Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill

Hon JIM SUTTON (Associate Minister for Trade Negotiations) Link to this

I move, That the Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill be now read a third time. This bill amends New Zealand’s domestic legislation to enable it to become party to the Trans-Pacific Strategic Economic Partnership Agreement, a four-way economic partnership between New Zealand, Chile, Singapore, and Brunei Darussalam. Membership of this partnership is open to other nations in the Asia-Pacific region, and I predict that a number will, indeed, seek to join it.

The agreement is a treaty that liberalises and facilitates trade in goods and services, improves the business environment, and promotes cooperation on a broad range of economic ideas of mutual interest to all four countries. It establishes a free-trade area that spans the Pacific and joins Latin America, South-east Asia, and New Zealand, and in doing so will open up new opportunities for New Zealand exporters. Passage of this bill will enable New Zealand to ratify the agreement. The agreement will enter into force 30 days after ratification by at least two of the four signatories.

Initial tariff cuts will take place when the Trans-Pacific Strategic Economic Partnership Agreement comes into force for a party. In the case of Chile this will result in the immediate elimination of tariffs on 89 percent of current New Zealand exports to Chile. All remaining tariffs on exports to Chile will be phased out by 2017. Brunei will bind at zero tariffs covering 92 percent of New Zealand’s exports to Brunei, with the remaining tariffs eliminated by 2015. Tariffs between New Zealand and Singapore are already zero under the existing New Zealand – Singapore closer economic partnership agreement.

To help secure these gains on trade in goods, the trans-Pacific agreement contains rules governing the free-trade area. These include rules to determine which goods qualify for tariff preferences as well as rules to counter unfair trade. It also includes broad coverage of services, which will make it easier for New Zealand service providers to operate and compete in the markets of Chile, Singapore, and Brunei. The agreement meets the Government’s aims in entering negotiations for closer economic partnerships: of providing newer opportunities for exporters, and guarding against erosion of benefits to New Zealand exporters from preferences afforded to third parties. The framing of the services commitments in the agreement provides legal certainty and transparency for New Zealand services exporters, while retaining New Zealand’s ability to protect sensitive sectors such as social services, water, and marine resources.

Successful completion of this agreement also serves the objective of wider trade liberalisation within the APEC region as a whole. As the Foreign Affairs, Defence and Trade Committee noted in its report to the House under the treaty examination procedures, the agreement serves New Zealand’s objectives of broadening relations with Latin America and Asia as well as promoting New Zealand’s wider trade policy interests in APEC and multilaterally. The Trans-Pacific Strategic Economic Partnership Agreement is important, therefore, for what it can deliver economically for New Zealand, and also for its contribution to our strategic trade objectives. The Government’s confidence in the agreement is shared by a wide range of New Zealand businesses and industry groups, and by educational and scientific institutions, who have publicly welcomed the successful negotiation of the agreement and are looking forward to its entry into force.

Finally, I want to acknowledge and thank members opposite for the broad support the Government’s trade negotiations efforts receive in the House. Our prosperity as a nation, and our ability to pay for the lifestyles and social services that are so important to us as New Zealanders, are very much dependent on our ability to sell our goods and services and compete on the world market. New Zealand needs global trade rules that allow us to compete on a level playing field on our own merits, and on the quality of our products and innovations—a playing field not distorted by subsidies and trade barriers that are not only economically damaging but also promote wasteful and environmentally unsustainable practices.

The ultimate goal, supported by the vast majority of members across the House, is the conclusion of comprehensive global trade agreements through the World Trade Organization. The successful completion of high-quality free-trade agreements such as the Trans-Pacific Strategic Economic Partnership Agreement provides invaluable impetus towards that ultimate goal, by demonstrating and modelling a commitment to the principles of free trade that stretches right across the Pacific. Ratification of this agreement once again demonstrates New Zealand’s credentials as a forward-looking open economy and a progressive free-trade partner. I commend the bill to the House.

The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

Before I call the next speaker, I remind members in the House to look at Speaker’s ruling 16/2: “Cellphones should be switched off within the hearing of the debating chamber.” They are not allowed to be on. It is disrespectful to other speakers.

TIM GROSER (National) Link to this

I rise to support the bill. Of course, my party, the National Party, supported the expeditious passage of this bill through the Foreign Affairs, Defence and Trade Committee. I also rise in complete astonishment that this is now, I think, the sixth or seventh time in fewer parliamentary working days than that that I have been asked to make a speech about the same issue. Unfortunately, I have not changed my mind at all on any of the fundamental thoughts, so the challenge is to work out some novel way of putting across the same proposition, fulfilling my responsibilities to my chief whip, and maintaining at least a minimum of consistency.

In doing so, I am beginning to think that this is rather like the existentialist play written by Jean-Paul Sartre called No Exit, which puts forward a secular view of hell. The secular view of hell, according to this philosophical school, is that there is no such thing as fire and brimstone but that hell is what one does on earth—except one does it forever. So I am beginning to wonder whether my ultimate fate will be to make speeches like this one for eternity, without the matter ever coming to the vote. But I hope, at least on this occasion, this will be the last time I will bore you, Mr Assistant Speaker, quite apart from boring myself.

I think the fundamental point here is that we are following a strategy that has been in place in this country essentially for about 13 years, whereby we pursue opportunity for New Zealand exporters across the board, simultaneously in the multilateral, bilateral, and plurilateral tracks. To maintain some degree of coherence behind that, there has to be some buy-in to the underlying principles. The most important, of course, is that we accept modest progress forward, because that is only politically realistic. But all our main sectors must be included in the framework for the agreement. That is the first fundamental principle, and the agreement passes that all-important test.

Some criticisms could be made about the pace, but I think that is of secondary importance, because at the end of the day we live in a world where our exports often fall into the most sensitive category and it is only realistic to expect the progress forward to be relatively modest. In the end, all those agreements add up only to opportunities. That then links back the external strategy to what is, in fact, internal economic policy, and there we have some problems ahead of us.

I think it has become more widely recognised in the past year or two that New Zealand is not doing as well on the external front as many people would have us believe. People tend to say that we are a small but great trading nation. Unfortunately, that is not a correct statement. We are a small trading nation, but we are relatively mediocre in terms of our export performance by the standards of other small developed countries. If I am not mistaken, 15 of the OECD countries have a population of 10 million or below, and we are at the very bottom. It is quite natural that larger economies—starting, perhaps, with Australia with roughly 20 million people—have a lower export-to-GDP ratio than small countries, and that is certainly the case with giant countries, such as the United States. So we are performing only at barely acceptable levels.

The second thing that becomes a little more apparent, when one looks into the linkages between the opportunities an agreement like this puts forward and the internal economic challenges facing New Zealand, is that participation in the external environment—and this agreement will certainly assist in a very modest way; it is part of the overall jigsaw of assisting our exporters—is absolutely linked to increasing productivity in this country. It is absolutely no coincidence that we have only one sector that has outstanding growth of total factor productivity. That is, of course, the sector that is deeply involved in the international economy: the agriculture sector, which has an average annual rate of growth of a little under four times the growth of average total factor productivity for the economy as a whole.

We have to ask ourselves why. I think the reason is that, in spite of the agriculture sector being the sector of the economy that has had opportunities choked down on by the system of international protectionism that is now in the process of being unwound, this sector—and this sector alone—is involved in a process in which the domestic market is merely an afterthought. On average, our major industries sell maybe 10 percent of their output to the domestic market. For them, their real market, where they sell 90 percent of what they produce—90 percent of the sheep meat, 90 percent of the dairy products—is the global market. To maintain their position in that market involves a commitment to a continual cycle of innovation, and that is the critical difference. So I believe there is a move forming in this country whereby the essential agenda is becoming identified with a little more precision.

It is very similar to what Trade and Enterprise put before the select committee in its public documentation today. It talked about connecting New Zealand business to the global economy. I think that is as good a way of putting it as any and I think both sides of the House are strongly behind that effort. I think where we do differ is when we discuss some of the linkages back into hard policy levers here, in terms of deregulation and of what is the next phase of economic reform. But when it gets to the frontier, we are following a common policy. This agreement will, of course, be part of that process, and I support it strongly for that reason.

I have been advised by the whip that, unlike last night, it is enough just to get up and make a speech without necessarily filling the time slot entirely. So, to sum up, I am pleased this agreement is now in its final stages in the House. I think it is a modest part of, but it is totally consistent with, a positive strategy for New Zealand and its place in the global economy.

DIANNE YATES (Labour) Link to this

I am sure that the member opposite will be relieved to know that this is the last time he will be called upon to make a speech on this particular legislation. But he is relatively new to the House, and I am sure that he realises how wonderfully democratic it is that we have had to listen to him say much the same thing at least five times.

The treaty-making process is a very interesting process, and we have almost come to the final stage, which is the implementation of the law that will allow the process to finally happen and the treaty to be signed. As we have noted, the bill started off with discussions in Chile, which the Prime Minister was engaged in, talking about the possibility of an agreement. Then a paper prepared by the ministry was widely touted round New Zealand so that there could be a great deal of public input, as we have mentioned, from stakeholders such as chambers of commerce, businesses, and various interest groups. I thank the members opposite who were employed by the ministry at that stage for the work that they have done on the agreement in that regard and for the negotiations they have been involved in.

Once all that process had been gone through, including the external negotiations, the national interest analysis was tabled in the House and was sent to the Foreign Affairs, Defence and Trade Committee. The select committee then had another look and was able to call for submissions from the public. So the public were given another chance to have an input. There were submissions on the national interest analysis. The select committee looked at them, considered the issues, were briefed by the ministry staff, and then reported back to the House.

Following that process, there must then be legislation that allows the agreement to go ahead. So what we have here is a very small bill—just two pages—called the Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill. It amends the Tariff Act 1988 to enable the treaty to come into force and to be signed by the parties involved, which are Brunei Darussalam, Chile, New Zealand, and Singapore. What we are talking about now is the legislation that allows for the signing of, and commitment to, the agreement by New Zealand. As has been mentioned by the Hon Jim Sutton, who was very much involved with the actual negotiations, it is the first multiparty trade agreement linking Asia, the Pacific, and Latin America. For that reason alone, it is significant.

I also thank the Hon Phil Goff, the Hon Annette King for the contribution she made yesterday on this particular bill, the officials, those who worked very hard at the negotiating stage, and the members of the select committee. I am sure that the new members have found it very interesting to follow the process through, from their former lives during the negotiating stages to actually seeing what happens in the House. Although I think one of the members is getting a little tired of repeating his speeches and comments, it is important that the democratic process be gone through and the full consultation be carried out.

As we have seen, the Trans-Pacific Strategic Economic Partnership Agreement allows 90 percent of New Zealand’s exports to Chile and 92 percent of New Zealand’s exports to Brunei Darussalam to be duty-free. As has been mentioned, we already had an agreement with Singapore, and the bill has extended that agreement. Of course, we look to extending agreements in the future even further.

I have mentioned the role of the Prime Minister, Helen Clark, the Prime Minister of Singapore, and the President of Chile in coming together and working with representatives from Brunei Darussalam to bring the agreement about. We have already noted that it is important in terms of New Zealand trade. It is important, in terms of the fact that it is an agreement within the WTO Doha round, that although on the one hand we are working on the bigger picture, on the other hand we are also able to speed up the process with agreements between countries within that. The Hon Jim Sutton pointed that out during his speech. So, once again, I thank everybody who has been involved, and we look forward to 1 May for the final signing of the treaty.

TE URUROA FLAVELL (Māori Party—Waiariki) Link to this

I rise to make a few points about the bill, based on concerns about its process, content, and themes. It took just 43 minutes to sign away a managed approach to economic development in New Zealand’s first multi-party agreement with the Asia-Pacific region. My understanding is that three submissions were made to the Foreign Affairs, Defence and Trade Committee, all of which expressed concerns about the process and substance of the agreement, with one stating that it was “ill-conceived and irresponsible”, and another claiming that the scrutiny given to the agreement was insufficient. Comments were made on the limited time frame, and the hearings committee was urged to conduct an independent inquiry. Those comments reflected the context of criticism that the Government received when challenged about the secrecy of the process associated with establishing New Zealand’s closer economic partnership with Singapore.

How did committee members respond? They reported that a standard approach was used, in that they had advertised for submissions in national newspapers. It seems to me that the level of opposition contained in those three submissions even on their own should have provoked the committee to take a more proactive approach, and not just to apply the old standard formula. It is hard to engender any confidence in how an agreement spanning four countries across Asia and the Pacific will improve strategic and economic opportunities for Aotearoa.

In the first and second debates on the bill, the Māori Party attempted to describe tangata whenua history, and the experiences of strategic economic partnerships nation to nation. I myself talked about the impact the agreement could have on Brunei’s indigenous communities, and the effects of local identity becoming subsumed under flows of global trade, colonialism, and assumptions of universalism. My esteemed colleague Dr Sharples also raised the thorny question of definition and interpretation of Treaty responsiveness—the application of the Treaty of Waitangi in international trade and tariff agreements.

Today we want to focus more particularly on the international treaty examination that was undertaken in the report to the Foreign Affairs, Defence and Trade Committee. The Māori Party has taken particular note of the advice and analysis provided by Professor Jane Kelsey from the law faculty at the University of Auckland. Professor Kelsey described the agreement as the latest attempt to bind the policy options of present and future New Zealand Governments to a global liberalisation agenda that is facing a crisis. She advised the committee that global trade and investment liberalisation is not delivering on poverty reduction, and that the trade agreements restrict the Government’s ability to regulate in several areas.

Again, the select committee’s response was fascinating in terms of what it did not say. The report states: “… the Government is aware of trends in the global political economy and the limits of what is possible for a small country.” I am wondering where the reference is to poverty, which is a key outcome of possible arrangements like that. My research tells me that at the United Nations millennium summit in 2000, all nations agreed to put effort into halving extreme poverty by the year 2015. The Māori Party believes it is all about priorities. Global military expenditure last year was US$1,035 billion—on average, more than $2.8 billion every day. The need for all Governments, rich or poor, to reprioritise their spending to meet human security rather than military security has been agreed by United Nations member States since 1945, but it has not been put into practice. By neglecting to mention it we certainly do not address it, let alone reduce poverty.

That tendency to fail to mention, to ignore, or to be silent on things that matter is a theme the Māori Party has been returning to over and over again in its scrutiny of Government policy. When one looks for the word “Māori” in the international treaty examination for this bill—and one has to look fairly hard—one sees the references are all couched in the negative. So we see: “… there is also a general exception to ensure that the Trans-Pacific SEP will not prevent New Zealand from taking measures it deems necessary to fulfil its obligations to Māori, including under the Treaty of Waitangi.” Rather than reflect or support the honouring of obligations, it is worded in the negative—it fails to “prevent”. That is later diluted further: “Provided such measures are not used for trade protectionist measures, the Trans-Pacific SEP also gives successive New Zealand Governments the right to adopt measures they deem necessary in relation to Māori, including in fulfilment of Treaty of Waitangi obligations.” That may be just words, but one has to ask what sort of measures will be considered necessary in relation to Māori. Are we talking measures to advance Māori, or to impede their progress? Failure to name the positive means we will forever be hopeful that the opposite is not intended.

Following on that theme, the "Cultural effects” section of the treaty examination notes that: “The Trans-Pacific SEP contains safeguards to ensure that there are no adverse effects on New Zealand cultural values including Maori interests.” The power to name our own world, and to be clear in saying what we mean and what we want, is absolutely central to self-determination. To take it further, we asked the Government yesterday in the House what it means to live and succeed as Māori—a simple enough question, one would have thought, and clearly one that most New Zealanders understand. As reported by a UMR Insight survey released on Tuesday, there was strong overall agreement—in fact, 66 percent agreed and 12 percent disagreed—with the statement that: “In addition to having the same rights as all New Zealanders, Māori have the right to live as Māori.” Clearly, the people know what it means to live as Māori.

So how did the Government respond? The response of the Minister of Justice was to say that to live as Māori was to: “… fully participate in, and to have the economic, social, and cultural benefits of a full, healthy, and wholesome life in New Zealand.” Do members spot one little difference? The difference is the word “Māori”.

Another definition comes from Dr Mason Durie, who discusses the goal of living as Māori as: “… being able to have access to the Māori world, that is access to language, culture, marae, resources such as land, tikanga, whānau, and kai moana. Being able to live as Māori means being able to identify oneself as Māori and to also be prepared to participate in Māori society. It is not simply to learn about Māori, but also to live as Māori.”

That question was not a trick question. The Māori Party has been watching the Minister of Finance exclude the word “Māori” from his Budget, and watching the Minister of Foreign Affairs exclude the word “Māori” from policy on indigenous people, so we thought we would aim for third time lucky.

The celebrated Brazilian educator, the late Paulo Freire, believed that we should all have the freedom to name the world, and he included the voiceless. He believed that possessing the ability to name the world inevitably meant that one could take action to intervene and transform the world. Since coming to this House I have become aware of the awesome power of voices we have in naming, and therefore in defining, the world. But the questions I ask are: whose world is it that we are defining, and who are we defining it for?

The Māori Party stands on a platform of giving voice to the voiceless and, although it is a Māori voice, it has resonated like the haka with non-Māori. Our belief in the voiceless naming their world is what drives us to continually go back to our people, to listen and to hear what they have to say, and to act for them. Being named out, rendered invisible, or couched in the negative is not an option. The Māori Party will stand up for the right to name Māori in this bill on strategic economic partnerships and, indeed, in every sphere of influence we take up. The Treaty of Waitangi means something to us. It brings with it rights and responsibilities that will not be ignored. We will not focus just on economic and trade partnerships without considering the impact on people, particularly the indigenous people of the nations involved.

JOHN HAYES (National—Wairarapa) Link to this

I listened with interest to the comments made by my colleague from the Māori Party and would like to address one or two comments to him in reply to the points he made. Firstly, I feel disappointed that someone like Dr Jane Kelsey is preparing speeches for colleagues in the Māori Party to read in this Chamber, because it is stopping—

TE URUROA FLAVELL (Māori Party—Waiariki) Link to this

I wish to provide a personal explanation to clarify a matter that was raised by the previous speaker, Mr Hayes. In my speech, I advised that the Māori Party has taken particular note of advice and analyses provided by Professor Jane Kelsey. I also said that Jane Kelsey was one of the submitters to the committee. An accusation was made that the Māori Party was using Professor Kelsey as a speech writer. I want to explain to the House that Professor Kelsey has never provided any speech either to me or to the Māori Party under those conditions.

ERIC ROY (National—Invercargill) Link to this

I also to wish to make some comments as we wrap up the debate on the Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill. I may well be the last speaker from any side of the House on this debate, and I would certainly like to summarise a few of the points that I think are pertinent on this occasion.

Firstly, I acknowledge the comment made by the Hon Jim Sutton that there was a degree of will on both sides of the House to see the bill progress. He is correct. Across the work of Parliament, trade is one of those areas where there is a great similarity in approach, at least between the two major parties. That is appropriate, because it sets a standard that says trade is important and significant to this nation, and that we concur that every trade opportunity we can get will benefit this nation. As the previous speaker, John Hayes, said, that helps to create wealth and opportunity. It is also significant for this reason: trade is a commitment, and it is also an investment. The fact that we have this area of stability around policy between Labour and National provides security and stability for our exporters, who know that if and when there are changes of Government, there will not be a radical shift in trade policy. So exporters know that their investments in personnel and infrastructure—or whatever is needed—are secure. It is appropriate that our two major parties are in broad agreement on the principles of trade. We certainly acknowledge that that is the case, and we are keen to support the bill, which takes the notion of trade agreements to another level—but I will speak more about that in a moment.

I want to respond to the member of the Māori Party, Te Ururoa Flavell, who raised some valid concerns about the impact of trade on Māoridom in New Zealand. I just say to him that a trade policy is a nation approach, and any subset that wants to claim that it is disadvantaged needs to look at where that approach is taking the country as a whole and at its part and its opportunity in those opportunities that are presented through increased trade. One can look at the countries that have said they are not in trade, and see where they have gone.

Let us look at some countries and at their position on trade. We can take, as an example, a country that has had the very broadest attitude to trade that is possible—maybe Singapore would be that country. That is a country we used to give aid to in the 1960s, but by embracing trade as a wealth-creation process, its economy is now ahead of ours on the OECD list, and is ahead by any measure. We can contrast that country with countries who have said that trade is not where they want to be. So on the other end of the scale is, maybe, Albania, or North Korea. I ask the member from the Māori Party whether he wants to embrace the kind of economy that North Korea finds it is now saddled with—with the restrictions and implications of an economy that is not performing. I would say very clearly that a great deal of the position North Korea finds itself in has been the result of shutting its borders and saying: “We are an island and we do not want to engage in global world trade.” So trade as a principle is significantly important.

This particular trade tariff agreement, this strategic alliance, requires the signatures of the four players in it: Chile, Singapore, Brunei Darussalam, and New Zealand. Those parties have to be signed up, and this bill will come into effect on 1 May. We look forward to a network being created. There are a lot of firsts about this bill, and it is significant that this step takes place. We are members of the Pacific, and it is good that in the wider global trading environment we will have that network arrangement emanating around the Pacific. It is a web that will cross from New Zealand to Latin America and South America—Chile is the country that will be a signatory—and into Asia. Again, we will strengthen our relationships in Asia by signing up with Singapore and Brunei Darussalam.

Singapore and Chile are two significant platforms that reach each way. Singapore is the hub of Asia; it is crucial that we acknowledge that country. Its population is a similar size to ours. It is entirely different geographically, but it is the hub of Asia. We do ourselves a great service when we work towards a trade opportunity with Singapore and become a signatory to reducing tariffs in that direction. Similarly, Chile is a platform into Latin America and South America. It is our nearest country in that continent, and its ports are our entry points for many of the opportunities that exist as we head east into South America. So that is significant. We have similar values and similar types of economies. No, we are not the same, but we have a similar sort of ideology.

The second thing that occurs from this bill is that we set a standard. We are saying to the world that we believe in trade. We believe in reducing tariffs and increasing opportunities. That is a significant statement to make. We are not a big player in the world as a trading nation. Trade is probably more important to us than to most countries, but in terms of volume of trade we are not huge. But we can set some standards. As I mentioned earlier, Singapore today is a model of where we can go if we embrace trade. North Korea, on the other hand, is an example of where we can go if we do not embrace trade. Through this bill we can say to the world: “Here is an opportunity, and we will be the net beneficiaries.”, and the Māori Party and its constituents are very much part of that. So that is important. The first thing, then, is that those countries are similar types of countries with similar values, and the partnership will build bridges across the Pacific. As I said, it is a first move into the Latin countries, and it is an important platform for us to get into the important hub of Asia.

It is interesting that if we look at other impacts besides the standard we are setting for the rest of the world, we see that both Chile and Singapore have been advocates for a freer air transport environment. So that is another symbol that says to the world: “We will gain if we exchange.” Those countries have been at the forefront of the opening up of those opportunities. Through passing this legislation, we are signing up four countries that will say: “Yes, we want to trade clearer with each other, and we don’t want to have the impositions of a cost barrier.” I have to say to the House that that has created an environment of dialogue from which there are also other benefits. Barriers are not just on the basis of tariffs, but they can be imposed through a whole lot of restrictions, requirements, and specifications that prevent us from trading. The very notion that we are saying we want to enter negotiations at the table, and not have a cost tariff, also says that we want to reduce the non-tariff impositions that prevent trade, as well. This is a small bill, but it is a significant bill in that it sets a standard, and it says that this is where we want to go—we as a nation will be beneficiaries. I support the bill.

BRIAN CONNELL (National—Rakaia) Link to this

I raise a point of order, Mr Speaker. I would like you to reflect on the process here. The vote was called for, but the member was silent when asked to cast the vote for United Future. I am not sure he can now seek to change that and cast the vote now.