ASEAN-Australia-New Zealand Free Trade Area Bill

Hon CHRISTOPHER FINLAYSON (Acting Minister of Trade) Link to this

I move, That the ASEAN-Australia-New Zealand Free Trade Area Bill be now read a second time. I begin by thanking the Foreign Affairs, Defence and Trade Committee for its consideration of the bill and for reporting it back to the House. The committee’s recommendation is that the bill be passed with no amendments.

The committee also conducted an international treaty examination of the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area and its associated treaty and non - treaty level agreements. The enactment of this bill will allow the agreement and its associated treaty-level outcomes to be brought into effect. I would also like to thank those who made submissions on the treaties and on the bill. The report reflects the strong agreement in this House and the wider business community for the free-trade area, as well as for alternative views.

As the Foreign Affairs, Defence and Trade Committee noted in its report tabled in the House on 9 April, this free-trade agreement is a significant agreement for New Zealand that provides new opportunities for New Zealand exporters and investors. The scale of the opportunity is significant. New Zealand - ASEAN two-way trade was worth more than $12 billion last year, which is 85 percent greater than New Zealand’s trade with China for the same period. ASEAN is our fastest-growing market, with New Zealand goods exports growing 121 percent—or 25 percent per annum—since 2000. The free-trade agreement will further facilitate this growth.

A number of submitters welcomed the very positive outcome for services. The agreement provides new market access opportunities and greater certainty for services trade with sectoral commitments by ASEAN countries that, in many cases, significantly expand on their existing commitments in the World Trade Organization. This is an important outcome, as services currently constitute about 30 percent of our exports. Submitters also recognised the agreement’s investment protection disciplines as providing improved certainty and security for New Zealand investors and investments in ASEAN countries. Importantly, the committee also reported that a failure to sign on to the agreement would leave New Zealand exporters and investors at a disadvantage in the region.

ASEAN is now an integration hub for free-trade agreement activity in Asia. It has free-trade agreements in place with China, Japan, and Korea, and it is about to sign an agreement with India. It is also in free-trade agreement negotiations with the European Union. The agreement ensures that New Zealand exporters and investors enjoy the same treatment—and, in some cases, better—that is granted to ASEAN’s other free-trade agreement partners, in addition to an advantage over our key competitors in the region who do not already have a free-trade agreement in place.

The committee’s report recognises that the agreement does not affect New Zealand’s ability to protect public morals; human, animal, or plant life; national treasures or sites of historical or archaeological value; or its ability to support the creative arts, where measures do not constitute an arbitrary or unjustifiable discrimination or a disguised barrier to trade. The committee was also satisfied that the agreement, through a specific provision, protects the intellectual property rights of Māori and New Zealand’s ability to take measures to accord more favourable treatment to Māori in fulfilment of Treaty of Waitangi obligations.

Some concerns were raised about the effect the agreement may have on the New Zealand manufacturing sector and on employment. The agreement is expected to have a positive effect on exports, gross domestic product, and employment in New Zealand, including in the manufacturing sector. Significantly, improving market access for New Zealand firms through a progressive trade agenda that includes free-trade agreements like this, ensures that we continue to stimulate economic growth and help safeguard the jobs of the many thousands of New Zealanders who work in or support export-oriented industries.

As a consequence of this 12-country free-trade agreement, New Zealand manufacturers and producers that export directly to the ASEAN region, or that use imports from the region as inputs into their products, will enjoy the benefit of the elimination of 99 percent of all tariffs on current trade with key ASEAN economies. Furthermore, the enhanced regional rules of origin encourage Australian and ASEAN producers to make greater use of New Zealand inputs in regional and global supply chains.

The agreement takes import-sensitive industry concerns into account through the phased removal of tariffs to smooth any adjustment process. New Zealand has left the elimination of existing tariff protection for its import-sensitive industries until the end of the tariff phase-out, particularly between 2017 and 2020. That is a time frame of up to 12 years. This represents New Zealand’s most conservative tariff phase-out time frame ever negotiated in any free-trade agreement to date.

New Zealand’s ability to regulate the financial services sector was another concern that was raised. Under the agreement, existing regulatory and policy settings for services and investment are protected, as is this country’s ability to regulate the financial services sector where this regulation does not constitute an arbitrary or unjustifiable discrimination or a disguised barrier to trade.

The free-trade agreement’s financial services annex includes specific provisions that protect New Zealand’s current regulatory settings and preserve its ability to regulate its financial services sector. In fact, the annex on financial services also provides a framework that may help to prevent any future financial crisis in New Zealand by providing for enhanced transparency and certainty through provisions relating to the application of prudential measures, transparency, and transfers of information relating to the broader sector.

I note the concern expressed in the committee that the agreement undermines New Zealand’s ability to tackle tobacco use. The agreement does not in any way change New Zealand’s current approach to tobacco regulation, nor is it likely to have any significant impact on the price or availability of tobacco products in New Zealand. Furthermore, there is nothing that contravenes or undermines New Zealand’s commitments under the Framework Convention on Tobacco Control. New Zealand currently employs a number of policy tools outside trade policy to regulate tobacco use, including education, excise taxes, and labelling requirements. The use of these policy instruments to address tobacco use is not undermined or compromised in any way by this free-trade agreement.

In conclusion, I point out that the free-trade agreement represents a significant achievement and new opportunities for this country. It ensures we are not left on the sidelines of the rapid economic integration of east Asia. The bill amends New Zealand’s domestic legislation so that the agreement can be brought into force. It amends the Tariff Act 1988 in order to implement preferential tariff rates on imported goods from free-trade agreement parties and enable transitional safeguard measures to be applied in appropriate circumstances on such exports.

The bill also amends the Customs and Excise Act 1996 by creating a system for issuing certificates of origin for goods exported from New Zealand to ASEAN markets. The Government would like to see the bill enacted as soon as possible so that New Zealand can be ready to enter the free-trade agreement into force by the 1 July target agreed by the parties. I commend the bill to the House.

Hon MARYAN STREET (Labour) Link to this

I rise to speak to this legislation, which enacts something that has been in the making for many years. The ASEAN free-trade agreement enshrined and implemented in this legislation has been a long time coming but, given the state of the global recession as we now see it, it is timely that this legislation is before us and that the negotiations around the agreement have been concluded. I had the pleasure of accompanying the Minister of Trade when this free-trade agreement was signed in Thailand, and it is a great pleasure to be the spokesperson in a portfolio where there is truly a bipartisan approach to trade. I underscore that point, because the kind of time frame in which businesses choose to invest in foreign markets is generally much longer than an electoral cycle. The last thing that New Zealand businesses need for a long-term plan, some strategic engagement with foreign markets, and the application of a great deal of investment needs, is for those things to be interrupted by a very short 3-year electoral cycle in New Zealand. It has been a very good thing that over the last 10 or 15 years New Zealand has enjoyed having both Labour and National adopting a bipartisan approach to the trade agenda—in fact, working under New Zealand Inc. as its operation, effectively, for trade policy. This is a significant moment.

The ASEAN market is hugely significant to New Zealand. We have some agreements already in place with some ASEAN nations, including separate agreements with Singapore, Brunei, and Thailand. But this agreement binds together 12 countries—10 ASEAN nations, plus Australia and New Zealand—in a market that has the most extraordinary potential for growth. It is very clear that in the operation of this free-trade agreement, from New Zealand’s point of view, even a very small percentage increase in trade represents a huge benefit for our producers. This is a market where, quite simply, the volume of the population and the volume of the emerging middle classes really represent an extraordinary opportunity, particularly for New Zealand’s food-producing industries. The quality of our produce, and for once the proximity, relatively speaking, of New Zealand to these markets, are two elements that position us very well to take advantage of this free-trade agreement.

There is another matter that I will touch on in the context of this free-trade agreement. I have talked significantly about the opportunity and the value for New Zealand and New Zealand industries to enjoy access to these markets over quite a short period of time, in the scheme of things, and eventually at no tariffs. It depends on the country as to just how quickly tariffs will be phased out, but generally speaking they are moving quite quickly for us and moving more quickly for us than for others in the ASEAN agreement, which is a very good thing. So although we will enjoy this access eventually, we have to remember also that there are three developing countries in this ASEAN grouping. I think particularly of Burma, Laos, and Cambodia. Those three developing countries have a particular status as “least developed nations” in the context of a free-trade agreement such as this one.

I have for a long time been very committed to the achievement of democracy in Burma. Sometimes critics have asked why I am entering a free-trade agreement with ASEAN nations that includes in this agreement a brutal regime, one that is more oppressive than almost any other in the world.

JOHN HAYES (National—Wairarapa) Link to this

I am really intrigued by what my colleague has said and by the reflections on the fact that Myanmar—or Burma, depending on which set of words one wants to use—is a member of ASEAN and that we should be concerned about this. I make the point because here is today’s Trans Tasman. The No. 1 headline is “NZ in the Economic Trough, Export Sector Flat on its Back”. The second headline is “Dairy Sector’s Debt Bubble about to Burst?”. So we can wring our hands about the good people of Burma or we can focus on the purpose for which each of us was brought into this Parliament, and that was to bat for our collective constituencies.

I am here to support this bill because that is what we have to do if we are going to lift this economy up the OECD ladder. I reflect particularly on Burma because if I go back to our select committee’s report back, I would draw attention in it to the minority view of the Green Party. The Green Party minority report says: “The Green Party is not supporting the legislation because of the objections noted in the party’s minority view on the ASEAN-Australia-New Zealand Free Trade Area Agreement. The Agreement, and this legislation, constrains New Zealand’s right to ban tobacco imports on legitimate health grounds.” I thought that that was a pretty selective issue on the part of the Green Party because in another context we see them out batting furiously for the people of Burma. I have no objection to them doing that but I would like to see a principled approach. If we are going to attack this legislation and not support it on grounds of tobacco, it would have been nice if the Greens had also focused on the membership of Burma in the ASEAN group.

Earlier this week I spent my luncheon with a number of ASEAN heads of mission. The reason was that we, as members of this Parliament, need to be focused on going into bat for the interests of our economic activists—people who actually deliver to our economy. This bill is hugely important to us because the ASEAN market is the third-largest export market in the world; it brings together 566 million people. I was sitting at lunch earlier this week in Wellington with the representatives of those 566 million people, and together those people represent US$1.4 billion in trade.

Let us revisit this issue of why this legislation is important. It is important, and it has cross-party support—except from the Greens—because it will expand opportunities available to New Zealand exporters by removing barriers to trade. It will help us establish sound frameworks under which trade and investment can flourish. We need that to happen to get rid of the Trans Tasman headlines that we have seen here today.

We want to move this economy forward, we do not want to stay in an economic trough, and we do not want the dairy sector’s debt bubble to burst. We need to provide additional incentives in New Zealand to utilise New Zealand materials by way of incorporation of the cumulative principle in the rules of origin, which allows originating goods to be cumulated between parties and used in the production of further goods. This sounds a bit academic but it is fundamentally important to increasing our productivity. I shall digress for just one minute to try to give a practical example of the importance of these trade agreements to us. At the moment Mr Groser is offshore. He has been actively engaged in trying to establish a free-trade arrangement with Korea. What is the consequence of that? Well, if we can get New Zealand kiwifruit into the Korean market without a duty payment, we will save $8,000 per kiwifruit farmer in this country. In other words, the simple stroke of a pen to sort out this problem with Korea will increase, on average, every kiwifruit farmer’s income by $8,000.

The ASEAN-Australia-New Zealand Free Trade Agreement will provide much greater certainty and transparency for New Zealand businesses operating in ASEAN markets. We will put in place a range of mechanisms that will allow individual New Zealand exporters to sit down with the Government officials in those 10 ASEAN countries and to have a formalised arrangement for addressing their problems when issues arise in export areas. That will hugely reduce transaction costs and the costs of doing business in those countries. That applies to the direct export of products and also to the goods and services trade.

This agreement between the 10 ASEAN countries, Australia, and New Zealand will assist New Zealand investors operating in the ASEAN markets, because it will allow State-to-State investors arbitration procedures to be brought into force. We will be giving investors, exporters, and traders a more certain market platform to operate from, and that is important from the point of view of alleviating, or reducing, business risk. Many of our companies are quite small. Risk is very important to them; it is a very high-cost area. So the Government is moving forward to try to insulate our companies from that.

The other really important area is around profile. When we engage in a free-trade agreement of this sort, we inevitably raise the commercial profile of New Zealand and New Zealand companies. We get huge free advertising, which can only benefit our exporters. That is another reason that will enhance New Zealand’s strategic engagement with the ASEAN region and more broadly. These things are absolutely central to lifting our economic well-being.

The agreement will also provide a framework for more effective discussion and cooperation on issues around labour and the environment, for example with the Philippines. These outcomes supplement existing instruments on labour and the environment with other ASEAN parties, because we have those in place already with Thailand, Brunei, and Singapore. It is really important that we can engage with all the ASEAN countries, and engagement with the Philippines is a particularly important issue.

The expansion of trade in goods and services as a result of reductions in tariff barriers with duty savings, and new exporters, will really assist small New Zealand companies. It will be good to get greater regional integration, including an expansion and a facilitation of improved investor business links, which will further improve productivity gains, with improvements in productivity as a result of dynamic effects, including the potential for enhanced levels of investment, and greater innovation and cooperation.

One of the things that we have to watch for is that we do not lose our bright ideas to ASEAN countries. I know that some of those ASEAN countries actively look across to New Zealand for our No. 8 fencing-wire innovative solutions. They like to vacuum those up and take them off to places like Singapore, repackage them, and sell them. So having this free-trade agreement in place will enable us to assist those companies and in general to move this country forward towards far greater economic prosperity. Thank you.

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

I need not necessarily take all of my allotted 10 minutes to make some comments but I have a few things to say, and I will try to say them as briefly as I can.

The first is that this is a very important trade deal. It is a strange situation that it is not seen as being particularly important. It is not optically as important in the eyes of many people as, say, China or optically as important as, say, CER but that is because ASEAN is a collection of countries. So we do not immediately know; the ordinary person in the street might find it a little difficult to rattle off what the ASEAN countries are, and, as a result, the importance of the agreement seems to be just passing below the radar a little bit in the New Zealand public’s eye. I will use two statistics to show how important it is. First, ASEAN has more than half a billion people and has had a compound average growth rate, in trade volumes, of 24 percent in each of the last 3 years. That is an astonishing figure. So I want to just underscore the importance of it. Secondly, everyone thanks everyone else about trade agreements, and that is the right thing to do in this House, but let us acknowledge Tim Groser, let us acknowledge Phil Goff, and let us acknowledge Jim Sutton before Phil Goff. These were the people who were involved. But now let us acknowledge the officials from the Ministry of Foreign Affairs and Trade, who probably should not be named, but boy did they put in the hard yards! It was a complex free-trade agreement because it was so multilateral and because ASEAN comprises countries that are quite different. It was not a perfect agreement by any means, for that reason, but it is a very, very solid beginning and one that we can build on.

I will make some brief comments about the Greens’ minority reports. In an earlier reading of this bill I took care to make some, I suppose accommodating, comments towards the Green Party and its approach to trade in general. Indeed, the Green speaker who followed me thanked me for that, and that was nice. I do not want to withdraw any of those accommodating comments, because I am respectful of the Greens’ position on trade in general. They are hesitant free-traders: they are not antithetical to trade, but they do not embrace it as freely as do most parties in this House.

However, if I may, I say to the Greens that their excuses are starting to run a little thin in their minority reports. The bit about tobacco imports is easily dealt with. Yes, we can ban tobacco imports from ASEAN countries if we want to—not that we have any, but we can. We import nearly all our tobacco from Australia, as it happens. If we were to have that ban, we would have to ban tobacco from all countries. But the World Trade Organization rules say that we cannot pick off a particular country for a ban on tobacco, if that is what we want to do as a nation; we have to do it for all countries. That makes sense, because if we did it only for some, we would be importing from others. The Greens have raised that flag erroneously, I am sorry to say.

The other point is that we never did have a national interest analysis on the issue of how many climate change gases would be generated by that extra trade. Well, that is true; we did not. But then again, if one is to approach climate change one cannot approach it through trade; one has to approach it through the economy and society as a whole. The emissions trading scheme legislation, which is now on ice, was a fantastic response to the issue of climate change as it affected New Zealand. It was strongly supported by the Green members, and I thank them for that yet again. But I point out that if one is going to take an approach to climate change, one cannot do it in such an itsy-bitsy way as in a minority report on the ASEAN free-trade agreement.

The last thing I will say is to the Government. I am not convinced that the support that will be delivered through the Ministry of Foreign Affairs and Trade and New Zealand Trade and Enterprise—and especially the latter—into the ASEAN countries will be good enough; I am not convinced. In the case of China, we moved quickly to strengthen the New Zealand Trade and Enterprise presence there. We moved quickly to get a beachheads programme up in China; we moved quickly to have planeloads of business people go to China for the celebrations, the ceremonies, and so on; and we had a lot of focus on the aftermath of the signing of the China free-trade agreement.

But it has not been so with ASEAN. The effort has been muted. What is more, New Zealand Trade and Enterprise has had its budget cut. We have this free-trade agreement at a time when we are saying to ourselves that we have a current account deficit, we need to export our way out of this recession, so let us go and cut the budget of New Zealand Trade and Enterprise. That is just dumb. It is just dumb, and I think that another Government speaker may want to get up and defend that. But I would have thought that in the May 2009 Budget there would be a significant increase in New Zealand Trade and Enterprise funding, precisely because that would help to drive the engine that will pull us out of the recession we find ourselves in. Of course we all know that it will address, somewhat, the current account deficit as it goes.

I am critical of the Government for that, and I do not think that it has done a full, rounded job. It is great that the Government has closed the deal, it is great that we have this legislation, and it is great that we have made the progress we have. I warmly congratulate all who have been involved. But what about the aftermath? Where is the support to New Zealand business? Where is the increased support to New Zealand business? These people may not have gone into Viet Nam, or the Philippines prior. That opportunity, which was not open, is now open. How is it that at the same time as this free-trade agreement has been signed and is now being written into law, on the passage of this legislation, we have decided not to increase but instead to cut the degree of support that New Zealand businesses will receive in the export drive that must follow?

KEITH LOCKE (Green) Link to this

The Green Party will be voting against the ASEAN-Australia-New Zealand Free Trade Area Bill. I thank other members for their comments. As Pete Hodgson said, the Greens are not at all against trade or trade agreements; we are against agreements that reduce tariffs to nothing, across the board, in an ideological way rather than in a practical way. We are against agreements that open up New Zealand to foreign investment in an across-the-board way—be it investment in production, services, or whatever. That is our concern, because we believe that the motivation of the other parties in this House is more ideological than practical.

If we look at the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area, in practical terms, we see that there are some advantages for our exporters. We often refer to our dairy exporters gaining greater access to overseas markets, and perhaps getting more returns. But, at the other end, our domestic manufacturers will compete against very low-wage economies. In the ASEAN area, Viet Nam has expanded quite dramatically as a manufacturer and exporter, as have some other ASEAN countries. Thailand is another country that exports, either actually or potentially, quite a bit our way. There is a serious problem in that our manufacturing industry is declining quite rapidly. Our manufacturing associations are much more cautious about these agreements than the export sector is. The clothing and textiles industries are losing much of their skills base. If we want a really well-rounded economy, with at least a minimum amount of skills in textile and other manufacturing industries, we have to be careful not to expose our manufacturers to the full blast of competitors from very low-wage economies—economies with which we are to be partnered under this agreement.

The other criticism, which was made in submissions to the Foreign Affairs, Defence and Trade Committee, was whether this time of a world financial meltdown was the right time to have a free-trade and services agreement that covers, in particular, financial services. Under such an agreement, we would have to allow a financial instrument—be it a futures contract, or one of those funny names that have come up in the American-led financial crisis—operated by a Malaysian or Singaporean firm to be introduced into New Zealand. We would not have control over it.

At the present time we are trying to work out ways to regulate the financial industry. President Obama is doing something on financial regulation this week. This agreement goes in the opposite direction. The Greens have been saying that there is some good in these free-trade agreements. That is true. We are not totally against this agreement. But, hold on, is this the time to be throwing the doors wide open to these different financial services in particular? There have been discussions on these matters in this Parliament over the last few days. We even find it hard to control the Australian banks making huge profits from having their mortgage rates way above the official cash rate, which is determined by the Reserve Bank. It is even more difficult to control some of the banks and financial services people in the ASEAN bloc, which is even more distant from us and operates in a different framework from that of our Australian brothers and sisters.

I turn to the point raised by Maryan Street about making sure we promote democracy in Burma. The Greens are at one with that member, with Labour, and with most members in the House in going all out in promoting democracy in Burma and opposing the current trial of Aung San Suu Kyi, the leader of the democracy movement in Burma, who has been unjustly held in prison for so many years. When it comes to the economic dimension of our relationship, it is true that under a measure brought in a few years ago imports from Burma are free to come into New Zealand. The Green Party is not for a total ban on imports from Burma, although we note that the European Union and America have certain restrictions on imports. The European Union, for example, has banned the importation of timber and gemstones from Burma, because they are used by members of the junta to enrich themselves, and they use that enrichment against the people. The Green Party here and the green parties in Europe support that ban. Those sorts of targeted sanctions have some validity. The United States has targeted sanctions on the assets of the Burmese junta in the United States. It has frozen those assets, it has placed certain restrictions on investment in Burma, and it has placed certain restrictions on imports from Burma. Economic sanctions can be a useful complement to the political pressure placed on Burma. The political pressure on Burma takes the form of strong criticism, but there is also engagement. The United States engages with the junta. It is not an isolationist policy; it is an engagement policy. It is also a policy that involves economic pressure.

Under this agreement we have to give preferential treatment to Burmese junta members who invest in New Zealand. If those generals, who enrich themselves from native timber, or whatever, want to invest in any New Zealand company, they have the absolute right to do so, under this agreement. This agreement actually gives them more rights than they had before, whereas the United States and Britain have been taking away the rights of the junta. Similarly, the agreement gives New Zealand companies more rights to invest in Burma, in collaboration with the junta, and against the people, who are often used as slave labour. Some of the big projects in Burma are done with slave labour. That is an apt term, because those people have no rights. They only get fed, and they are housed in camps, and all the rest of it. They are effectively slave labour. This agreement, if Parliament supports it today, gives extra rights to New Zealand companies that are involved in investing in slave labour. The question of slave labour has come up at the select committee. The Government was quite opposed to our developing a clear stance on slave labour, because it was seen to be too vague and indefinable. There was quite a discussion on slave labour at the select committee. The Trade Aid organisation, which was promoting a ban on slave labour, got short shrift from the Government on that, unfortunately.

The question of tobacco came up in this debate. The anti-smoking organisation Action on Smoking and Health (ASH) was very strong in its submissions. It did not say that there should be absolutely no trade in tobacco. The Green Party does not say that, at the present time, there should be absolutely no trade in tobacco. ASH said that we do not include trade in machine-guns and things like that in a free-trade agreement; we can have exceptions. We can still have trade, but we do not need to give preferential treatment to certain types of trade. Tobacco, arms, and things like that—the “bads” in our society—can be separated from a free-trade agreement to eliminate tariffs. That was all that ASH said. That is all the Green Party says.

When we put the “bads” outside the agreement, it gives us flexibility if, at a future time, we want to put restrictions or some sort of qualification on certain types of tobacco or on all tobacco that is imported into New Zealand. It will not create difficulties with the country where that tobacco comes from. It may be that not much tobacco is coming from ASEAN at the present time, but we will not get into the battle of whether a particular restriction put on one type of tobacco, which, say, has more nicotine, is a trade restriction. We will have more freedom to put on the restrictions we want—although we might still be constrained by some World Trade Organization provisions.

Tobacco is traded in an entirely different context, because it is a harmful product. World society is trying to reduce consumption of, and trading in, tobacco. We are not trying to reduce the price. With all other goods, the concept is that by trade we reduce the good’s price to the consumers. We are not trying to do that with tobacco. It is a different concept altogether. I think the Green Party’s position on that is quite sound. Thank you.

Dr PAUL HUTCHISON (National—Hunua) Link to this

I regard the ASEAN-Australia-New Zealand Free Trade Area Bill as an incredibly positive and important bill. The bill is supported on a bipartisan basis. It is a shame that the Greens take a different view on the bill, and I find it very hard to understand how they see that imposing restrictions will make a difference to the regime. In fact, I think the opposite is more likely to be the case.

Nevertheless, I agree entirely with the Hon Mr Hodgson, who made the point that the genesis of the bill has taken place over a considerable period of time. I would go back even further, to the Hon Dr Lockwood Smith, for his work in the early 1990s—

PHIL TWYFORD (Labour) Link to this

I rise on behalf of Labour to speak in support of the ASEAN-Australia-New Zealand Free Trade Area Bill. I will start with just a few brief comments in response to earlier contributions from Green and National members about the ethical underpinnings of the debate around free trade. I think they are important and are worth discussing. Out there in the community and in the public, New Zealanders, like people all over the world, have some anxiety about globalisation, and fears about the possible loss of jobs and livelihoods as a result of free trade and globalisation. I say very clearly that on the Labour side of the House the approach we take to this issue is one of engagement. We are internationalists; we believe we have an important role internationally on all sorts of issues. The purpose of our foreign policy is not about only our own economic prosperity; it is about being part of an international community. We believe that we can do well through trade and that we can also do good things in the world.

I was disappointed by the contribution that I heard from the member for Wairarapa, John Hayes. He seems to practise a fortress Wairarapa mentality when it comes to foreign affairs. He thinks that in a recession we should retrench back behind our picket fences in the Wairarapa and look only to our own short-term economic benefit. That is precisely the kind of attitude that is driving the protectionism that we see in Europe and in the United States as a result of the global economic crisis.

When it comes to matters of trade we differ from our friends in the Green Party. We embrace wholeheartedly the need for trade and economic engagement. It is not because we are blind to the economic and social downsides of globalisation; it is because we believe that globalisation is a reality in the world today. There is no choice but to engage, and to do so economically, socially, politically, and diplomatically. If one looks at the amazing developments in New Zealand foreign policy over the last decade or so, and particularly the free-trade agreement with China, one sees that the developments have been pursued with a view that our economic destiny lies with Asia. The prosperity of our children and our grandchildren rests on how successfully we can engage with our neighbours in that region, which will be the economic powerhouse in the global economy for the next century.

We cannot engage simply on the basis of treating those countries and their people as potential customers. It has to be a fully integrated strategy that has been thought through and that sees us becoming truly a part of that regional community. The free-trade agreement with China was premised on that kind of thinking, which is that we have to have a full relationship with the Chinese Government and with the people of China so that our firms can do business there. We also need to have a full relationship with China so that we are in a position to have conversations with them about human rights, labour standards, the environment, and the rights of Chinese people to organise themselves into free and independent trade unions. How will we do that if we do not have a substantive, real relationship with them?

Labour believes that we must engage trading opportunities in our region as vigorously as we possibly can. We also believe that we should do as we have done with this agreement and talk about labour and environmental standards. We were able, as part of this process, to conclude agreements with the Philippines on both labour and the environment. We must continue to talk to our trading partners about human rights, and we must pursue those concerns in multilateral forums at the same time.

Labour strongly supports this bill. It is a major achievement in our foreign policy and in our trade agenda over the last few years. I recognise, as colleagues have before me, the work that has been done by previous Ministers of Trade, including Phil Goff. I commend the way that the current Minister, the Hon Tim Groser, has continued with this work in a bipartisan way, and I also commend the work that has been done by officials from the Ministry of Foreign Affairs and Trade. They have conducted the entire body of negotiations in a really—