ASEAN-Australia-New Zealand Free Trade Area Bill

Hon TIM GROSER (Minister of Trade) Link to this

I move, That the ASEAN-Australia-New Zealand Free Trade Area 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 25 May 2009. A report presented by the committee on or before 25 May will enable New Zealand to remain on course to complete its domestic procedures for the purposes of the agreement’s entry into force by 1 July 2009. That is the target date set by the parties to the agreement for its entry into force. For that to occur, New Zealand, Australia, and at least four members of the Association of South-east Asian Nations (ASEAN) must have notified the parties that they have completed their domestic procedures.

This 12-country, region-to-region free-trade agreement is of both commercial and strategic significance. It opens new commercial opportunities for New Zealand businesses and investors, and it integrates our economy more closely with South-east Asia—a region of critical importance. I think the strategic significance to New Zealand’s future prosperity from access to the 10-country ASEAN market should not be underestimated. In terms of political leadership, I acknowledge a number of people who have contributed to this initiative over a very long period of time. The first is the Hon Dr Lockwood Smith, a former Minister of International Trade, who was responsible for initiating the Singapore - New Zealand free-trade agreement. That spawned a thinktank expert group for this very agreement, chaired by the then Deputy Prime Minister of Australia Tim Fischer, with New Zealand being represented by the Rt Hon Bill Birch. Second, I acknowledge the further work done by my two predecessors in the previous Government, the Hon Jim Sutton and the Hon Phil Goff, for their political leadership of this initiative. It has had widespread support over a very long period of time, and I think there are some very important and obvious lessons that arise about the importance of continuity of policy in this area of interest to New Zealand.

The ASEAN market of more than 566 million people is already New Zealand’s third-largest export market for merchandise goods. It was worth approximately NZ$4.6 billion in the year to June 2008, and New Zealand exports to the ASEAN region have grown at an astonishing compound average rate of growth of 24 percent over each of the past 3 years. Incidentally, that rate of growth was faster than our rate of exports to China. It is clear that the ASEAN region is a critical one for New Zealand exports not only for outward investment but also for our wider economy and our future. We are a small, export-driven, and trade-dependent economy, though it is my strong view that we have a great deal of work to do to increase the trade orientation of the New Zealand economy. Trading prosperity provides the basis for much of the current employment in this country and the continuing economic viability of this country. Improving market access for New Zealand firms through a progressive trade agenda, including through this particular agreement that we are examining for the first time today, will stimulate economic growth and will help create and safeguard New Zealand jobs. Let me emphasise that not just in this country but also around the world most research indicates that in the export sector we get higher-quality and higher-paid jobs.

The ASEAN free-trade agreement, like all of our free-trade agreements, helps to create an environment that makes it easier, more profitable, and more predictable for New Zealand businesses to enter markets and to do business in those markets. Now, as we find ourselves in the greatest period of economic downturn since the Great Depression of the 1930s, securing new market access is more critical than ever. New Zealand stands to lose from protectionist measures, which have a severe impact on trade and investment flows. I think that is well understood up and down the country. This agreement provides some considerable assurance against that long-term threat. It ensures that New Zealand businesses remain at the cutting and competitive edge, benefiting from tariff reductions and a greater certainty of access. In the face of global pressures towards economic protectionism, this agreement is a welcome sign that the ASEAN nations and New Zealand’s CER partner, Australia, are committed to staying open for business.

In the area of goods exports, the outcome secured by the agreement is an excellent one. Over time New Zealand will benefit from the elimination of 99 percent of tariffs on exports to the four key markets in ASEAN—Indonesia, Malaysia, the Philippines, and Viet Nam. On day one of the entry into force of this agreement, 70 percent of New Zealand’s current exports to these key ASEAN markets will be duty-free. In a sense, a very large part of the job will happen immediately once the agreement enters into force. We do not have to wait the full 10-year period or 12-year period for this to start having substantial benefits for New Zealand goods and services, and for the people whose employment is sustained by those companies. That figure on day one—70 percent—will rise to nearly 85 percent by 2016, which is not too far away. On full implementation, under current levels of trade this will equate to an annual duty saving of approximately $50 million. Whether or not that is a gross underestimate—which I suspect it is—depends on the future growth of New Zealand exports to the ASEAN region.

The ASEAN free-trade agreement does more than simply address tariff lines for merchandise trade. As we all know, services are becoming an increasingly important part of our export economy. Our growth rate and services is actually somewhat better than the average OECD growth rate. It is not just the old story about agriculture—important though agriculture will be to our future. For New Zealand exporters of services, the ASEAN free-trade agreement represents some real gains. For example, the ASEAN countries have gone further for New Zealand than they have currently undertaken in respect of their World Trade Organization services commitments under the General Agreement on Trade in Services (GATS). This includes taking on commitments made in New Zealand’s priority service sectors, which include education services and engineering.

The free-trade agreement also helps New Zealanders investing in the region. They benefit from new and additional protections, including the potential for recourse to binding investor-State arbitration procedures. New Zealand business people will also benefit from new provisions and disciplines that facilitate their movement across and within the region. The agreement includes robust and transparent dispute settlement procedures in order to resolve any trade-related disputes that may arise. It is a commonplace but correct observation that as countries increase their trade, inevitably the number of disputes will rise. In addition to this aspect of the agreement, New Zealand has also concluded legally binding agreements on trade and labour, and trade and environment with the Philippines. These build on existing instruments in other areas of the ASEAN grouping—Thailand, Brunei, and Singapore—and we have ongoing processes to try to advance these objectives in respect of Indonesia and Malaysia. So it is an iterative process. These agreements enhance communication and cooperation on these issues, and aid the objectives of raising working standards and improving environmental protection.

This agreement has a direct bearing on New Zealand’s future in the Asia-Pacific region. The ASEAN free-trade agreement represents an important building block in the wider east Asia region, and underscores New Zealand’s strategic commitment to greater regional integration. It is also strongly in our interests to do what we can to ensure that any moves in the Asia-Pacific region towards closer regional economic integration remain open and outward looking. By concluding this agreement, New Zealand remains very well positioned to retain and play a proactive role in further regional initiatives such as the potential closer economic partnership with east Asia. This is a potential free-trade area that would encompass the 10 members of ASEAN, New Zealand, and Australia—that is, the same countries we are talking about today—plus India, South Korea, China, and Japan. The bill amends New Zealand law to comply with the ASEAN free-trade agreement, thereby enabling New Zealand to bring the agreement into force. This requires certain amendments to the Tariff Act 1988 and some other consequential changes to legislation.

The Government would like to commend this bill to the House and to see the bill enacted by 4 June 2009 to meet the target date of 1 July 2009 for entry into force. I commend this bill to the House.

Hon PHIL GOFF (Leader of the Opposition) Link to this

The Labour Opposition, in the usual pattern of bipartisanship on developing market access to new economies for our businesses, very much supports the ASEAN-Australia-New Zealand Free Trade Area Bill. This bill will bring into effect a free-trade agreement with Australia and the countries of ASEAN. It was my privilege in May of last year to conclude those negotiations, and I congratulate Tim Groser on having the privilege of being able to sign it.

I think we had an incredibly good year for trade last year. We concluded the free-trade agreement with China, the first free-trade agreement that China has had with any developed country, and then we developed, worked through, and concluded the negotiations with ASEAN. China is our fourth-largest trading partner, but ASEAN, collectively, is our third-largest. It is a critically important market. ASEAN has 575 million people as part of it. It has become more and more important, over time, as a destination for our merchandise goods, our services, and our investments.

I think Tim Groser mentioned that over the last 3 years this market has grown, on average, by 24 percent a year. That rate of growth is higher than that of China. It is a market that is expanding, and it is a market that is at the core of the most economically progressive part of the world—the fastest growing and the fastest developing area of the world. We send something like $4.6 billion of exports into that market—those are the figures to June 2008—and therefore it is critical for our exporters to gain the advantages of a free-trade agreement and, ultimately, free-market access for 99 percent of our current exporters into that market by 2020. That is a huge step forward.

It was not a straightforward process to negotiate. The negotiation took 3 years. In Singapore last year I attended the 15th round of those trade negotiations. That indicates that it was a tough agreement to achieve. There were big obstacles to overcome, but we got there. That is a real achievement, and there is a sense of satisfaction for all of us as New Zealanders.

As Tim Groser knows, we have to acknowledge our professionals in the Ministry of Foreign Affairs and Trade for doing the nuts and bolts work—the critical hard work of a negotiation. I want to make reference to two of our very best trade negotiators—Martin Harvey, who started the process, and Vangelis Vitalis, who completed the round. I have huge respect for both of those people, and I pay tribute to them and to their teams for their skill, their hard work, their commitment, and their sheer perseverance. We went to Singapore uncertain that we would complete the round. We knew that it was vital to do so. There was a series of problems that we had to overcome, but I will not go into the details of those in this House. They worked at the official levels, and they did a superb job. I worked at the political level. I tried to reach an agreement, which, in the end, has to be a political agreement. In the end we got there, and I think that that is an enormously important achievement for New Zealand.

The agreement was actually the first time that the ASEAN countries had negotiated a comprehensive agreement as part of a single undertaking. That means that the agreement simultaneously covered goods, services, and investment, as well as other areas that one would expect in a modern free-trade agreement, such as intellectual property. New Zealand exporters are currently paying around $50 million a year in tariffs in order to trade with those economies. At a simple level, that means that the saving for New Zealand businesses will be $50 million a year when we finally implement this agreement. But, actually, it is much more important than that, because a free-trade agreement does a lot more to provide the foundation to expand exports into that market. Not only does it eliminate the tariffs on all of our key exporters by 2020 but also it means that our businesses have protected access into those markets and they have competitive advantage over the other countries that are also working to sell their goods and services into those markets.

But we took another factor into consideration, which was the regionalisation process in the Asian area. There was real concern at one point that with free-trade agreements being negotiated within the region that were not necessarily outward looking, we could have found ourselves locked out of a very vital market. It was critical for New Zealand to engage in that regionalisation process. It was also critical to become part of a free-trade agreement with the ASEAN countries, part of the closer economic partnership for east Asia through the East Asia Summit, and also to look at what we could negotiate in terms of a regional free-trade agreement through APEC.

Those goals are important, but they are not immediately achievable. This agreement was achievable, and we have got into the markets through that free-trade agreement. That will prove vital for us at a time when trade this year is likely to diminish for the first time since World War II. Pascal Lamy said trade internationally will diminish by 9 to 10 percent this year. At a time of recession there is a mood, regrettably, of protectionism. Protectionism is very good if it works just one way; that is, if a country protects its borders against imports coming in but the other countries it trades with welcome its exports with open arms. Clearly, that does not happen. The problem with protectionism is that it does not protect jobs; it destroys jobs, because protectionism invites retaliatory action. For us as a trading nation it is critically important that we protect our jobs in the export area by ensuring that we have access to our markets. It is also a fact in favour of free-trade agreements that when a country increases its trade by about 10 percent, the latest figures from the OECD suggest that that will increase its per capita income by around 4 percent. So trade is a way in which we build up our wealth and our employment opportunities for New Zealanders.

I think this agreement is critically important, but by itself it is not sufficient. The free-trade agreement that we are separately negotiating with Malaysia will be very important. That is a big market for us. My sense is that good progress was, and is, being made in that area. In Korea, which is not part of ASEAN but part of North Asia, we are seeing good progress, and we will see a free-trade agreement delivered in that area. I hope also that we will be able to make progress when the American administration has settled its trade policy with the Trans-Pacific Strategic Economic Partnership Agreement. That encompasses the P4 countries—New Zealand, Chile, Brunei, and Singapore—with the United States, Australia, Peru, and Viet Nam coming in as well. That is critically important because the United States is our second-biggest trading market. It is also critically important because if we succeed in that then we will get a forward momentum that will see other countries in the Asia-Pacific region wanting to become part of that free-market agreement.

I will conclude on the other area that I know that Tim Groser is very familiar with and will be working hard on, and that is the area of concluding the Doha round. Free-trade agreements are good, but the thing that bilateral free-trade agreements do not achieve is dealing with the problems of export incentives, agricultural subsidies, and overall tariff levels. We need to conclude the Doha round of World Trade Organization talks in order to achieve those objectives. At a time when there is recession, the Europeans have brought back export incentives. Under the Doha round they would be eliminated by 2013. There is a huge difference between the applied rate of tariffs in the world at the moment and the bound rates. Doha will bring down the bound rates and stop countries lifting their tariff levels. This agreement is good, but it is part of a wider whole.

JOHN HAYES (National—Wairarapa) Link to this

I will begin by setting a little context to this somewhat anodyne discussion. First of all, I see this agreement as being fundamentally important, because it will help to consolidate and underpin our world market democracies. The legislation that has been introduced by my colleague Tim Groser this afternoon, the ASEAN-Australia-New Zealand Free Trade Area Bill, is an example of history on the move. If we think about developments in the last 20 or 30 years, we rapidly come to understand that there are about 137 countries on the planet that, more or less, practise free elections, and 82 of those countries have executive power controlled by a Parliament like ours. What does that mean in the market place? It means that, between 1980 and 2008, world GDP multiplied by three times. Trade in industrial products, however, grew 25 times. If we think about production across the planet, we see that in that same period—from 1980 to 2008—there has been an increase in production valued at €40 trillion. Industrial production has grown by 4 percent per year, which is a rate never previously achieved in the history of our world. If we look at what has been going on since about 1985, we can see that exports between countries on the planet amount to roughly 13 percent of global GDP, a percentage never achieved since 1913.

As this trade is going on we are also seeing power relationships changing, in relative terms. Newspapers continue to report about American stagnation, and many of us know that Europe is in decline. Counter to that, Asia is climbing. Asia had an annual growth rate across all of Asia of 6 percent in 2008, but from 1980 to 2008 Asian GDP multiplied by four times, China’s GDP multiplied by three times, India’s GDP multiplied by three times, and Europe’s GDP multiplied by only two. So Asia’s share of world trade has climbed from 16 to 28 percent over the period from 1980 to 2008. Over that same time frame America managed to keep only a 21 percent market share, and Europe declined from 28 to 20 percent.

So we see a global environment where America and Europe are losing ground. Those economies are experiencing declining productivity. They are encountering fading competitiveness, and dynamism is on the wane. Their populations are ageing. In 1992 European nations adopted a common currency, but they are still at a point where Europeans even today do not have an integrated market economy. In 2008 per capita GDP in Europe was 25 percent below that of the USA. Industry is leaving Europe. Where is it going? It is going to Asia. The Pacific Ocean—in our part of the world—is fast becoming the world’s most important body of water. In 1990 trans-Pacific trade outstripped trans-Atlantic trade by 50 percent. If we think about the countries around the rim of the Pacific, we see that nine of the world’s 12 greatest ports are located on the Asian seaboard of the Pacific.

It is against that background that I see this agreement as being incredibly important. It will link us to an ASEAN market, across those 10 member States, of 566 million people. It will link us into an economy of US$1,400 billion of global trade. As my colleague Phil Goff pointed out, ASEAN is New Zealand’s third-largest market for merchandised goods, and it is our third-largest trading partner. So why is this agreement important? Well, aside from plugging us into this dynamic part of the world, the free-trade agreement will facilitate trade in goods and services by reducing and eliminating barriers, by providing greater certainty to New Zealand manufacturers, by providing transparency, and by reducing associated transaction costs for New Zealand businesses wishing to operate in ASEAN markets. It also provides additional protection for New Zealand investors investing in that part of the world.

The free-trade agreement is not about just economics. As well as the immediate commercial benefits that most companies in our electorates will be concerned with, the free-trade agreement also represents a really important building block in the development of our relationships with South-east Asia. We have been seriously working on that—certainly since I was posted in Singapore back in the late 1970s. We really have to make a broad strategic commitment for greater regional integration amongst our Asian neighbours. They are the communities and the economies that are growing. This free-trade agreement is part of a broader process of regional integration being developed through a range of groupings in the Asia-Pacific region, such as the East Asia Summit and other ASEAN-related processes in the APEC forum, of which many New Zealanders are well aware.

I think the conclusion of this free-trade agreement, when it comes back to this House from the Foreign Affairs, Defence and Trade Committee, will help to ensure that New Zealand remains an integral part of this unfolding regionalism and that this process remains open and focused in an outward direction.

A number of advantages will accrue to companies in New Zealand once this agreement comes into force on 1 July this year. Tariff elimination will generate the most immediate gains. In 2010 we can expect over $429 million worth of current exports to Indonesia, Malaysia, and the Philippines. These exports will include, in some markets, butter, milk powder, cheese, wool, kiwifruit, apples—including apples from my home town of Greytown—and some manufactured products like those that come from the metal craft industry in Dannevirke. Those products, covering 28 percent of the total current exports from New Zealand to Indonesia, Malaysia, the Philippines, and Viet Nam, will enter those markets duty-free. When that happens, 70 percent of New Zealand’s total current exports will enter those markets duty-free in 2010.

Between 2011 and 2015 we will save another $60 million on current exports to Malaysia, Indonesia, and the Philippines, covering things like beef, wine—which is, again, produced in my electorate—apples, onions, aluminium, and iron and steel products. Then, in 2016, we will gain more benefits from the export of $137 million worth of products to Viet Nam, like milk powder, paper, and those sorts of products.

Hon PETE HODGSON (Labour—Dunedin North) Link to this

There seems to be a remarkable outbreak of peace across the Chamber on the ASEAN-Australia-New Zealand Free Trade Area Bill. But I am aware the speaker following me will be from the Green Party, and I want to make some remarks to which I hope he or she will respond.

I should start as the Minister of Trade, Tim Groser, did and acknowledge the history of this agreement. I acknowledge its beginnings in Singapore with the work of the Hon Dr Lockwood Smith, and the work of Jim Sutton in ASEAN and in many other parts of the world—most notably China. I also acknowledge the work of the Hon Phil Goff in various parts of the world, and his role, which he mentioned, in getting the political closure on this agreement last year. As a member of Cabinet at that time, I remember well the sense of excitement as we moved closer to that agreement because of its importance to us. I will not reiterate all the figures that have been given by other speakers, but if this is our third-largest export market and our combined average growth rate over the past 3 years from New Zealand to those markets has been 24 percent in the absence of a free-trade agreement, then that is a remarkable achievement.

It is an achievement that, one assumes, will be improved on what it would otherwise be without the presence of that free-trade agreement. I want to acknowledge, as indeed the previous speaker has, the extent to which trade has changed over recent years. This is not quite the same analysis as that of the chairman of the Foreign Affairs, Defence and Trade Committee, but a different one since he has already given his. I do not dispute anything he said, but I add some observations around the role of agreements on trade and the environment to the contributions in the House. Such agreements, even 12 years ago, were considered completely impossible, simply a challenge, and something that would bog down the agreement in tradable goods. Indeed, moving to services was itself quite big, but it is now an ordinary feature of our free-trade agreements.

The other thing that has happened in recent years and continues to develop is that, on the New Zealand side, the internal processes we use are just becoming better and better. We ought to acknowledge the role of the Ministry of Foreign Affairs and Trade, of Business New Zealand, and of the various groups that interact in that process. I refer to, for example, the trade union movement and many others that interact in the course of negotiations. The awareness within the New Zealand economy as to how these negotiations are going, or not going, gets better and better; the awareness that negotiators have on the particular effects of this or that clause on a particular company, such as Fisher and Paykel Appliances, are becoming more and more obvious; and the very vulnerable sectors—and there are some; textiles, clothing, and footwear come to mind, but there are others—are taken into account in a fairly free way. Then, of course, an agreement must be struck. An agreement is never struck so that there is only one winner, because that would not be an agreement. The other side would not come to the party; there has to be give and take. I am acknowledging that I think we have a more and more elaborate and open consultative process.

It is interesting that that consultative process does not involve the Foreign Affairs, Defence and Trade Committee, and maybe it should. It does involve Cabinet. Cabinet is given updates as these various negotiations come along, and it seems to me a reasonable proposition that it ought to be the case that the Foreign Affairs, Defence and Trade Committee—or another select committee, as is relevant—is also briefed. Maybe, with some agreements, the Primary Production Committee should also be briefed. One reason why a select committee would not be briefed is that it does not have any natural expertise. But, you see, neither does Cabinet, except perhaps for the trade Minister of the day, the foreign affairs Minister of the day, the primary production Minister of the day, or the Prime Minister of the day. But, generally speaking, Cabinet is not comprised of experts, and neither is the Foreign Affairs, Defence and Trade Committee. I put the idea on the table that it would help us as a group of parliamentarians if one or two of our select committees were briefed as a matter of routine to the level of detail that was deemed appropriate, so that people could be questioned about processes, progress, and outcomes.

The other comment I make concerns the Green Party. I do not believe the Green Party is anti-trade, but it certainly has misgivings about trade that are not shared by other parties. I think that if the Green Party was represented on select committees and was privy to information that National or Labour had whenever they have been in office—and both parties have been—then that may not only assist the Green Party’s understanding of the process but also enhance the process itself, because the Green Party is thoroughly capable of coming up with suggestions or propositions. I would like Green Party members to respond to that if they want to.

I make another comment to the Government. I am not convinced that this remarkable agreement involving a series of trading partners collectively bigger than China will be as well supported by New Zealand Trade and Enterprise as the agreement with China has been. I do not know that that is the case; I hope I am wrong. I note that New Zealand Trade and Enterprise—which, of course, I generally perceive to be a very good outfit—needs the support from this Government to ensure that our exporters have the opportunity to take advantage of this agreement as it comes into force. That was the case in China. There are stories all over the place about New Zealand businesses making progress—some slow, some fast—in various parts of China, and the role of New Zealand Trade and Enterprise in that progress. I think the role of beachheads in various parts of the ASEAN community needs to be explored. Generally speaking, New Zealand Trade and Enterprise might need to be bulked up in response to our free-trade agreements having essentially been bulked up. It used to be a big deal when we got ourselves a free-trade agreement with Singapore, which has a population of just over 4 million people. That pales in significance when we consider what progress we have made with our third and fourth-largest partners, and what progress we might make when the Obama administration has had an opportunity to consider its trade policy with our second-largest export partner. If the New Zealand export community is to ensure that it maximises its effects in these easier-to-access markets, then it will need a degree of support from New Zealand Trade and Enterprise. With those remarks, I congratulate the Government on introducing this legislation. I hope for its rapid and seamless passage.

Dr KENNEDY GRAHAM (Green) Link to this

Let me begin, if I may, by paying tribute to Minister Tim Groser for his personal skill, and that of his predecessors Phil Goff and others, in endeavouring to advance New Zealand’s national interest in the trade negotiations. I also express my considerable appreciation to the previous speaker, Pete Hodgson, for his very thoughtful and constructive comments that, I should say, were inclusive in the sense of seeking to strike up constructive debate on this quite complex matter. I appreciate his concerns about Green Party policy on the question of trade. He is correct when he observes that the Green Party is not anti-trade per se; in fact, we simply harbour considerable concerns about certain aspects of certain free-trade agreements. We believe that some of these agreements do not meet the required standards to attract our support. Let me respond constructively and advance the debate by offering our views on this matter. I looked to the stated purposes of the free-trade agreement as they are set out in the national interest analysis, I looked to the report of the relevant committee, which identifies the stated reasons for the free-trade agreement, and I listened to the Minister this afternoon. In a sense the Minister summarised the report—because I do not have much time. He stated: “We are a small, export-driven, and trade-dependent economy.” Increased market access is critical to stimulate our economic growth. That, in essence, is the rationale for all free-trade agreements, whether it is the free-trade agreement with China, the ASEAN-Australia agreement, or others.

The first fundamental critique we have to offer is what we take to be the obsessive concern about economic growth and commercial opportunity, which we do not hold as having the same absolute, untrammelled, uncritically questioned value that the Government does. We do not dispute the need for a sustainable economy; we do question the need for economic growth if it risks being unsustainable. That is the fundamental premise to be debating. It is not drawn out properly in the national interest analysis.

Let me be more specific. To respond to Mr Hodgson, I say that the Green Party is composed of rational individuals who will be prepared to switch policy if our concerns are properly refuted or decently answered. Let me offer four questions for the Government—and, for that matter, Labour—to answer convincingly. The first is the following. Why does the national interest analysis not include in the “disadvantages” section an estimate of the increased volume of trade in tonnage, not currency, and the increased greenhouse gas emissions that will ensue as a result of that increased tonnage?

This is the second question. Many of our domestic manufacturers are in a precarious economic position currently, finding it difficult to compete with the lower wage structure of their Asian competitors. We in the Green Party are concerned that the further phasing out of protections envisaged in this agreement could well lead to more factory closures in New Zealand. On 3 March the Minister of Trade, Tim Groser, welcomed the recent free-trade initiatives as “good news for the New Zealand economy”. He dismissed concerns that free-trade agreements, including the China agreement and, for that matter, the ASEAN one, would do businesses in New Zealand out of work. He stated that those concerns had “zilch” to do with free-trade agreements and international trade. So the second question to the Minister asks him to please define “zilch” and explain why there is no causal relationship between free-trade agreements and business closures in New Zealand.

This is the third question. The services and investment provisions in the agreement are also of concern. Under this agreement firms based in the ASEAN countries must be allowed to provide the full range of financial services here, even those instruments that are currently under such scrutiny and criticism around the world. The agreement locks in light-handed regulation of the finance sector and capital markets, which is at the root of the global economic crisis. So the third question asks whether the Minister agrees with that observation—and if not, why not?

Finally, we in the Green Party are concerned at the agreement’s application to Burma, in view of the call for economic sanctions of the Burmese pro-democracy leader, Aung San Suu Kyi. At a time when the United States and the European Union have responded to that call with sanctions, New Zealand firms under this agreement are being encouraged to invest in Burma, and these investments are being given further protection. So the fourth question asks what the Minister has to say to Suu Kyi. Will she be satisfied with his claim that this is good for the New Zealand economy—is that enough? Thank you.

RAHUI KATENE (Māori Party—Te Tai Tonga) Link to this

The figures at the core of this ASEAN-Australia-New Zealand Free Trade Area Bill are staggering. We are talking about a free-trade area with approximately 566 million people, a combined gross domestic product of US$1.9 trillion, and global trade of US$1.7 trillion. It is not easily ignored. This region represents one of the most economically dynamic markets in the world. Even in the Aotearoa-ASEAN relationship, trade and exports have grown an impressive 24 percent per year over the last 3 years. This is certainly a massive undertaking.

The agreement, signed on 27 February this year, did not just formalise a commitment between Australia and New Zealand; the agreement also involves Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam. Amongst the key guiding principles of the agreement is the objective to move towards deeper economic integration through the progressive elimination of all forms of barriers to trade in goods, services, and investment. It is designed to inspire and promote the facilitation of trade and investment, as well as measures of economic cooperation. It is also intended to be comprehensive in scope, covering trade in goods, services, and investments.

This all sounds good in principle, and even more promising for practice, but here is the thing: the economic benefits of international trade agreements need to be balanced with consideration of our own local, regional, and national social progress and environmental enhancement. The Māori Party’s mantra is that we support fair-trade agreements, as opposed to free-trade agreements. What do we mean by “fair” instead of “free”? The Fair Trade Association of Australia and New Zealand works with the following definition: “Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers—especially in the South.” This is a big difference from what we would expect of conventional international trade. This bill provides for the application of preferential tariff rates for goods manufactured or produced by parties to the agreement, and for the ability to set different tariff rates of duty for the parties. It provides for the application of transitional safeguard measures to be applied on imports originating from agreement party countries, and it will enable the New Zealand Customs Service to designate certification bodies authorised to issue New Zealand certificates of origin for goods exported to party countries.

At its very core, the agreement includes investment, intellectual property rights, competition policy, financial services, and telecommunications. There is nothing wrong with that, but, alongside the conventional concepts of free trade, we in the Māori Party also want to see demonstrable evidence of fair trade as a just and environmentally sustainable alternative. We want to see attention paid to labour and environmental justice issues, and to human rights. The fair-trade movement would enable items to be produced with only a minimal impact on the environment, with the cost of environmental sustainability being a key consideration in the equation. Importantly, although there are clearly advantages to exporters if a fair-trade framework was applied, it also enables an opportunity for both producers and consumers to challenge unfair trading practices. At its heart, it is about balancing the profits and benefits of international trade with the strengths of grassroots development and economic justice. Yet, in this ASEAN free-trade agreement, just as in the China - New Zealand free-trade agreement, the treaties on labour and the environment are not sufficiently robust to guarantee minimum standards or commitments to establish minimum standards on labour issues or environmental standards.

In terms of labour law, New Zealand manufacturers and businesses, in further removing tariffs on imports into New Zealand, are further exposed to competition that they may be unable to match, given the differences in wages between New Zealand and ASEAN countries. Of course, it is not just at home that we need to be thinking of the impacts of this new ASEAN-Australia-New Zealand Free Trade Area Bill. We need to also be considering the likelihood of low pay, unsafe working environments, poor living conditions, and exclusion from the decisions that affect the lives of the populations living in the 10 member countries of ASEAN. How will this free-trade agreement make any difference to their poverty and suffering? What opportunity have they had to participate in the decisions around this agreement? How does it assist these countries’ producers to escape the cycle of poverty? When we think of the second issue—the environment—it is arguable that New Zealand’s current environmental laws are sufficient to protect the natural estate. As we know, Māori have raised concerns with the Hazardous Substances and New Organisms Act and genetic experimentation, the Conservation Act 1987, the Crown Minerals Act 1991, and fisheries legislation. We are hardly in a position to stand strong about our environmental laws.

Another of the measures introduced in the bill is the undertaking that there is nothing in this agreement that prevents the New Zealand Government from taking any measure it deems necessary to accord more favourable treatment to Māori, given its Treaty of Waitangi obligations. This is interesting wording, and it is clearly not sufficient to ensure the Government will act in accordance with such obligations. If recent events are anything to go by, we have every reason for caution. Just yesterday, in the Emissions Trading Scheme Review Committee, we were told that the scheme was unfair on Māori, who will reclaim 600 hectares of pre-1990 forests in Treaty settlements. Under the terms of the emissions trading scheme, landowners are liable if they deforest more than 200 hectares of pre-1990 forest land. The Climate Change Iwi Leadership Group told the committee that the bulk of Māori forestry is pre-1990, and, of course, the Auckland super-city situation is even more conclusive evidence that Treaty of Waitangi obligations are easily and quickly discarded when the rule of the majority interest prevails.

Finally, I believe that the timing of this bill, coming into Parliament this week, is particularly significant. This weekend New Zealand starts a Fair Trade Fortnight, symbolised by the “Go Bananas for Fairtrade” campaign. As a country, New Zealand imports the highest per capita number of bananas in the world, but the majority of banana plantation workers are unable to earn enough to live on and to support their families, with some earning less than $3 a day. So it is the humble banana that I have been thinking of when considering the local cost of production in contrast with the corporates that dominate the global banana trade. Will ASEAN offer a better deal for producers? Will there be security of long-term contracts? Will we see an investment in local community development? How will working conditions improve as a result of the agreement? Will any changes be made to achieve fair and stable prices for produce? Will there be knowledge acquisition of a scale necessary to compete in the global economy? With all of these questions on our mind, we are unable to vote in support of this bill.

The ASSISTANT SPEAKER (Hon Rick Barker) Link to this

Before I call Dr Paul Hutchison, I would just like to offer an apology to Rahui Katene. I had mixed her name up previously. I thought to myself that I must not do it on this occasion, and that is exactly what I did. I am sorry; I promise to get it right on every occasion in the future.

Dr PAUL HUTCHISON (National—Hunua) Link to this

Thank you, Mr Assistant Speaker, for the opportunity to speak on this landmark and historic ASEAN-Australia-New Zealand Free Trade Area Bill. I too want to acknowledge some of those responsible for the bill’s genesis, and in particular the trade Minister, the Hon Tim Groser, who has worked hard and long in this area for New Zealand. It is great to have him as the National Government trade Minister. Also, like various others, I acknowledge the fact that this bill has had a long genesis over a great deal of time. It has been mentioned by Pete Hodgson that the Hon Lockwood Smith, back in the days of the New Zealand - Singapore free-trade agreement, had a lot to do with the beginnings of this bill, and in the 1990s, of course, it was the Rt Hon Sir William Birch, followed by the Hon Jim Sutton, and more recently by the Leader of the Opposition, Phil Goff.

There is no doubt that this is an extremely important bill. It does give huge opportunities for New Zealand exports, including of course our vital primary exports. But it does not mean only export opportunities, and I think it is important to point that out to Dr Kennedy Graham. It also means closer ties culturally and politically in a very wide region that is becoming increasingly important to New Zealand. I noted that the Hon Phil Goff mentioned the importance of a bipartisan approach to such vital foreign affairs and trade legislation as this, and of course we absolutely agree with that sentiment.

It is worthwhile to think back a little to the importance and the origin of ASEAN, the Association of South-east Asian Nations, which was founded in 1967 and is central to New Zealand’s relations with Asia itself. There is no doubt that this area is a major regional, political, and economic grouping, with a population of over 500 million people. New Zealand became a dialogue partner, in the technical term, of ASEAN in 1974 and joined the ASEAN regional forum in 1994, and in 2005 it acceded to the ASEAN Treaty of Amity and Cooperation in Southeast Asia. Again I think this is one area where it is appropriate to point out to Dr Kennedy Graham that all these issues are not about an unbridled obsession with economic growth. They are far wider and deeper than that. I think the Greens should put that in perspective. In 1995 ASEAN and the Closer Economic Relations trade and economic Ministers agreed to establish a dialogue to facilitate trade and investment linkages between the two regions, and in 1996 ASEAN and the Closer Economic Relations Ministers signed a memorandum of understanding to promote cooperation on standards and conformance.

Participation in ASEAN provides an opportunity for New Zealand to contribute to evolving regional views on security, and on political and economic developments. As we think about the Pacific in these days, in these troubled times with Fiji, and where there were difficulties with Timor-Leste, Tonga, and of course Bougainville, we realise it is very important to be able to have solid relationships in this wider area so that the dialogue that we have is one of constructiveness and reasonable familiarity, so that hopefully these issues can be solved in a useful way. Participation also provides an opportunity for New Zealand to underline its credentials as a committed and responsible member of the Asia-Pacific community, and again this is a rebuttal to the Green member Dr Kennedy Graham’s suggestion that there is an obsession with economic growth. Economic growth is absolutely important; it has huge benefits. How else would we manage to achieve a good health service, a good social welfare service, and all the facilities that New Zealanders believe are very important to them, if we do not get sustained economic growth? But the point is that ASEAN membership certainly reinforces our bilateral relationships with ASEAN and individual member countries, and it also provides the ability to exchange views with other dialogue partners that are major influences in the Asian region and beyond, right throughout the world.

This trade agreement is significant as it represents closer relationships with key countries in South-east Asia. It is important that we establish trade partners that have huge potential for an increase in trade, and other members have pointed out just how large the potential is. It is also important that New Zealand can assist developing countries through closer economic relationships. The Hon Steve Chadwick and I were part of a team of New Zealand parliamentarians who went to a climate change and population conference in Viet Nam recently. Again, this was very useful in terms of our debate on the revision of the emissions trading system, and it was very useful for the links that we made with Viet Nam. It is important to realise that Viet Nam itself is a country where we have had extraordinary growth in trade in recent times. For example, Viet Nam is a rapidly growing export market. In 2007 exports were $362 million, roughly double those in 2005. If we can keep on doubling those exports, we will certainly be doing extremely well.

There is no doubt that the other effect that this bill creates is more certainty in trade relations with other countries, which makes doing business more profitable—and there is everything right with that; there is nothing wrong with it whatsoever. As I have tried to point out, the remarks of the Greens about an obsession with economic growth are clearly not true. This bill is involved with a whole spectrum of activities that are very important to New Zealand: cultural, diplomatic, and political activities. It is also important to remember that the economic downturn that we are currently suffering will increase protectionist actions in other nations, and this agreement will counter that by opening opportunities in other potentially lucrative markets. It opens the doors to investment and the provision of services in areas where New Zealand is currently unable to meet demand, and the agreement with the Philippines on trade, labour, and the environment provides certainty that the human rights and environmental standards that we value are maintained by our close trading partner.

There is no doubt that this bill is a significant step towards closer relations and it opens the door for further development in the future. This means that New Zealand is in the centre of these developments. The free-trade agreement has strong support from the New Zealand business community, and also from many of the newer immigrants from this very wide region who have come into our country over the last few decades.

STUART NASH (Labour) Link to this

I rise to speak in support of the ASEAN-Australia-New Zealand Free Trade Area Bill for a number of reasons. First and foremost, this bill implements a major agreement achieved by the last Labour Government. If I were wearing a hat I would doff it in respect to the Hon Phil Goff and the Rt Hon Helen Clark for the years of work they have done to arrive at such an important trade agreement. I also congratulate Minister Groser on being in the right position, with the right skills, to collect a pass 5 metres from the try line and to dive over the line under the posts.

Labour and National tend to act in a bipartisan and cooperative way when it comes to international trade deals, which is wonderful for the country. The passing of this bill will be the conversion of a Labour vision of greater international engagement for New Zealand’s companies—a great victory for New Zealand businesses. Let us just hope that the new Minister for Economic Development does not cut the staff and budget of New Zealand Trade and Enterprise. I hope that Minister Brownlee will please provide the businessmen and businesswomen of New Zealand with the certainty they now need in order to take advantage of this Labour bill.

Of course, I also support this bill because it opens up enormous opportunities for New Zealand businesses that are either currently engaged in export activity or thinking about entering export markets. As mentioned by other speakers, the ASEAN market has over half a billion people and accounts for approximately $1.4 billion in global trade. It is a market that is slowly embracing consumerism, with the growth of an aspirational middle class that is demanding the type of niche consumables and primary products that New Zealand excels at producing. Unfortunately, the growth of this middle class has slowed considerably with the current economic crisis, but this combined market had grown at a rate of 24 percent per year before the economic crisis hit. Hence, it has still been a very important trading bloc over the past 3 years. A free-trade agreement will not only maintain but significantly help the sustainable growth of this important market, as New Zealand exporters currently pay around $50 million in tariffs annually in trade with these nations.

Export growth is the only way forward for New Zealand. Organisations like Federated Farmers have applauded the Hon Phil Goff for his work on this free-trade agreement. That organisation has said of the agreement: “Despite all the doom and gloom in the other sectors, it strategically sets New Zealand up for the long haul and farmers appreciate that,”. The Wellington Regional Chamber of Commerce chief executive has commented: “I would like to congratulate Phil Goff and his officials for their hard work and successful outcome.”, and Alasdair Thompson from the Northern Employers and Manufacturers Association has said: “Overseas Trade Minister Phil Goff is to be congratulated for his work in expediting the ASEAN/CER FTA for New Zealand,”. I think that all in this House would agree that the Hon Phil Goff was a very hard-working Minister of Trade, and the previous quotes, this bill, and the Chinese free-trade agreement are testament to the fact that all New Zealanders, and especially those engaged in any form of international trade, are eternally grateful for the work of the Hon Phil Goff.

CRAIG FOSS (National—Tukituki) Link to this

Speaking on the first reading of the ASEAN-Australia-New Zealand Free Trade Area Bill, I say that it is almost surprising that such a small bill of only nine or so pages, with seven or so of detail, can actually be so beneficial, so empowering, and so helpful in building a platform for future New Zealand growth, and in joining up parts of the fastest-growing region in the world at the moment. It is very helpful and satisfying that most of the House is in favour of this bill. In fact, the previous speaker said, I think, that it was a very, very good bill, or something along those lines.

I acknowledge the assistance that the House is giving this bill as it goes through the process. I also acknowledge that with its effective date of 1 July, the House and the Foreign Affairs, Defence and Trade Committee have to move very fast in their examination of this bill and the hearing of submissions. If the bill goes through its first reading—and I presume it will—I wish that select committee very well. I am sure the committee is aware how important the bill is to New Zealand, and that the bill will have the endorsement of most of the House when we vote, following the speeches of one of two more speakers, to refer this bill to the select committee.

I also join most of the other speakers in congratulating, first of all, Mr Tim Groser, on getting this bill to this House, and acknowledging the hard work he does as Minister of Trade, as have all previous Ministers of Trade. It was very satisfying to hear an earlier speaker, the Hon Mr Hodgson, talk about peace breaking out. Actually, peace always breaks out—mostly—across the House around bills such as this one, which are for the benefit of “New Zealand Incorporated”. Most of us, to a greater or lesser degree, are in favour of free, open trade. We have heard earlier speakers speaking about fair trade to the tune of the idea that this week is “Go Bananas” week, or something. Someone may allege that some members have gone bananas already, but that is probably for a debate on Wednesday afternoon.

I also acknowledge the Hon Dr Lockwood Smith, the Rt Hon Sir Bill Birch, the Hon Jim Sutton, and, of course, the now Leader of the Opposition, the Hon Phil Goff. It is a credit to all those gentlemen, and all those who have worked with them, that they have constantly put New Zealand up on the page to punch above its weight on free trade around the world. Mr Nash has probably sent the speech he gave earlier up to Mr Goff already, as he makes his bid for the Auckland Central nomination, as I understand he is doing. His speech was very praising of Mr Goff, but, to be fair, Mr Goff did a pretty good job over the last few years when he was the Minister of Trade. I also acknowledge today that Minister Groser announced today a strengthening of agreements, ties, and discussions with Italy, as part of his ongoing work in free trade. The Leader of the Opposition talked about the need to strengthen trade around the world with his comments about the importance of the Doha round, and his knowledge of these matters is, of course, very impressive.

There was one thing that Mr Goff mentioned that, although I had not heard it before, I agree with, at least, intuitively. He said a 10 percent increase in trade between nations can result in a 4 percent increase in incomes. I was not sure whether he meant gross or net incomes, but that point does not matter too much. I would be interested to know where those numbers came from. I do not dispute them in any way. Is there any empirical evidence or hard and fast numbers to help encourage this House, and, hopefully, the rest of the globe—especially some of those countries that are dragging the chain—into opening up their borders somewhat?

I will give members a couple of quick quotes relating to the economic growth of less developed countries, compared with those with lower and higher trade restrictions. Admittedly, some of these numbers are a bit out of date. They cover 1980 to 1999. In that period, Singapore, for example, which has very low trade restrictions, had an annual growth per capita between 1980 and 1990 of 4.2 percent. That is interesting because Singapore, of course, is part of the ASEAN group. Of other nations, Hong Kong had 5.7 percent annualised growth per capita. Malaysia, which is also part of this agreement, had 2.6 percent annualised growth per capita. Other countries include Ireland, with 2.9 percent, Taiwan with 6.5 percent, and Thailand, which is also part of the ASEAN agreement that is before us, with annualised growth of 5.8 percent. Would it not be nice to have that growth in this country? South Korea had 8.6 percent, and Indonesia, which, again, is part of this agreement, had 3.7 percent. It is worth contrasting those figures—because it backs up the Hon Phil Goff’s earlier point—with those of countries that had high trade restrictions over exactly the same period. For example, Iran had negative 1.2 percent growth over that same period. Brazil had 0.5 percent growth, India had 3.2 percent—although India has come a long way in the last 20 years, of course—and other countries such as Rwanda had negative 2.3 percent growth. The point is that the numbers speak for themselves on the GDP growth and the well-being of those countries. There is the evidence.

That is one of the reasons why New Zealand is so keen to pursue a free-trade agenda—to help our country enjoy the fruits of living on this globe in 2009. It is a globalised globe, if you like, but globalisation is before us. We can confront it, or we can take it on board. I acknowledge that the previous Government did take it on board, and I acknowledge the importance of the free-trade agreement with China, as well as the ongoing work that Mr Groser is doing. New Zealand is an exporting nation, and our interests continue to be in relentlessly and constantly opening up trade, reducing tariffs, and also, very importantly, building trust with those nations in our regional vicinity. As we all know, among the 10 countries represented in this bill, plus Australia and New Zealand, there have been some historical disputes. But there is nothing like ongoing and growing trade between nations for, not totally avoiding conflict, but really helping to build trust, relationships, and understanding between them. Some of those nations have some quite fundamental differences, be they religious or in the way their Governments operate. I did not hear that point being picked up by one or two earlier speakers.

We have to be constantly vigilant. There are suggestions of protectionism coming back and barriers going up. Unfortunately, currently New Zealand and the world are in a recession. For many, that is an excuse to put domestic trade barriers up. Climate change is an interesting part of this issue, because many who are very involved in the climate change debate are suggesting that trade barriers are put upon countries that are not part of some international agreement on climate change. Interestingly—and that will be a tension—Mr Groser will have some challenges on that issue. When we look at the nations that are involved in ASEAN, I do not think we see that any of them have ratified the Kyoto Protocol, and that could be an interesting tension as we go through this process.

I would just like to read members a quote, because it shows what protective tariffs are: “Free trade consists simply in letting people buy and sell as they want to buy and sell. … Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading.” Surprisingly enough, that is from a Mr Henry George in 1886. How relevant that still is now.

As I noted earlier, there are many challenges in front of us—knee-jerk reactions to short-term supposed solutions to the recession we are in, or to climate change, or even to short-term pork-barrel domestic politics. It is a credit to this Parliament and to the parties involved that we are almost united in pursuing this agenda, as I noted at the start of my speech. Thank you very much.

GRANT ROBERTSON (Labour—Wellington Central) Link to this

I want to join in the outbreak of peace, as my colleague described it earlier, around the ASEAN-Australia-New Zealand Free Trade Area Bill. I think it is a good bill, and it is great to see it come to the House as a culmination of a lot of hard work from a lot of people. We have already heard some of the earlier speakers talk about the officials who worked on this bill. In particular, we heard about Martin Harvey and Vangelis Vitalis from the Ministry of Foreign Affairs and Trade, who led teams of people who worked extraordinarily hard for extraordinarily long hours over a long period of time to bring this agreement to fruition. I note that those kinds of officials are the very backroom officials whom this Government seems so determined to cut back and cut out. These backroom officials have not just been capped; they are the very people who have actually had their jobs cut. From day to day in this House we see the important work that is done by public servants right across New Zealand. Those public servants are not being given the respect that the National Government claimed it would give them when it came into office. Free-trade agreements such as this one rely on the hard work of public servants who are seen as backroom. They are not seen as front-line public servants, and they are being put into a different category by this Government. That is very disappointing, because what we see today is the fruit of their labours, and how important their work is for the economic and social well-being of all New Zealanders. That is work done by so-called backroom public servants. They should be valued for that work, not put down, and not have their jobs cuts, as this Government would do.

I also want to thank the Ministers who have been involved in these negotiations over a long period, starting right back with the Singapore agreement with Lockwood Smith, and also with the Hon Phil Goff, Jim Sutton, and also Tim Groser, who brought this bill to the House. All those Ministers are people who have shown a lot of commitment to the free-trade agenda. I wonder whether Mr Groser, and Mr Foss, who has recently resumed his seat and said very complimentary things about the Hon Phil Goff, might wish to share those complimentary things with John Key. It was only last month in this House that John Key said: “… Mr Groser is a very hard-working Minister of Trade, unlike the previous Minister of Trade.” That statement is really unbecoming of Mr Key and, given what we have heard today from other Ministers and members across the House, it seems very out of context, because Mr Goff’s role in this legislation—and indeed this trade agreement—was significant.

I can quote from Don Nicolson of Federated Farmers, who said: “Federated Farmers applauds the Hon Phil Goff for his earlier work and the National Government for bringing this FTA home.” We also heard from Stephen Jacobi, from the New Zealand International Business Forum, who said: “Trade Minister Phil Goff and his officials have done a superb job to conclude a particularly complex negotiation.” Charles Finney, of the Wellington Regional Chamber of Commerce, said: “I would like to congratulate Phil Goff and his officials for their hard work and successful outcome.”

So it seems that we have widespread agreement that Phil Goff worked hard on this bill as Minister of Trade. We heard it from Craig Foss today, and we have heard it from Tim Groser, but unfortunately Mr Key did not seem to want to share in that last month in this House. I hope his colleagues will return to talk to him and to say that Mr Goff was, in fact, a very hard-working Minister of Trade. That should be acknowledged by Mr Key—as it has been by his colleagues.

I would also like to say that this bill represents excellent negotiation between the Governments of the ASEAN region and New Zealand, although I think we all acknowledge that multilateral trade negotiations are the priority for New Zealand and the rest of the world because it is only through multilateral trade negotiations that we will achieve the objectives of removing agricultural subsidies and create a fair rules-based system for trade, so the Doha round must be, and has been, our priority for a long time.

We also do a lot, in the absence of a full multilateral agreement, around bilateral agreements, and they are important as well. We have discussed in this House the enormous economic benefit that will come from the China free-trade agreement, for instance, and the earlier free-trade agreements that New Zealand has negotiated. But these regional agreements fill a very important gap in that trade agenda in the absence of a finalised multilateral agreement; and with the bilateral agreements we have, we need these regional agreements because they start building an infrastructure around trade that all of us can benefit from, and should, in the end, help to fulfil the multilateral agreements. The Trans-Pacific Strategic Economic Partnership Agreement, involving Chile, Brunei, Singapore, and New Zealand, is the classic example of that. That is a regional agreement that is seen around the world as a model of the kind of agreement that should be negotiated—that actually brings together strong, rules-based agreements with networks of countries. We hope, obviously, to see the United States added into that agreement over time.

So this agreement, which brings together the ASEAN nations with Australia and New Zealand, is just that kind of regional agreement, and all those involved in negotiating it deserve to be supported. As Mr Goff said earlier in the debate today, the immediate benefit for New Zealand exporters will be that the $50 million in tariffs that New Zealand exporters face in the ASEAN free-trade region will be gone. So there we go—immediately, there is a $50 million benefit for New Zealand exporters.

But also these kinds of regional agreements are the basis on which to build further and deeper trade links, and it is incredibly important that New Zealand exporters now grasp the opportunity put forward by this agreement to be there in the fastest-growing regional market in the world. It is incredibly important that we recognise that it is not just about the tariffs that will disappear overnight—$50 million—but it is also about the base to expand our new export market.

The free-trade agreement will eliminate the tariffs on all key items of trade interest to New Zealand in the markets, so that is where the $50 million comes from. We also have to acknowledge that the bill also involves and facilitates free trade in services in the region. The services market is an important and growing market for New Zealanders overseas; we are well regarded for the kinds of things we can provide in terms of areas like engineering and environmental science—areas where New Zealand has service expertise that is liked all over the world, respected all over the world, and will now be able to be used throughout the region as part of this agreement.

The bill in its technical sense amends the Tariff Act 1988 and the Customs and Excise Act 1996. In the Tariff Act it will enable the application of preferential tariff rates that will enable transitional safeguard measures to be applied in appropriate circumstances on imports originating from party countries. That is the bit that will lower the tariffs. Amendments to the bill relating to the Customs and Excise Act will create a system of certification bodies that are authorised to issue the necessary certificates of origin for goods to be exported to party countries. They are the technical matters that are actually dealt with in the legislation here but, as a number of speakers have said, the important thing is the money that will be earned by exporters and the jobs that will be created for New Zealanders by this agreement. It is anodyne legislation, but it is incredibly important in terms of New Zealand’s economy and the jobs for New Zealand people.

I want to talk about two things that other speakers have not dwelt on greatly today. One of those is the side agreements that go along with this particular free-trade agreement. In this case it is the trade and labour agreements and the trade and environment agreements with the Philippines. It is good to see National supporting and encouraging these; it has not always been so. These side agreements began to come into play around the time of the Singapore agreement and they are useful additions because they start to address some of the concerns that Dr Kennedy Graham raised earlier in the debate about how we move the focus beyond some kind of strict economic development role. These agreements help to fill out the relationship that New Zealand has with the countries concerned, and I know, having done some analysis in another job around New Zealand’s side agreements with Chile, that they certainly deepened an understanding about environmental cooperation. They have enabled New Zealand and Chile to share a great deal in terms of ideas about how to protect and enhance our environment, how we can use tourism and ecotourism in ways that support the environment and support out economy and our jobs.

So these side agreements are extremely important and they add to the ones we already have with Brunei, Singapore, Thailand, and China. I personally would like to see those agreements continue to evolve and expand. They go alongside the trade agreement at the moment but they are negotiated just as hard, and I am sure all the officials I mentioned before would acknowledge that a lot of work goes into developing these arrangements.

I must now call on National to go through and fulfil those agreements—to fulfil their meaning so they are not just left off to the side but form an important part of our relationship with ASEAN countries, by improving labour standards in those countries, and by improving environmental standards in those countries. But New Zealand can also learn as well, and the experience of Chile tells us that we have learnt a lot from our environmental cooperation with Chile.

The last matter I want to mention is around process, and my colleague Pete Hodgson has already addressed a lot of these issues. The Foreign Affairs, Defence and Trade Committee in considering this treaty before it came to the House discussed the fact that the process around how New Zealanders engaged with free-trade agreements is something we could look at more. These kinds of agreements are not really fully understood out there in the community, their implications are not always fully understood, and the benefits are not always fully understood. I think we need a process that opens up these agreements so people can understand them more, there can be input from a wide range of sources, and all New Zealanders can ensure that they understand the benefits that this kind of legislation and this treaty bring us. Thank you.

TIM MACINDOE (National—Hamilton West) Link to this

As has been alluded to by previous speakers in this debate, the ASEAN-Australia-New Zealand Free Trade Area Bill represents a very significant development in our country’s international trade arrangements. I commend the Minister and his officials in the Ministry of Foreign Affairs and Trade for the considerable and important work that they have undertaken in their negotiations and in the preparation of this bill.

In the current economic climate it is especially important for a small country that depends very heavily on export earnings to do all it can to facilitate trade by reducing and eliminating barriers, and by reducing costs for our producers and businesses as they seek to operate in significant markets, such as those that constitute the ASEAN group of countries. ASEAN represents a market of more than 586 million people and accounts for more than US$1.4 billion in global trade. In recent times New Zealand has secured a significant increase—some 121 percent since 2000—in its exports to ASEAN countries.

This is a welcome development, as a result of which the ASEAN group of countries now constitutes our third-largest trading partner and the third-largest export market for merchandise goods.

An important outcome of the agreement is that by 2020 there will be no tariffs on 99 percent of New Zealand’s current exports to the vital markets of Indonesia, Malaysia, Viet Nam, and the Philippines—four major economies in Asia. During the same period ASEAN exports to New Zealand will also increase, through the gradual elimination of tariffs. However, the agreement provides protection for some important industries, especially in the manufacturing sector, by scheduling longer phase-out periods for tariffs that are associated with sectors that may be sensitive to the potentially negative effects of adjustments in industries such as manufactured products, clothing, footwear, carpets, and certain textiles. I am sure that members will join me in welcoming that flexibility and long-term thinking.

It was encouraging to hear the Leader of the Opposition, at the beginning of this debate, lending his support to this agreement. I acknowledge both his personal contribution as the previous Minister of Trade and the bipartisan approach that has been taken to New Zealand’s trade negotiations in recent times. It is difficult and demanding work, and having that consensus on the home front and in this Parliament is hugely important to those who work so hard on our behalf to secure the best deal that is achievable. Trade creates jobs, builds vital market access for our products, and secures the export earnings that all New Zealanders depend upon for economic growth and our nation’s collective wealth.

As my colleague the member for Wairarapa noted, Asia’s share of global trade has increased markedly in recent years, and it is essential for New Zealand to ensure that we are well positioned to take advantage of that development. So it is particularly exciting and impressive to observe that this agreement marks the first time that ASEAN has negotiated a comprehensive free-trade agreement as part of a single undertaking—that is, an agreement that spans goods, services, investment, and other aspects of modern free-trade agreements, such as intellectual property and competition policy. Thus it really does represent a new high-water mark in New Zealand’s integration with the combined ASEAN market.

I listened carefully to Dr Kennedy Graham’s address, which commenced with tributes to the Hon Tim Groser and the Hon Phil Goff for their personal contributions to this agreement. It was good to hear him confirm that the Green Party is not opposed to free trade per se, and his recognition that trade is critical to the stimulation of economic growth. He posed four questions in relation to the agreement, which will, no doubt, be answered during the subsequent readings of this bill, and I trust those answers will be sufficient to secure the Green Party’s support for this agreement.

I acknowledge Dr Kennedy Graham’s final point, which focused on the continuing house arrest of the Burmese leader Aung San Suu Kyi. There has been longstanding concern in this country about the suppression of human rights in what is now known as Myanmar, and it is a concern that is keenly felt on all sides of this House. However, in negotiating a comprehensive free-trade agreement with a range of countries, of which Myanmar is one of the smallest, it does not follow that we are turning a blind eye to that country’s disturbing record on human rights or condoning the incarceration of a widely respected and rightful leader. To the contrary, it is to be hoped that increasing trading relations will secure increasing diplomatic influence, especially for Australia and New Zealand as we strive to encourage the Myanmar military Government to release Aung San Suu Kyi and demonstrate respect for democracy and the rule of law.

But we cannot ignore the fact that we now have significant trade agreements with a number of countries whose policies and customs we cannot admire or share, and if we were to set such a high moral benchmark to all decisions about trading partners that it led us to reject trade with countries that have unsatisfactory Governments, we would absolutely kneecap our own productive sectors and economy. That would do little to bring about political change in those countries, but it would certainly bring about disastrous changes in ours. Nevertheless, I acknowledge Dr Graham’s concern and strongly share his desire to see the long and abhorrent discrimination against the Nobel Peace Prize - winner brought to an end.

It was a pity to hear Stuart Nash trying to score a cheap point with his rugby analogy about the respective contributions to this agreement of Phil Goff, Helen Clark, and Tim Groser. In the interests of fairness it would do Mr Nash well to remember that Mr Groser came to this House nearly 4 years ago, after a long and distinguished career as a trade negotiator for this country. There can be few New Zealanders who can stand more proudly on the world stage of trade agreements than the Hon Tim Groser. I have no doubt that Phil Goff and Helen Clark would certainly acknowledge his sterling work on our behalf while they were Ministers in the last Government, and I imagine that they would urge Mr Nash to reflect on the comments that he made in what has been, in the main, an otherwise constructive and intelligent debate over a measure of vital national significance.

Like Grant Robertson, I conclude my remarks with some observations about two of the key outcomes of this agreement—that is, the memoranda of agreement on labour cooperation and environmental cooperation with the Philippines. The agreement on labour cooperation provides a basis for both countries to promote sound labour policies and practices through an approach based on cooperation, consultation, and dialogue that takes into account the unique circumstances, needs, and future aspirations of New Zealand and the Philippines—and I agree with Mr Robertson that these are significant. This agreement, it needs to be noted, is a treaty and is legally binding, and it has been included in the context of the ASEAN - Australia - New Zealand Free Trade Area. Under it there are a number of key undertakings, of which I will mention just a few. New Zealand and the Philippines reaffirm their obligations as members of the ILO and their commitment to the principles of the ILO Declaration on Fundamental Principles and Rights at Work. They agree to work to ensure that their labour laws, regulations, policies, and practices are in harmony with international labour commitments, and they support the commitments made by the parties to the memorandum of agreement with a view to improving the working conditions and the quality of work life in their respective countries.

Meanwhile, the memorandum of agreement on environmental cooperation with the Philippines seeks to promote sound environment policies and processes by establishing a set of shared commitments, a framework for cooperation, and a mechanism for consultation, which, taken together, allow the parties to address any environmental issues through cooperation, consultation, and dialogue. Again, I hope that these are measures that will encourage the Green Party to throw its support behind what could become a unanimously supported agreement. Again, the memorandum of agreement on environmental cooperation with the Philippines is legally binding and has been concluded in the context of the ASEAN-Australia-New Zealand Free Trade Area.

I conclude by simply mentioning those aspects, because they demonstrate the potential of free-trade agreements and international treaties to secure improvements and cooperation across a wide range of geopolitical matters. Again, I pay a warm tribute to all the negotiators, Ministers, and officials for the comprehensive nature of their concerns and achievements. They have done the job well. They have done our country proud. I am delighted to support the measure.

Hon TIM GROSER (Minister of Trade) Link to this

I move, That the Foreign Affairs, Defence and Trade Committee consider the ASEAN-Australia-New Zealand Free Trade Area Bill, and that the committee report finally to the House on or before 25 May 2009.