic growth, for the simple reason that big business ensures that profits stop trickling down when they reach its own pockets, and that the only trickle left for those at the bottom is the pollution and trash from industries built under such agreements?

There is clearly more to this agreement than simple economics, and that is why the Māori Party reserves the right to make its decisions based on principle rather than simply profit, and on whether we should be focusing more attention on fair trade rather than just free trade. Indeed, the notion of a broader Treaty partnership with trading partners is of huge interest to us in the Māori Party, and we note that there is no recognition of primary Māori principles contained within the free-trade agreement. There is no explicit evidence or requirement at all for consultation with tangata whenua as the Treaty partners. There is no analysis of the impact of the free-trade agreement on the Treaty of Waitangi itself. In fact, the only mention of the Treaty of Waitangi suggests that the New Zealand Government will protect it. That is a great idea, until we realise that the same Government stole our foreshore and seabed, voted to take the Treaty out of legislation, announced that it was taking the Treaty out of the curriculum, tried to sell Māori land still under claim, and refused to support the Declaration on the Rights of Indigenous Peoples. It is hardly the crowd one would vote for to protect one’s Treaty interests.

Then, of course, there are other questions we should be asking ourselves, such as, how do we reconcile our signing up with a trading partner with a poor record in human rights and a reputation for unsatisfactory labour conditions and low wages, and that is the current holder of the title of the world’s greatest polluter? Or do we simply turn our heads and look the other way? Then there is Tibet. If China’s repression of Tibet is any indication of its respect for the rights of indigenous people, then Māori have every right to be wary of giving it any special privileges here. Derek Fox, the Māori Party member of Parliament for Ikaroa-Rawhiti, also reminded me that the people of Tibet are a first-nation people, who continue to suffer every day under the tyranny of a colonial superpower and who have continued to suffer the same loss of land, language, and erosion of culture that Māori people knew of only too well. Mind you, I also liked Judy Turner’s tongue-in-cheek line when she said: “maybe if the People’s Liberation Army can crush the dissension quickly enough, we might be able to sneak over to Beijing, sign on the dotted line, and still gain the plaudits for being the first country, to sign a bilateral free-trade agreement with China”. Is it worth it? That is the question.

Another really worrying issue in this free-trade agreement for New Zealanders is the consequences for our biosecurity, because under this free-trade agreement the import checks applied to animal and plant products are to be carried out in a manner that is “least trade-restrictive and without undue delay”. That is a horrifying thought, given the importance of our agricultural sector to the New Zealand economy.

Finally, there is the gnawing suggestion that this free-trade agreement will not only allow but also even encourage massive growth within the dairy sector—a sector that we already know is having huge adverse effects on water quality, carbon emissions, and our own commitment to the Kyoto Protocol.

Although we are told that there are benefits for Māori from the free-trade agreement, the downside in terms of compromises to our national sovereignty, threats to the status of the Treaty of Waitangi, the impact of low work standards and wage rates, and China’s lack of respect for human rights, indigenous rights, and the environment means that this free-trade agreement with China is simply unacceptable at this time, and the Māori Party will be opposing this bill accordingly. Tēnā koe.

Hon ANNETTE KING (Minister of Justice) : I raise a point of order, Mr Speaker. I am sure that Mr Harawira, the member who has just spoken, did not mean to mislead Parliament or the listening public, but I think on two occasions he claimed that a person outside this House was a member of this House. That is not correct. I do not think that he should continue to do that; anyone in this House could make that claim, but we would be knowingly misleading Parliament.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you very much.

Hon PETER DUNNE (Leader—United Future) : When the sailing ship Dunedin left Dunedin in 1882 with the first cargo of frozen meat, two things changed for New Zealand permanently. Firstly, it was the start of the refrigerated meat trade, which has subsequently been a mainstay of our economy for over 120 years, and, secondly, New Zealand joined the world’s international trade system. As a small, isolated country at the end of the trade routes, we have never, even in our strongest areas, been in the position of being a price maker. We have always been a price taker. We live by our ability to trade and we grow by our ability to get our products into other markets, in order to gain the benefits we can then use to provide the income that generates the revenue we need to fund all of the services that we expect a responsible Government to provide in New Zealand. That has been our history for 120 years, no matter which Government has been in power.

We have gone through some changes, though, in terms of emphasis. Originally it was very easy. We traded with mother Britain. Then mother Britain deserted us and joined Europe—it eloped, if you like—and we have spent the last 30 or 40 years in this country desperately trying to replace the dependence that we had right up to 1973. That is why the network of free-trade agreements we have entered into, right from the time of CER in 1982 through to this New Zealand - China free-trade agreement now, are so critical to this country’s future.

There is another factor why the notion of free trade is important. Initially, as other countries did, we embarked, in a far more polarised world, on a series of bilateral agreements. What could we do with this country? What advantage could we achieve? Now, in a globalised environment, where telecommunication and the speed of transport have never been greater, we simply cannot survive by having a series of one-on-one bilateral agreements. The world is catching up and the challenge for a small, isolated country is greater than it has ever been before. That is why the very concerted move that the last two Governments have made to boost New Zealand’s standing in the world through the conclusion of a range of free-trade agreements—and this is but the latest—is a good and positive step. United Future, as a free-trade party, supports those initiatives because they are what is good for New Zealand.

When I look at this bill, I see that it follows the same broad format as the agreements that have already been entered into over the last few years. This is by far the biggest and the most important agreement, because it is with our fourth largest trading partner, and the benefits to New Zealand are substantial. There will be billions of dollars’ worth of gain for our economy over the duration of this agreement. No New Zealand Government, whatever its colour, can afford to give up that possibility in the interests of the welfare of our people. Yes, issues will arise in terms of areas where China is more competitive than we are, but the challenge we have always had, no matter what the market, is to improve our productivity and to boost our competitive edge, and that challenge is no different with the conclusion of this agreement.

So I have little truck with those who say that somehow we have sold out our sovereignty to China. If that were the case and if that were the issue, then we sold out our sovereignty the very first time we ever traded with anybody, because trade is essentially a compromise. I have something to sell, someone else has something he or she wants to buy, so what do we agree is a reasonable price? The trade agreement with China is that notion writ large over a whole range of products, and those who try to pretend that it is something else simply miss the point.

I want to make one other point in respect of this agreement. We are entering into an economic relationship with China. That is good and that is positive, and it will be beneficial to both economies in relative terms of scale. It also means, inevitably, that there will be political consultations of a closer nature between our two countries. I make no apology for having taken the view—I have said it in this House, and I am repeating it today—that we ought to be using the advantage that the newer political relationship will create to push home with more force than ever before our concerns about China’s blatant disregard for the human rights of its own people. Mr Harawira referred to China as the world’s greatest polluter. That is certainly true. It is also the world’s greatest executioner and murderer of its own people. We ought to be taking the opportunity provided by the fact that we now have a close economic relationship to strengthen our political relationship, and to make these points—as successive foreign Ministers have always told this House they make—even more strongly to China.

I make no apology for not going to Beijing for the signing of the free-trade agreement, because I have no truck with what China is doing in Tibet at the moment. I think for Mr Moore to try to draw some sinister allusion from my absence at the signing, when probably no one would have noticed I was there, is simply extreme in its most bizarre form. I take no notice of him, either, and I note that the world trading community did not take much notice of him; he served the shortest term of any director-general of the World Trade Organization.

When the China free-trade agreement is signed, we have to be very careful that it does not stop there. There are other countries in Asia that we ought to be looking to. The Prime Minister is in Japan at the moment and, apparently, if one believes the overnight media, some small progress has been made in terms of our economic relationship with that country. That is good. We have burgeoning relationships with Viet Nam. We have a strong relationship with Taiwan. We have good relationships with various other countries around that Asian fringe, and we need to be developing our relationships more strongly and constantly with all of them.

A couple of years ago the Asia New Zealand Foundation hosted an international seminar in this building. One of the distinguished speakers, a professor of economics from India, made the very valid point that India and New Zealand were, to use his phrase, the bookends of Asia. The challenge for us is to engage. The challenge for us is to be part of the world that we profess to have an interest in, the region that is of concern to us. We cannot do that while we bring down the shutters on any form of international engagement in trade. It does not mean that we compromise our basic principles. We need to state them more loudly, more vociferously, and more clearly than ever before. But it does mean we engage, we trade, and we work at an economic relationship that is of benefit to both of us.

I see this bill very much as a continuation of the trend that successive Governments have followed, right from the time the Rowling Government, back in 1974-75, opened up discussions with the then regime in Iran about meat and petrol. It is the same fundamental issue. It simply changes its complexion from time to time. But New Zealand always has to be one of the smart nations because we are so small and so isolated. We need to be in a position where we can take advantage of the opportunities that present themselves. We are smarter and better than most if we apply ourselves fully, and these sorts of agreements provide the opportunity for us to do so.

There are immense chances for this country arising out of this bill. It does not mean we compromise our values or our principles. But it does mean that we make a stand in favour of New Zealand’s economic progress. Yes, there are opportunities for China to invest in New Zealand. There are also significant opportunities for New Zealand to invest in China, and significant opportunities for the mutual export of technological advantage, for exchanges between peoples, and for the knowledge base in both economies to be built up. That has to be good for all of us.

United Future supports this free-trade agreement. We want to see New Zealand take a much more, if you like, open-ended political relationship with China as a result, and be less cowardly than perhaps we have been to date, in terms of not wanting to upset that country. This is a huge economic opportunity, and it would be irresponsible for any Government and any Parliament to turn it down.

Hon LUAMANUVAO WINNIE LABAN (Associate Minister of Trade) : Kia ora, talofa lava, ni hao, and warm Pacific greetings. It is my pleasure indeed to speak in support of the New Zealand-China Free Trade Agreement Bill. This bill will enable the free-trade agreement to be brought into force by making the necessary amendments to the appropriate legislation around tariff rates, issuing of certificates of origin for goods exported from New Zealand to China, and compliance by New Zealand for the conformity cooperation agreement.

The signing of the free-trade agreement is an enormous and historic achievement for New Zealand and our Labour-led Government. We are the first developed country to negotiate such an agreement with China, and we are extremely proud of this. China is the world’s fastest-growing economy, and one of New Zealand’s fastest-growing export markets. It is an agreement that is strategically important for New Zealand’s economy and it is of real benefit to Kiwi businesses. The elimination of tariffs on 96 percent of New Zealand’s exports to China gives a distinct advantage to businesses here that are looking for opportunities in China.

Many of our business leaders have commented how supportive they are of the free-trade agreement with China. Let me give a couple of quotes. Phil O’Reilly of Business New Zealand said: “It is a very good deal. It is actually more comprehensive than most of us had hoped for.” Of course, Ngāi Tahu’s general manager, Geoff Hipkins, whose tribe’s fishing arm exports more than $100 million of live lobster to China and large amounts of pāua, said that the deal had amazing potential: “The sky’s the limit really.” In my Mana electorate, the Porirua City Council and Business Porirua are already talking with their sister city in China, Yangzhou, and of course they are looking at trade missions. The local is global. I want to thank the Hon Phil Goff and I thank New Zealand and China for the vision.

Hon BILL ENGLISH (Deputy Leader—National) : Along with my colleagues I rise to support the further progress of this legislation on the free-trade agreement with China. The events of the last couple of months sum up our sometimes ambivalent attitude, as reflected in this debate, to China and its opportunities. On the one hand, there has been a great deal of concern about the way in which the independence movement in Tibet has been dealt with. On the other hand, we cannot help but empathise with those tens of thousands of people who have been caught in a major earthquake in China. The pictures of it are transmitted to us every day. It makes the Chinese people more real than do some of the generalised ways in which we have thought about them in the past.

This free-trade agreement has, I think, been something of a challenge for many New Zealanders. They have had to understand from their own points of view the right balance between the opportunities that are created by the fastest-growing economy in the world—certainly the one with which we have the closest connections—on the one hand, and on the other hand the underlying concern that if we get too close to the dragon, then some harm will come to us.

I was pleased to see that the Government did not resort to its knee-jerk reflexes, which it demonstrated in recent months when a Chinese company bid for the lines company in Wellington. There was a time when that move may have been very controversial, but for once Labour was a bit responsible in the way it dealt with it. I have to say, though, that I am still somewhat bemused that Labour regarded a Canadian bid for part of Auckland airport with a great deal of hostility, and perhaps political opportunism, yet it showed almost no interest in what was happening with the Chinese bid for our power lines.

This free-trade agreement will be one of the ways in which New Zealand gets used to a permanent and growing aspect of its future—that is, a relationship with China, which has a culture completely different from our own, but which is also well represented here in New Zealand. I hope that this agreement will encourage New Zealanders and New Zealand businesses to see the local Chinese community in a new light as a strategic asset, as a group of people who know well and understand well the fastest-growing economy in the world, and also as an economy that has volunteered to lower its barriers to our products. Any scrutiny of the detail of this agreement shows just how far the Chinese Government has gone in lowering its barriers to our products, including a whole range of tariffs applying to forest products, dairy, meat, seafood exports, fruit, vegetables, and wool. Barriers to selling those products to China will virtually disappear, in some cases, over the next 10 years.

As my colleague Luamanuvao Winnie Laban just said, the global is local. In my own community I have a large sawmill that has traditionally sold sawn timber to factories in China that produce toilet seats. There is absolutely no doubt that if that arrangement is still in place when this free-trade agreement comes into effect, then the people in my electorate who are competing in the global economy will do much better out of it.

We acknowledge the efforts of the Government and its trade negotiators in obtaining what has to be seen as a good deal for New Zealand. It is a deal that, hopefully, China will strike with other countries. It has also set a standard for the kinds of agreements New Zealand might itself seek from other countries.

It is quite important, in the light of this agreement, for New Zealanders to take more than an ambivalent view about overseas investment in New Zealand and New Zealand investment overseas. All the economic evidence tells us that if we are open to overseas investment here, then we will get better at investing overseas, because we learn how people do business differently and we learn new methods and new technologies. The growth of this economy, our economic prospects, and the prospects for the wages and incomes of New Zealanders will be critically determined over the next decade by our attitudes towards the opportunities created by this free-trade agreement and by our attitudes towards people who want to invest in New Zealand. In both cases we ought to be positive.

There is no doubt that this free-trade agreement will create a beachhead in China that we must exploit. If we are to have a step-up in New Zealand’s economic performance, then certainly part of that step-up will come from a successful export sector selling at higher prices in markets that are willing to pay those prices. We see the early signs of it with the big impact that the demand of the Chinese middle class is having on food prices: food prices that we have traditionally assumed would always go down are going up. That signals to us the scope and size of the opportunity that this free-trade agreement represents. National is happy to support the further progress of this bill.

Hon MARYAN STREET (Minister for ACC) on behalf of the Minister of Trade: I move, That the New Zealand-China Free Trade Agreement Bill be referred to the Foreign Affairs, Defence and Trade Committee, that the committee finally report to the House on or before 30 June 2008, notwithstanding Standing Order 291(1), and that the committee have authority to meet at any time while the House is sitting except during oral questions, and during any evening on a day on which there has been a sitting of the House, on Friday in a week in which there has been a sitting of the House, and outside the Wellington region during sitting of the House despite Standing Orders 192, 194(a) and 195(1)(b) and (c).

• Motion agreed to.