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Trade (Safeguard Measures) Bill — Second Reading

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Trade (Safeguard Measures) Bill

Second Reading

  • Debate resumed from 27 March.

JACQUI DEAN (National—Waitaki) : Speaking to the second reading of the Trade (Safeguard Measures) Bill, I want to say that this bill repeals the Temporary Safeguard Authorities Act 1987 and implements a new safeguard regime for New Zealand that is consistent with World Trade Organization rules. I think that is particularly important to New Zealand’s economy, because, as this Government knows only too well, enhancing and growing New Zealand’s international trade links and also opportunities is a pretty much key part of our plan to build a competitive and also productive economy. This bill is part of that. It promotes efficient, transparent, and objective investigative decision-making processes. Now to explain.

Safeguard measures are emergency measures applied at the border, usually in the form of a duty, which is a cost to the importer, to temporarily protect the domestic industry from a surge in imported goods. If you think about what kind of product that might mean, you are talking about a container-load of cheap T-shirts, maybe cheap socks, or some product of that nature. The bill prevents New Zealand from receiving a rapid influx of cheap imports. What it does is allow New Zealand businesses time to bring themselves up to the level of international competitiveness required to stay competitive and afloat in this current economic climate. Again I need to say that it is a temporary measure. New Zealand consumers will continue to have the benefit of free-trade principles, which are so important to New Zealand and underpin New Zealand’s trading environment. The bill creates—and this is also significant—a single point of contact for all trade remedy inquiries, which, of course, is a plus for busy businesses, and provides an effective safeguard regime that can help build support for future trade liberalisation among domestic manufacturers who compete with importer trade. I commend the bill to the House.

IAIN LEES-GALLOWAY (Labour—Palmerston North) : It is a pleasure to rise on behalf of the Labour Party and speak in support of the Trade (Safeguard Measures) Bill. As with many trade bills, this is a bill that has received bipartisan support from across the House. In fact, it was originally introduced by the Hon Lianne Dalziel during the last Labour Government. I think that does require a comment to note that it seems to have taken an awfully long time for this Government to progress the bill, because it was introduced by the previous Government and, 4 years later, here we are at just the second reading.

The purpose of the bill is to replace New Zealand’s current safeguards regime with a new regime that is consistent with World Trade Organization rules. The new regime will be a more efficient, transparent, and objective investigative and decision-making process. Safeguards are emergency measures applied at New Zealand’s border, usually in the form of a duty, and facilitate adjustment by a domestic industry to competition from increased imports. That is, I suppose, a flowery way of saying it is a response to the practice of dumping large quantities of often low-quality and low-cost goods on a particular market. This is the regime by which New Zealand will be able to defend its borders against such exercises.

The existing Act, the Temporary Safeguard Authorities Act 1987, was subject to review under the Labour-led Government, which included wide public consultation, and the bill is the result of that work. I note that a lot of the work, a lot of the consultation, and a lot of the activities that take time in preparing a bill were carried out by the previous Government, and, again, the question remains, when this is such an important piece of legislation to support the work of small businesses and large businesses across New Zealand, to support our own local economy and to safeguard our own local economy, why on earth it has taken this Government such an astonishingly long time to progress the bill to the point where it is at—that is, its second reading.

The bill not only ensures compliance with World Trade Organization rules, it streamlines the process of responding to allegations of dumped or subsidised goods on the New Zealand market—something that will certainly be welcomed by New Zealand manufacturers and New Zealand producers. It removes the requirement to establish temporary safeguard authorities and it enables the existing expertise of the Ministry of Economic Development to be utilised instead. It is a cost-effective measure too, and we are all supportive of that.

The bill is timely, as it is important that at the time when domestic spending is constrained in New Zealand we have the right tools to protect our businesses from the impacts of globalisation and increased competition, where appropriate. This is, of course, one part of ensuring that the New Zealand economy is able to compete fairly in the world market, and it is great that we are able to put these measures in place to protect and support New Zealand manufacturers and to protect and support New Zealand producers. But what those manufacturers and producers will really be looking for is a real plan, a real economic plan, from this Government—not 120 points of nothingness, not a 14-point this and a 6-point that, and goodness knows what other plans and bullet points will be introduced by this Government as it seeks any opportunity it has to try to convince New Zealand that there is a plan.

We do not need bullet points; we do not need statements. What New Zealand actually needs to make our economy stronger, to ensure that we can compete internationally, to ensure that our exports are of value, and recognised and valued by markets overseas, is an economic plan from this Government. And I think it really is reflective of how sluggish and how lamentably poor this Government has been at driving our economy out of the recession that it has been in, that this fundamental piece of trade legislation has languished for such a long time—4 long years, if not more, since it was first introduced. It was introduced by a Labour Government, it was progressed by a Labour Government, but it all came to a grinding halt once National got into power.

Some significant changes are certainly proposed by the bill. I have mentioned the safeguard interventions, which will be undertaken by the ministry rather than by independent temporary safeguard authorities. The extension of the current 30-working-day time frame for the completion of a safeguard investigation will now be extended to 75 working days, or, in fact, even 85 days, if provisional safeguard duties are requested. The bill provides that after receiving the chief executive’s report about the safeguard investigation, the Minister may take one or more of the actions in relation to imported goods, if the Minister is satisfied that a range of criteria have been met.

Given that this is the second reading, it is worth reflecting on some of the amendments offered up by the select committee. The first of those is around the “Provisional safeguard duty—termination or reduction”. The commentary on the bill states: “As introduced, clause 15 of the bill would provide the Minister with a wide-reaching discretionary power to terminate or reduce a provisional safeguard duty.” The select committee considered that this power was “too wide, and should be subject to a ‘parameter of compliance’.”, and recommended “an amendment to clause 15(1) to limit the Minister’s discretion to terminate a provisional safeguard measure by requiring that the Minister be no longer satisfied that there are reasonable grounds for believing that the conditions that justified imposing a provisional safeguard duty are met.” The select committee also recommended “an amendment to clause 15(1) to limit the Minister’s discretion to reduce a provisional safeguard duty by requiring that the Minister be satisfied there are good reasons for doing so.”

The select committee also made amendments on the types of safeguard measures that are available, and recommended “the deletion of clause 17(d), which provides that a safeguard measure can consist of ‘any other action the Minister considers appropriate’.” The select committee considered that the “types of safeguard measures in clause 17(a) to (c) are comprehensive; and likely actions other than those provided for in the bill, such as the monitoring of particular imports by the Ministry of Economic Development, would not require legislative authority.” The select committee also recommended “an amendment to clause 17(b) to delete the words ‘or an exemption from any duty’, because there is no case in which a safeguard measure could be an exemption from a duty under the Tariff Act 1988.”

It is a reasonably technical bill, as often these trade bills are. But, as is so often said in this House, with trade being so fundamentally important to our economy as a small nation reliant on primary produce and manufacturing, we are getting these technical bills around trade and ensuring that where possible we are consistent with the World Trade Organization. They are fundamentally important to the growth and development of our economy and our ability to compete internationally.

The National Government talks a good game on this stuff, but the fact remains that a bill like this has been allowed to languish for so long, and we are in the second term of this Government. It was not a bill that was introduced by this Government; it was introduced by the previous Government. This Government has had plenty of time to progress a technical bill like this, which is just so fundamentally important to ensuring that the New Zealand economy is robust. In fact, it would have been extremely useful. In times of low spending and in times of recession in New Zealand, it would have been very useful for this bill to have been implemented 2 or 3 years ago. I think producers and business people in New Zealand would have appreciated that, but no, because this Government can talk a good game on business but when it actually comes to getting on with the job of being in Government, it fails again. New Zealand businesses are starting to wake up to this. They are starting to realise that this is the second, and final, term of this National Government, because, quite simply, it does not have a plan for our economy.

STEFFAN BROWNING (Green) : The Greens are very clear that they like the point of this bill, the Trade (Safeguard Measures) Bill, in terms of it being an anti-dumping bill, effectively, and in terms of it reducing the risk in terms of a World Trade Organization (WTO) trade dispute. However, the Greens are about fair trade, not free trade as we see free trade happening at the moment.

There is a very disturbing aspect in this bill. In fact, the purpose of it is only temporary. Clause 3 provides that the purpose is to: “(a) provide temporary protection to a domestic industry from serious injury caused by increased imports; and (b) facilitates adjustment by a domestic industry to increased competition from increased imports.” There is nothing permanent about this.

This is effectively saying: “Hey fellas, organise a redundancy for your staff, give them their notices, plan for your early retirement, think about what your local community is going to do from now on because, sorry, this bill looks out for only a temporary adjustment.”, while these people actually downgrade their businesses and move out of their businesses.

We have seen so many things happen in New Zealand. We have watched clothing move off to Fiji, and now we know it has moved further afield and even Fiji does not have that as a business, any more. We have watched footwear manufacturers head off overseas. We now are getting more and more primary-production imports, huge amounts of stuff. I would suggest that 40 percent of the pork that is eaten in New Zealand—hundreds and thousands of tonnes a week—is effectively dumping, and what are we doing about that?

This bill is fine if it saves us from a big, expensive court case, but beyond that it continues to send us in the wrong direction. What is “serious injury”? It is really, effectively, looking out for the absolute worst while anybody who is considered small fry—small to medium sized business—will be going down the gurgler all that much quicker. I would suggest it is just the very big businesses that will get any benefit from this. There is no suggestion of any protection for anything less than what is considered serious injury.

We have lost expertise; we have lost self-reliance in this country. As we head into increased impacts from oil shocks, natural disasters, and social and civil disasters internationally we actually need to have a higher level of self-reliance. We have no self-reliance from something like this. This is absolutely temporary.

A problem with the World Trade Organization, which we are connected with and which we look at to try and smooth trade internationally, is that it is very, very strong on trade and very, very weak on environmental and social concerns. We have material coming in here. Sure, we might get a bit of a tariff put on it. However, what adjustment to make an even playing field is there for New Zealand producers and manufacturers? There is very, very little.

We have material pouring into this country as it is. New Zealand manufacturers are expected to compete against low-wage economies—economies that do not have efficient and protective devices such as the Resource Management Act, and other devices such as national environmental standards, that might give some protections. Yet our manufacturers, our producers, have to compete, price on price, without those things being adequately considered.

So although the Greens are concerned and do not want New Zealand to be caught up in expensive litigation—and this bill may, and let us hope it does, go some way to ensuring it does not happen—we will remain concerned about the continuing and often secretive direction towards free trade.

We would love to know what is going on with the Trans-Pacific Partnership arrangement at the moment, where we have no idea as to the level that something like this bill may effectively be needed, or whether a secretive free-trade agreement may, in fact, lock us out of even being able to use our Trade (Safeguard Measures) Bill.

We need to get a better balance in terms of how we do our trade. We need to be moving on from the free-trade mantra to a fair and a socially and environmentally justifiable trade. While we carry on down this path of free-trade agreements, our manufacturers and producers continue to lose out. I notice that, of course, some producers may appear not to be losing out, because it appears that milk powder and maybe a bit of beef—and some coal, of course—might be the dominant beneficiaries of free-trade agreements.

We actually need to be looking at that other range of producers in New Zealand: the producers that used to be here before the free-trade deals. The opening up, in lots of ways, of trade has actually reduced us to having a series of monocultures. We have lost our diversity, and we have lost our self-reliance, and we have sent it off overseas through the unbalanced competition that has come in here. It is outrageous that this is about effectively supporting industry that is quite destructive and unsustainable in the New Zealand environment, as well.

We have so much riding on dairy, and some milk powder is produced in consistently unsustainable ways, and it does not need to be. Yet we have bills coming in that in a roundabout way support that continued unsustainable production. We need to shift to different systems. The sooner that our production is done in a sustainable way, the sooner we push into organisations like the World Trade Organisation the idea that sustainability needs to be at the absolute highest level.

The Greens do want to keep New Zealand out of litigation, but we are presented bills like this that are based on a very unbalanced environmental and social situation. Thank you.

SIMON O’CONNOR (National—Tāmaki) : I will take just a short call on this. I just want to bring a bit of context back to the discussion here tonight, and the context is a Government that has been progressing a number of bills for this country and for the betterment of it. And when we are talking about this Trade (Safeguard Measures) Bill, we are also seeing it in the context of a Government that is leading close to 28 high-level delegations around the world to try to secure better trade for this country—a cooperation that is global, and a cooperation that is good for this country.

The bill itself is relatively simple. It is a safeguard, and it is hard to understand why any safeguard of this nature, which enhances trade in New Zealand, would be rejected. It is a safeguard replacing a prior measure. It is simplifying it for New Zealanders. It is here to stop, as a member mentioned earlier, the rapid influx of cheap imports. It is relatively simple. It is here to try to increase the time frame in which we can consider the need to safeguard our trade. It is simply to provide us with that opportunity to reflect rationally and appropriately and to take on, and take in, all the effects that we need to—the main one being that we do not end up in the World Trade Organization facing problems and financial problems we do not need.

This is a responsible bill. It is a bill that highlights the continuing importance for this Government to promote good trade for the welfare of all New Zealanders, and I totally support it. Thank you.

SU’A WILLIAM SIO (Labour—Māngere) : I am happy to rise on behalf of the Labour Party to support this Trade (Safeguard Measures) Bill. What I will want to do is spend some time articulating why we support it and conclude with some remarks that I hope the other side will accept as constructive criticism.

But before doing so, I do want to make mention of an event that took place yesterday, because I think I might not get another chance to put it on the record. I was privileged yesterday alongside my colleague the Labour Party leader, David Shearer, the Hon Phil Goff, and the Minister of Foreign Affairs to join with the Governor-General and many other MPs to participate in the funeral of the King of Tonga. I think it is important. I have a significant number of the Tongan community living in my electorate and they would want me to express to this House the appreciation that they have, and I convey that to the Governor-General, to the Government Ministers, and to all the parties who were present yesterday.

It was a huge, strong delegation, which, I think, signals the importance of the relationship that New Zealand has in the international area, but, more important in this case, with Tonga and the Pacific Island nations. We do have a close relationship not only on a personal and educational level, but also on trade, and so I thought it was appropriate that I do so at this particular time. I do want to place that on record, because irrespective of what the outside world might feel about the King of Tonga, the people of Tonga have a high regard for their late King.

I want to do that because only today I have been advised by some in the Tongan community that they are complaining to this Government, and I have encouraged that complaint to go to the Minister of Foreign Affairs as well as to the Ministry of Foreign Affairs. I know it is hard for the Government to choose who goes and who does not go, but, in this particular case, I have asked the Tongan Advisory Council to lay its complaint directly as to why it was not part of that delegation. I thought: “Get it on record. Where credit is due, place that. But then also make it known to this Government about what the Tongan Advisory Council is intending to do.” So those are my comments to preface.

As I said, the Labour Party does support this bill. After all, it is a bill that began under the Labour Government with the good work of the Hon Lianne Dalziel, and I think it is important, as mentioned by other speakers, that we take this quite seriously. The safeguard measures are to try to ensure that duties are placed on certain goods that come into the country, particularly where certain industries might be under threat. I am not a member of the Foreign Affairs, Defence and Trade Committee so I did not get a chance to hear the submitters, although I understand there were five submitters from significant organisations in New Zealand.

But it was interesting reading some of the report that, in terms of our used tyres, we have lost some significant industry because we did not place enough safeguards on certain goods. I will give you an example. We have lost the footwear industry as regards all types of children’s, men’s, and women’s footwear. It was interesting that over a 2-year period, when we removed the protections on our borders, the volumes of import in regard to footwear increased by 124 percent. As a result of that not only did we lose the market share, the profitability, and the return on investment, but we lost, I suspect, thousands of jobs. Again, I am belabouring the point that there is a role for appropriate safeguards in order to protect our local industry.

It was interesting that I found for men’s and boys’ underwear that the removal of the licensing controls over those particular goods allowed for imports to increase by 289 percent over a 2-year period. Again, what we have witnessed over the past as a result of not having those safeguards or those protections on our borders with regard to those goods is loss—the complete loss, I would say—in that industry: the loss of profitability, the loss of our sharemarket, and also the loss of hundreds, if not thousands, of jobs. Again with used tyres, I note that in terms of used tyres for motor cars and light commercial vehicles over the 1-year period of 1992-93 there was an increase of 52 percent in our imports.

It was interesting that the temporary safeguard authority did not think that safeguard measures were needed at that particular time. There are also the abrasive discs in 1995, which are the grinding wheels, or the cut-off wheels, and imports increased by 28 percent over a 1-year period. Again the temporary safeguard authority concluded that there was no ground for safeguard measures. The point I am making is that Labour supports having these safeguard measures because I think where certain industries are threatened by imports we need to act fast, and we need to act decisively in order to protect those goods.

But also we need to protect the profitability in our own sharemarket, because in this day and age, as this Government knows, we are not only going through a recession but we have hit depression. I understand from some of my mates who are at the Ports of Auckland that a recession is when their neighbour loses their job, but a depression is when not only their neighbour loses their job but everybody else in that neighbourhood loses their job. There is a real need for us to be protective of our manufacturers in particular, and I hope that in the years ahead we can do more work in order to increase and support and encourage the manufacturing industry. I do not think that we are really taking the full potential of the manufacturing sector and being able to ensure that there is a deliberate and more determined plan.

I suppose that brings me to my criticism of tonight, and, as I said, I hope the Government does take it by way of constructive criticism. It has taken us almost 4 years to have this bill come to the House. As I said earlier, it began with the previous Labour Government, with the good work of my colleague Lianne Dalziel. It went to its first reading in 2009 and there were only five submitters. There were not hundreds or thousands of submitters, so I do not think the select committee really took a lot of time to deliberate on this. But only now is this Government bringing it in for the second reading. We should have had this in the House some time ago.

I suppose what that highlights is that it reinforces what we have been saying all the time about this Government. Where is the deliberate plan for protecting our industries, for boosting our economy, for creating jobs? Is it just simply rolling out the action points? Where is the comprehensive plan? Because of the ad hoc nature of the way this Government has treated this particular bill, we are continually on the back foot. The Government is not just focused on cuts to funding, cuts of public sector jobs; this House will recall when this Government first came into power the mantra for its cuts to the public sector was that it was capping the workforce. It was not cutting the workforce.

Hon Ruth Dyson: Capping, not cutting. Ha, ha!

SU’A WILLIAM SIO: That is right. Today the public sector has lost over 5,000 jobs across all Government departments and other State-owned enterprises. That is over 5,000 jobs. I also understand there are over 2,500 jobs still unfilled, and the morale of the public sector is so low at this particular time that I am hopeful that this Government acts quickly. Simply merging Government departments is not going to get us to where this economy needs to get. We need jobs and this bill should have been in the House a long, long time ago.

  • Bill read a second time.