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Tariff (AANZFTA) Amendment Bill, Customs and Excise (AANZFTA) Amendment Bill — Third Readings

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Tariff (AANZFTA) Amendment Bill

Customs and Excise (AANZFTA) Amendment Bill

Third Readings

Hon CHRISTOPHER FINLAYSON (Acting Minister of Trade) : I move, That the Tariff (AANZFTA) Amendment Bill and the Customs and Excise (AANZFTA) Amendment Bill be now read a third time. The ASEAN-Australia-New Zealand Free Trade Area Bill was referred to the Foreign Affairs, Defence and Trade Committee on 28 April. The committee recommended in its 15 May report to the House that the bill be passed with no amendments. Since then, the bill has had its second reading, on 24 June, and went through the Committee stage on 25 June. The legislation was then split into its two present parts, after the debate in the Committee of the whole House. The two parts should be read together today.

This legislation amends New Zealand’s domestic legislation so that New Zealand can be ready to enter into force the ASEAN-Australia-New Zealand Free Trade Area agreement by the target date of 1 July 2009. The agreement is a significant achievement for New Zealand, because we are so dependent on trade for our economic well-being and prosperity. The current global economic crisis and the protectionist sentiment it has fed has made gaining and maintaining access to valuable and dynamic export markets, such as ASEAN, more critical to New Zealand firms than ever before. Improving market access for New Zealand firms through trade agreements such as this agreement ensures we can continue to stimulate economic growth and help safeguard the jobs of the many thousands of New Zealanders who work in or who support export-oriented industries. There is a growing body of evidence that backs this up. Recent OECD data suggests that a 10 percent increase in trade is associated with as much as a 4 percent rise in per capita income.

This agreement, like all of our trade agreements, is about facilitating trade by negotiating an environment that makes it easier, more profitable, and more predictable for New Zealand businesses to enter markets and then do business in those markets. As a market of more than 566 million people, ASEAN is an increasingly important destination for New Zealand goods, service suppliers, and outward investment. The immediate trade benefits of the agreement are clear for all to see. ASEAN has now become New Zealand’s third-largest export market for merchandised goods, and those were worth NZ$4.6 billion in the year to June 2008. Our trade has grown at a staggering 24 percent per year over the last 3 years, with seven of the ASEAN member countries now featuring in New Zealand’s list of top 30 bilateral trading partners.

The agreement also represents the first time ASEAN has negotiated a comprehensive free-trade agreement as part of a single undertaking. That means it includes trade in goods and trade in services and investment, as well as the other subjects that are covered in a modern free-trade agreement, such as protection of intellectual property and competition policy. In the area of goods exports, the outcome that the Government has secured is a very good one indeed. Within 12 years, 99 percent of New Zealand’s current trade with Indonesia, Malaysia, the Philippines, and Viet Nam will be duty-free. For New Zealand businesses operating in those markets, this is a major advancement in terms of their market access into those major and growing markets.

But the agreement does more than simply address tariff lines for merchandised trade. For New Zealand exporters in the services sector, the agreement also represents real gains in New Zealand’s priority service sectors, including education services. New Zealand investors and their investments will benefit from the new and additional protections for their investments into the region, including through the potential for recourse to binding investor State arbitration procedures. The agreement includes a disputes settlement framework to resolve any trade-related disputes that may arise between New Zealand and its ASEAN partners.

In addition to this agreement, New Zealand has also concluded legally binding agreements on trade and labour, and trade and environment, with the Philippines. Those outcomes build on existing instruments on these issues with other ASEAN partners Thailand, Brunei, and Singapore, and ongoing work with Indonesia and Malaysia.

The difficulty of successfully negotiating a free-trade agreement simultaneously with 10 very diverse members of ASEAN should not be underestimated, so I acknowledge the efforts of officials, previous Ministers of Trade, and all of the stakeholders who have contributed to this very good outcome. I acknowledge and thank members of the Foreign Affairs, Defence and Trade Committee for their consideration of the legislation, and I thank those who submitted to the committee.

The legislation we are voting on today is relatively straightforward. It mirrors both in structure and content what was done for previous free-trade agreement legislation. It amends two Acts: the Tariff Act 1988 and the Customs and Excise Act 1996. The amendments to the Tariff Act allow for the application of the preferential tariff rates made under the ASEAN-Australia-New Zealand Free Trade Agreement to other parties of the agreement. Amendments to that Act also allow for New Zealand to apply transitional safeguard measures in certain circumstances on imports from the free-trade agreement party countries. Amendments to the Customs and Excise Act are required to provide for a system to enable issuing bodies to issue the necessary certificates of origin. These certificates will be required by exporters to establish that they are eligible to receive the preferential tariff rate in the free-trade agreement importing country. Subsequent to the passage of this legislation, implementing regulations will be required to implement the preferential rates of duty and the rules of origin.

The ASEAN-Australia-New Zealand Free Trade Area is a significant economic and strategic investment for New Zealand, in line with this country’s fundamental trade priorities. Our priority as a nation depends on our ability to trade and invest in the world market. We also depend on rules to govern trade and remove barriers so that our traders can fairly compete. These are among the goals of the agreement, which will benefit New Zealanders. I understand that the legislation is supported by a majority of the members of the House. I commend this legislation to the House.

Hon MARYAN STREET (Labour) : It is with great pleasure that I rise to speak again in the debate on the ASEAN-Australian-New Zealand Free-Trade Agreement—this time, for its third reading. This is an important moment. In the third reading, I will simply recap four essential points that I and my colleagues have already traversed in the course of the first and second readings of the ASEAN-Australia-New Zealand Free Trade Area Bill, which has been divided into the Tariff (AANZFTA) Amendment Bill and the Customs and Excise (AANZFTA) Amendment Bill.

First, I reiterate the opportunities that this free-trade agreement confers on, and provides for, the New Zealand economy. As was noted already, the ASEAN free-trade area includes markets of some 566 million people. It is a 12-country agreement. If we take out our chief trading partner, Australia, and concentrate on the 10 ASEAN nations, we see that we have an extraordinarily large market for which we can produce goods.

It is important to note in this third reading that sometimes there have been difficulties presented with free-trade agreements, and I will traverse two of those difficulties very shortly. I just say that the pedigree of this agreement reaches back to the time of Jim Sutton, and to him all credit is due. It proceeded from him into the care of Phil Goff, and to him all credit is due. It was finally signed and delivered into this House by the Hon Tim Groser, and to him all credit is due. This free-trade agreement has been a long time in the making and it has been worth waiting for. It allows our export producers in New Zealand access, on favourable terms, to markets of enormous size. Even when the global economy is faring badly, there is still room in these ASEAN markets for growth in New Zealand’s exports. Even a small percentage increase in growth for New Zealand exporters can be relatively easily achieved over time through this agreement.

The second point I make is that some of the obvious benefits of this agreement come from its scope. It covers goods, services, and investment, and, on that basis, it provides enormous scope for exporters, and not just commodity exporters but service providers and exporters as well. As far as goods are concerned, clearly, New Zealand will benefit from the elimination of tariffs—within 12 years—on 99 percent of New Zealand’s current exports to the four largest markets in the ASEAN grouping. Those markets are Indonesia, Malaysia, the Philippines, and Viet Nam. On full implementation, this agreement will equate to a saving for our exporters of some $50 million, even if exports to those markets were to remain static—in other words, on current export numbers. A saving of $50 million is something that our exporters, particularly our food production exporters but others besides, are looking forward to. For example, by 2010—and that is very quick in the process—tariffs will be eliminated on dairy products exported to the Philippines. As far as meat and wool are concerned, tariffs on New Zealand’s key beef exports to the Philippines will be eliminated by 2012, and to Indonesia by 2020. Over the 12-year period that sees those tariff eliminations rolled out—country by country, and year by year—exporters will see improved savings for their industries and their operations. That is very significant.

The effect of the agreement on services will also provide some critical outcomes for New Zealand. The number of services that are included in this free-trade agreement is quite remarkable: not only do we have business services, the usual things that one might expect, such as legal services, accounting services, and so on, but also we have communication services, construction and related engineering services, educational services, environmental services, health-related and social services, tourism and travel-related services, and so on—there are more besides. That list, although not exhaustive, indicates the breadth of this piece of trade architecture.

The third thing that is important in the scope of this agreement is the investment outcome for New Zealand investors. Essentially, this free-trade agreement provides additional protections for New Zealand investors in the ASEAN countries. Those protections include protections from arbitrary expropriation, and compensation for losses owing to armed conflict, civil strife, and so on. Those protections are of comfort to New Zealand investors.

There are two other points that I want to make. My first point went to the opportunities that this free-trade agreement provides. My second point went to the scope of this agreement. My third point relates to something that I talked about in some detail in the second reading, and that was that some concern has been expressed by critics of free-trade agreements about arrangements with Burma. I reiterate that the level of trade that New Zealand has currently with Burma is minimal, and none of it is in any way an obstruction to the registering of our profound concern about, and condemnation of, the regime in that country. We are obliged by other regulations to recognise Burma as one of the world’s least-developed countries. It has that status, and, therefore, automatic access in some respects, particularly with regard to quota protection, to New Zealand. However, that relationship remains fraught for us, and our ability to be critical of that regime is not interfered with by this free-trade agreement.

My final point—and it is one that I think one of my colleagues will pick up on later, as well—is the preparedness of New Zealand Trade and Enterprise to invest in ASEAN markets to facilitate the reach of New Zealand export companies and export industries into those markets in order to maximise the opportunities that this free-trade agreement provides. We heard this morning at the Commerce Committee the Minister responsible for Vote New Zealand Trade and Enterprise say that there was not any reduction in the offshore capability of New Zealand Trade and Enterprise. The point remains, however, that if we are to maximise the possibilities, New Zealand Trade and Enterprise needs to have a plan for increasing its capability in the ASEAN markets.

JOHN HAYES (National—Wairarapa) : The Tariff (AANZFTA) Amendment Bill and the Customs and Excise (AANZFTA) Amendment Bill were created from the ASEAN-Australia-New Zealand Free Trade Area Bill by the Committee of the whole House. The legislation went through the Committee of the whole House with only minor procedural changes.

As I have sat here this afternoon listening to the erudite speeches from my colleagues on both sides of the House, I reflected on what, if I was a constituent in, say, the Wairarapa electorate, this would do for me. I say to the sheep farmers to the east of Pahīatua, to the dairy farmers in the south of the Wairarapa and north into the west of Dannevirke, that they will all be better off because of this legislation. I say to the grape-growers and the kiwifruit-growers that they will all be better off because of this legislation. I say to the companies near Dannevirke, like Metalcraft Industries, and to the companies in Masterton that are actively engaged in producing, for example, things like axe heads, or monitoring the weather situation in vineyards in New Zealand and many parts of the globe, that they will all be better off because of this agreement.

This legislation will amend our domestic laws so that New Zealand can enter the ASEAN-Australia-New Zealand Free Trade Area on 1 July 2009. The legislation amends the Tariff Act 1988 and the Customs and Excise Act 1996. I regret to say to the winegrowers in Martinborough that, no, it will not reduce their excise tax obligations! We are doing this so that New Zealand can comply with its obligations under the agreement that has been, as colleagues have pointed out, under negotiation across three Ministers and for a good 9 or 10 years. The agreement requires New Zealand, Australia, and four ASEAN countries to tell each other that they have completed the domestic procedures for the agreement to come into force—yesterday. As has been pointed out, the agreement was signed in Thailand in February. It came through our Foreign Affairs, Defence and Trade Committee—and I thank my colleagues for their constructive contributions there—and I also say to the House that all the submissions we received were positive and supportive, particularly from organisations like Fonterra and other companies that are actively engaged in export.

Hon Pete Hodgson: What about Jane Kelsey, John?

Hon Maryan Street: Did you read Jane Kelsey?

JOHN HAYES: Jane Kelsey had a different view, but that was quite predictable and it has been known to this House over many, many years. In a democracy people are allowed to have alternative points of view. But then Jane Kelsey is not actively engaged in exporting, so I will leave that there.

The agreement is important because the ASEAN countries are close to New Zealand. As has been pointed out there are just under 600 million people—566 million people—in the ASEAN region and it is an important existing trade partner. What is really important is our ability to increase our trade to those countries, and if we are going to lift ourselves up the OECD ladder, we really have to do that. We have to increase our trade, and Fonterra is reporting to us that despite the difficulties over melamine in China, our exports to that country are strongly growing. China is not a member of this agreement, but it is in the general region and what is going on in China is reflected elsewhere in the region, which is why the Government has run a trade surplus of $860 million in the last month. When we think about countries like Burma, I think New Zealand can also assist those countries to move forward because of their closer economic relationship with ourselves. I think there have been significant trade increases between New Zealand and the ASEAN countries as a result of developing strong relationships and also removing barriers to trade. A colleague just asked me whether this would impact on our beef exports to Indonesia, because of the halal slaughter requirements. That issue is not caught up in this framework, except that the framework provides a mechanism for New Zealand to sit down with the other countries that are signatories to this agreement and engage in a dialogue to resolve potential difficulties between us. Doing that enables a much greater certainty in our trade relationships, and it gives a degree of confidence to our businesses by minimising the risk they face in engaging in trade with other countries.

The agreement will also enable us to jointly develop opportunities in trade development and service delivery where working together would reduce costs, increase speed and efficiency, and help develop knowledge, skills, and resources across a range of countries. All this becomes much more important in an environment where we are facing a significant economic downturn and recession because although some companies, including in my own town Bouzaid and Ballaben, have run into difficulties, by signing this agreement we are opening up new opportunities for a whole lot of new companies. One thing for sure is that jobs are lost but jobs are created as an economy moves forward. This agreement will also open doors for investment and the provision of services where New Zealand is currently unable to meet demand.

As other colleagues have pointed out, the agreement with the Philippines on trade and labour and trade and the environment provides certainty that human rights and environmental standards that we value are maintained by our close trade partner. It is also very important in my electorate that we have this arrangement for engaging in labour, because Filipino people are playing a very strong role in our dairy sector—particularly so in my electorate.

The agreement will move us forward and open the door for future developments as we look ahead. It means that New Zealand will be well placed in the centre of these developments. As I said in our select committee it is very clear that this agreement has huge support from our business community. As I said some time ago in this House, Asia had an annual growth rate of around 6 percent in 2008. But from 1980 to 2008 Asian GDP multiplied by four times, China’s GDP multiplied by three times, and India’s GDP multiplied by three times. In the same period Europe’s GDP multiplied only twice. Asia’s share of world trade has climbed from 16 to 28 percent in that period. Over the same time period America managed only a 21 percent market share, and Europe’s market share of world trade declined from 28 to 20 percent. What we are doing with this agreement is locking ourselves into a part of the world that has the potential to grow very quickly. That has to be a reason for improving the prosperity of every entrepreneur in this country, every business in this country, and every employee in this country. With those words I thoroughly commend the bill to the House. Thank you.

Hon PETE HODGSON (Labour—Dunedin North) : It is my pleasure to take part in the third reading debate on this legislation, and Labour members warmly support it. I will begin by doing what is now almost cultural in this Parliament, which is to acknowledge the work of previous and present Ministers of Trade in getting quite a complicated agreement done and dusted. I will also depart a little from the culture of this country by saying that we really need to acknowledge the work of officials. They are the guys who do the hard yards in terms of the negotiation. They are pretty clever people—some of them are very clever—and we would be a poorer nation without them. Let us get that on record. I am sure there is wide agreement on it.

A very small note of discord that I mention in passing is that the current Prime Minister of the land has said sort of negative things about the previous Minister of Trade, the Hon Phil Goff. The Hon Phil Goff has thick enough skin to manage that; there is no problem at all about that. But it shows that sometimes—if we are not careful—we can be a little graceless.

The breadth of the agreement has been outlined by previous speakers—particularly my colleague the Hon Maryan Street—so I do not want to go back over it. But I will say that in the recent burst of free-trade agreements, China and ASEAN rise as very big changes on our exporting landscape. I want to contrast our approach to each of them. It is not a fair comparison in one sense, because the ASEAN agreement involves many nations, and China is one huge nation. But the difference between the way that we have approached the aftermath of the free-trade agreements is worth reflecting on.

In the case of China, we did pretty much all that one could or might expect to do. There was a lot of ceremony about the agreement. There were a lot of trade missions around the ceremony about the agreement. There was a great deal of media coverage of the agreement. There was a retooling of New Zealand Trade and Enterprise’s presence in various parts of China as it sought to extend its focus into that country in light of the free-trade agreement. A Beachheads was set up in China. There is ongoing research and development collaboration with China. And on and on it goes.

But none of that has happened, and I expect none of it will happen, in respect of the ASEAN countries. That is a shame. Of course, it need not happen with all of those countries; some of them have smaller economies than others. With some of them we already have a free-trade agreement; the job is done. But for many of the countries—particularly Indonesia, Malaysia, the Philippines, and Viet Nam—we have an opportunity that we have not seized.

The reason we have not seized it came out in this debate when the person who began the debate, the Hon Christopher Finlayson, reminded us of how Fonterra will make progress because of the free-trade agreements, and of how the meat industry will make progress because of the free-trade agreements. The chair of the Foreign Affairs, Defence and Trade Committee, John Hayes, made similar comments. Although John Hayes managed to mention axe heads, weather sensors, and other businesses in the electorate of Wairarapa, which he has the current privilege to represent, the fact of the matter is that National assumes that business will follow function, that business will follow the signing of the free-trade agreements, and even measures how much it expects. What is apparent from those comments is that no further central effort is likely, which is a shame.

We heard from the Hon Maryan Street that under interrogation in the select committee the Minister responsible for the New Zealand Trade and Enterprise budget said there would be no cuts. Well, whether or not that is true, it ain’t good enough. It ain’t good enough. A recession is going on, and it is really important that we do not let a good recession go to waste. Probably an emerging difference across the House is that people on this side of the House would be much more inclined in a recession to put emphasis on and investment into skills, to put emphasis on and investment into what might be called innovation, and to put emphasis on and investment into trade.

I acknowledge the significant increase of investment in the Export Credit Office. I freely acknowledge that and congratulate the Government on that move. It is a good move. The Export Credit Office was opposed by everyone when it was set up. It was opposed by National, as well as by Treasury and God knows who else. But that is in the nature of things. It is now part of our fabric, and National has backed it with some cash. That needs to be acknowledged. But that is where it stopped, which is unfortunate. It is really unfortunate.

I think there is a case for trade missions, I think there is a case for a programme of development, and I think there is a case for increasing New Zealand Trade and Enterprise’s presence in those areas. I think there is even a case for extending beachheads beyond Singapore. There is certainly a case for saying that we need to pay attention to the countries where we think the increase from the free-trade agreement in trade is likely to be the greatest, and that we should not take the position that it is OK now to sign an agreement, to ring up Fonterra, and to tell it to make the best of it. You see, this country cannot be an economy built on dairying and tourism alone. That will not work. Just as we need a broad range of markets, which is why this free-trade agreement is so important, we need a broad range of exports. And we do not have that. ASEAN is an opportunity for us to improve a little on that.

Our exporters are a pretty gallant lot. They choose to spend a lot of time on aircraft, a lot of time away from their businesses and from their homes. Very few of them are exporting large quantities. There are very few large exporters in this country. It is important that we give small and medium-sized exporters the opportunity to grow. Not all of them will want to take part in any trade mission, will want to use the services of New Zealand Trade and Enterprise, or will want to use the services of a Beachheads to be established in Jakarta, for example. Not all of them will, but some of them will. We in Government should be there to offer support to those businesses that want to access them, but we are not doing so.

I am sorry that this is a negative contribution to a free-trade debate, but I think that we are wasting some opportunity here, and that the Government ought to think carefully about whether that is a smart thing to do. Free-trade agreements of this ilk come along but once. They come along but once. There is an opportunity that goes by once, but I think we are letting that opportunity pass us by. We are not seizing the totality of it by any means. So I am asking the Government—and the next National speaker may wish to respond—whether it thinks that it has maximised the opportunities of this free-trade agreement, because I certainly do not.

Dr KENNEDY GRAHAM (Green) : I rise to convey the views of the Green Party in the third readings of the Tariff (AANZFTA) Amendment Bill and the Customs and Excise (AANZFTA) Amendment Bill. My mind goes back in the first instance to the first reading of the original ASEAN-Australia-New Zealand Free Trade Area Bill, in which I participated. I was disappointed to miss the second reading, but I have since been through the records of the second reading and the Committee of the whole House quite carefully.

I wish to engage the two main parties, National and Labour, which, I have to say, should be regarded in this debate and on this issue—and not for the first or only time—as a conjoint political establishment best regarded as “NatLab”. Their views can be seen in contradistinction to those of the Green Party.

In the first reading, Pete Hodgson sought to engage the Green Party in a debate on this matter, and that was something I appreciated. I responded by identifying four concerns that we held, and, subsequently, we developed a fifth concern in the course of the select committee, which was also conveyed in our minority report. Those concerns were genuinely addressed in response by National members and Labour members, and we appreciate that. In fact, a debate was joined, and I see it as ongoing. I also see these particular third readings as simply one further step in a broader debate that is to be had, and that will not terminate immediately, on the issue of free trade more generally. I appreciate the comments made in the first reading by National members Dr Hutchison, Mr Macindoe, and Mr Finlayson in particular, and, from the other side, by Mr Hodgson, Maryan Street, and Mr Robertson.

The House is on notice that the Green Party has expressed these concerns, but, at the same time, we did say that we are not anti - free trade per se; it is just that we require that free trade meets certain fairly stringent standards that we appear to put at a higher threshold than the other two major parties do. I ask myself whether there is anything on which National, Labour, and Green can unite, and I think the answer is, well, yes. In terms of a very broad and idealistic vision of a future world, we no doubt can unite. I think all three parties can unite in a vision of a global economy that meets three standards: firstly, that global economy has to be based on green trade, pertaining to both the production and the freight of goods and services that are completely sustainable; secondly, there needs to be completely open trade—total free trade—and, thirdly, that trade needs to be fair, not only in respect of domestic producers and finding a natural balance of their activities in every country in that regard, but also in terms of political harmony around the world in our trading relationships with other parties. So we are united on three broad criteria for a future ideal global economy. We could call it green, open, and fair, or, by way of acronym, “GOF”. It would be the “GOF” vision, but let us recognise that there is only one “F”. If we had another “F” it could become futile, so we will keep it at “GOF” with one “F”, if members do not mind! All parties can unite on that vision, but having identified that somewhat artificial vision, we then realise that the reality is way short of it, because international trade at the moment is not green, it is not totally open, and it is certainly not free.

In the first reading I lamented the excessive obsession with economic growth. Dr Hutchison replied that the Greens missed the point, because the issue was much broader than economic growth; it had to do with cultural and political links, and so on. My reply to him is that we do not deny that fact, and we welcome the broader political and cultural ties with ASEAN, but, by way of responding in logic, we say that those ties do not and should not force us in any way towards a free-trade agreement, if that particular agreement does not meet the criteria and standards we have identified.

Let me proceed in an analytical manner with our five concerns and see to what extent the responses from National and Labour have allayed our concerns. Firstly, there was the issue of green trade. We asked why the national interest analysis did not include an estimate of the increased trade volume and the increased greenhouse gas emissions that would ensue from free trade. Unless I missed it, I heard no answer from National on this point, but I heard an answer from Labour. Mr Hodgson said that “if one is to approach climate change one cannot approach it through trade; one has to approach it through the economy and society as a whole.” He also said that “one cannot do it in such an itsy-bitsy way.” We simply disagree. Trade, whether it is airfreight or sea freight, is a critically important part of the global economy, representing somewhere around 2 percent of carbon dioxide emissions. Trade is likely to become a part of future Intergovernmental Panel on Climate Change negotiations, so, in response, I put it to our Labour colleagues that we cannot responsibly exclude trade from our climate change obligations. Therefore, we conclude that there is no change on our position on this, in light of the response to our concern in the first reading.

Secondly, we had a concern about the manufacturing equilibrium. We were concerned that further phasing out of protections could lead to further factory closures. Mr Finlayson assured us that “The agreement is expected to have a positive effect on exports, gross domestic product, and employment in New Zealand, including in the manufacturing sector.” I think this is simply a case of differing expectations. We do not know what will happen in the future. Future events, by definition, cannot be proven in advance; only time will tell. We acknowledge the possibility of a positive effect but we deny the certainty of its occurrence. There is no compelling evidence to surrender our objection. Let us look forward to empirical case studies to settle this matter in the future.

Thirdly, pertaining to the financial sector, we expressed our concern that the agreement locked in light-handed regulation of finances in capital markets. Mr Finlayson responded: “Under the agreement, the existing regulatory and policy settings for … investment would be protected.” He went on to say that the financial services annex of the agreement would preserve New Zealand’s ability to regulate. I interpret this statement to be an assurance that ASEAN companies can operate in New Zealand only in strict conformity with our tight regulatory measures. On that basis, the Green Party would be prepared to withdraw its concern, subject, of course, to future verification.

The fourth issue pertained to democratic protection. We expressed our concern over a lack of targeted sanctions against Myanmar’s leaders. In response, Maryan Street advised us that the least developed countries had automatic access and no quota barriers to the OECD under the existing free-trade agreement, and that the free-trade agreement did not preclude New Zealand protection. But that was beside the point. Our point was that it precluded targeted sanctions against Myanmar’s leaders.

The final point pertained to tobacco exemption. We expressed our concern that we would surrender the right to ban tobacco in future legislation on health grounds, should we wish to do so. We have been advised that the agreement does not in any way change New Zealand’s current approach to tobacco regulations, and nothing in it would contravene New Zealand’s obligations under the framework convention. Those were carefully crafted statements by Mr Finlayson, but they equally slid past the point that we wished to be able to ban tobacco in future legislation, if the country so decided. So we retain that concern, as well.

It is with a sober realisation of the limitations of the free-trade agreement that we will therefore maintain our opposition. Thank you.

Dr PAUL HUTCHISON (National—Hunua) : It is a pleasure to follow Dr Kennedy Graham, who undoubtedly is a true gentleman and gracious parliamentarian. I acknowledge the huge experience that member has had in this area over many years. I think that his idea of a triad—as he called it, a “NatLab-Green” triad—is somewhat visionary. One of these days, maybe, there will be areas of consensus. Certainly, this is an area where the National Party and the Labour Party quite rightly agree; that is, that vital trade is fundamentally important to our economy.

I also acknowledge the fact that Dr Graham lamented excessive obsession with economic growth, but then went on to say that he acknowledges that a huge richness has developed over the last 30, 40, 50 years in New Zealand that is continuing to expand. In an earlier debate I said how my wife, who runs a ballet school, now goes throughout Asia—

Hon Pete Hodgson: Ballet school?

Dr PAUL HUTCHISON: —I mentioned that—examining for the Royal Academy of Dance. The point I am making is that that sort of interchange would hardly be thought of 20 years ago, yet now it is becoming commonplace. When I go back to my electorate in Hunua and Pukekohe, where there is a very, very diverse community, I think of the huge interchanges that we have achieved both economically and culturally. They are now so important to a totally different way of life than what New Zealand had 40 to 50 years ago.

Like the Hon Pete Hodgson, I want to acknowledge the genesis of this bill and those who were associated with it. I note that ASEAN was founded way back in 1967. I was not too far wrong when I mentioned the Hon Lockwood Smith as one of those responsible for the start of the good work that was later followed by such others as Phil Goff and the most excellent Tim Groser, who is out there today working hard for New Zealand. We became an ASEAN dialogue partner in 1974, and in 1995 the ASEAN and CER trade and economic Ministers agreed to establish a dialogue to facilitate trade and investment linkages between the two regions. It has grown considerably since that time. The ASEAN-Australia-New Zealand Free Trade Area Bill has been divided into two bills. I acknowledge the fact that the legislation has been hardly changed, which is of great tribute to the parliamentary counsel, and, like Pete Hodgson, I acknowledge the officials who have worked very hard in this area.

I want to go back to a couple of the submissions that we had and that I was particularly struck with. One submission came from the Seafood Industry Council.

Grant Robertson: It was very good.

Dr PAUL HUTCHISON: Yes, it was very good. The point they made was that New Zealand was being, if anything, under-ambitious in the area of seafood trade. That points to the fact that here we are in a country that has a huge economic zone, that has huge opportunity to increase our trade in seafood, yet we account for only 0.4 percent of global production from wild capture fisheries, as well as from aquaculture. In comparison, the ASEAN nations have about 8 percent of global seafood exports. Indeed, there is a huge opportunity for us to expand in that area and into that enormous market.

The other point that Dr Kennedy Graham made was about the green trade issue. He feels that it is very important that we acknowledge air freight and sea freight, because they represent 2 percent of global emissions. One hopeful thing is the fact that we read recently in The Economist that there is likely to be a solar-powered flight right around the globe in the next year or two. That is the sort of technology that the world will be embracing, and, hopefully, New Zealand will also be embracing it in terms of our research and development. It may be embraced at a much more modest level to start with, but, after all, we had the boat that travelled around the globe using biofuels call in the other day. That boat will be going down to the South Seas to chase the Japanese fleet and their whaling activity. That is the sort of thing that I am sure we will be embracing in years to come.

There is no doubt that this agreement is a very significant one, and that it is very beneficial to New Zealand. It involves 12 countries, 566 million people, and the whole area has a GDP of something like $700 billion. I understand it will come into force at the moment this legislation is enacted today. I believe it will benefit New Zealand, and our area, for decades ahead. Thank you very much.

GRANT ROBERTSON (Labour—Wellington Central) : I also want to join in the congratulations that other speakers have given to the trade Ministers responsible for pushing this agreement along. People have referred to Lockwood Smith, Jim Sutton, and Phil Goff, and to the current Minister of Trade, the Hon Tim Groser. It is an enormous effort to get an agreement like this negotiated. It requires a range of diplomatic skills and technical knowledge. I know that all the Ministers have worked hard to get their heads around that portfolio.

I will also briefly note the role of the officials who have negotiated this, because if Ministers need to get their heads around technical details and the scope of these agreements, then it is the officials who do the grunt work behind that. I particularly acknowledge Martin Harvey and Vangelis Vitalis from the Ministry of Foreign Affairs and Trade. They are both excellent public servants. I am sure that my colleagues opposite would not be at all surprised if I took this opportunity to note that they represent backroom—as the National Government would have it—public servants; the very same ones who, apparently, are not doing anything useful. Bill English said yesterday that they were not doing real jobs.

Phil Twyford: They’re gone.

GRANT ROBERTSON: They are gone; they are being capped or cut, and everything, apparently, is about the front line. But in the end, the value that Mr Hayes and others have talked about tonight—the dollar value in terms of exports, and the jobs that could potentially be created out of this—owes an awful lot to those so-called backroom officials. I think everybody in this House should join in congratulating them and thanking them for their excellent work.

I think that today is a cause for celebration. We are putting in place legislation that will give New Zealand and New Zealanders greater access to a market of 566 million people, as has been said. It is a market place where $1.4 trillion in global trade takes place annually. That is a huge figure, and it is something that we can now be a part of. For New Zealand, it is a growing market. Over the last 3 years we have had a 24 percent per year increase in trade. But restrictions that are still in place until we pass this legislation today mean that $50 million in tariffs is being paid by New Zealand companies in this region. We can now work through and remove those.

In time 99 percent of tariffs on exports to Indonesia, Malaysia, the Philippines, and Viet Nam will be removed, and that is an excellent outcome. Even on day one of this agreement coming into force, 70 percent of exports to those countries will be duty-free, and that is a fantastic beginning and a fantastic opening for a range of New Zealand companies.

We know that 25 percent of Fonterra’s exports go to the ASEAN region. Fonterra is our largest company and 25 percent of its exports—about $2.2 billion worth of exports—go to that region annually. That region is an incredibly rich market that we can tap into further, and I know that Fonterra and others are waiting anxiously for this legislation to be passed and put into action. I do believe that that is a cause for celebration.

I also want to mention why this agreement is unique. When negotiations on this agreement began I am not sure that many people, even those in trade circles, thought we would be able to pull it off. I do not think that many people thought New Zealand and Australia could be part of a large regional body like this and negotiate with it. It is an important innovation.

I think that our No. 1 goal—and this cuts to some of the questions raised by Dr Kennedy Graham—still has to remain a global deal, and it needs to be a global deal that fulfils some of the “GOF” principles that Dr Kennedy Graham outlined, in particular the open and the fair principles, and also the green principles, which I will return to in a few minutes. A rules-based trading scheme that is fair at a global level is, I think, the aim of both National and Labour, and it must be something that we continue to pursue with vigour, because it is only then that we will begin to fulfil the open and fair aspects of Dr Kennedy Graham’s vision.

In the absence of a global deal, high-quality regional agreements like this one are the next best thing. Bilateral agreements are important for sure, and we continue to work on those and negotiate with a range of countries, but a regional agreement can start to knit together the key building blocks of that global deal, and this agreement is a high-quality one in that regard.

New Zealand was able to enter into this agreement with ASEAN—and with Australia as well—in a way that had not been seen before, and it made sure that we intensify those relationships in the growing markets of Asia. Other speakers have already talked today about the fact that in terms of our region, in terms of the livelihoods of New Zealanders, Asia is the place where we must continue to pursue and develop markets. This agreement will enable us to do that.

I want to touch on three other areas in this contribution. One of them is to note, as I did in an earlier speech on this legislation, the side agreements on trade and labour, and trade and environment that have been brought into force with the Philippines. These go along with agreements that we already have with Thailand, Brunei, and Singapore on trade and labour, and trade and environment.

I think it is very important that those agreements are worked on and developed, as they acknowledge that trade does not happen in isolation. Trade happens as part of our overall relationships with these countries and, indeed, with how these countries develop. I know that in other agreements we have signed around trade and environment particularly, there have been spin-offs for our companies. In the Trans-Pacific Strategic Economic Partnership Agreement with Chile there has been a large amount of interaction, discussion, and development of ideas in the area of environmental and eco-tourism and in the use of environmental services.

From the point of view of future trade negotiations we must keep up the momentum to have these side agreements—hopefully—incorporated closely and more often with the main trade agreement. They provide a whole other area of development, a whole other area where we can increase our relationship with these countries. I congratulate the Government on the fact that it has gone through with the trade and labour, and trade and environment agreements with the Philippines. National has not always been keen on these side agreements, but it has gone ahead with this one and I encourage and urge it to continue to include considerations of trade and labour and trade and environment in future agreements.

Other speakers have already referred to the issue of Burma. I know there will be a number of members in the House who will find it troublesome that Burma is part of this agreement. But I know for sure that by our engagement with the ASEAN region, we will be able to ensure that we have more contact and more dialogue with countries around the importance for New Zealand of issues of human rights.

I think it is important that we continue to build that dialogue and build those relationships, because I know, as I said, that many members in this House, myself included, have some discomfort about what is occurring in Burma and some discomfort about whether we can continue to work with Burma as a country in a way that we would like to. But I feel that the engagement that we get with the wider ASEAN region through this legislation will enable us to do far more in that regard.

I also want to briefly refer to a question that was raised in the select committee process around this legislation, and that is about how we keep open dialogue and discussion with Parliament during free-trade agreement negotiations. A very brief time line comes into play once an agreement has been signed and then needs to be brought through a legislative process like this one The select committee is given a brief time to look at the legislation, look at the agreement, and then go forward and bring it back to the House. In a sense, it is almost as if we parachute into a negotiation and a discussion.

I know from my previous work at the Ministry of Foreign Affairs and Trade that there has been a dialogue over many years with both business and unions about free-trade negotiations. People are kept up to date. They are kept informed about those negotiations in a way that, in fact, Parliament is not. I think there is some cause for Parliament to be updated as to the process of a negotiation so that we are not simply parachuting in on it at the end of the negotiation when there may be issues and core concerns that we need to resolve.

This is an issue that the select committee has been discussing and will continue to discuss, and I hope that over time we can include more people in knowing about what is happening in negotiations and in ensuring that we build a wider and broader range of support.

I commend this bill to the House. I look forward to seeing the benefits in terms of exports and in terms of the jobs that will flow on from it. I hope that in the future we can continue to build strong regional trade agreements and work towards the global deal with fair, rules-based trade that we all know this globe needs. Thank you.

  • Debate interrupted.