5. SUE BRADFORD (Green) Link to this
to the Prime Minister
Is she concerned that the preferential trade deal with China risks New Zealand becoming little else but a producer of raw primary products again; if not, why not?
Hon Dr MICHAEL CULLEN (Acting Prime Minister) Link to this
No; in part because I think the member’s question misrepresents the nature of much of our primary production, and also because our specialised manufacturers will also gain an advantage. A good number of those manufacturers are currently in China exploring opportunities. The agreement provides considerable benefits in areas such as education, environmental services, engineering, computer services, and investment.
Does the Prime Minister agree that New Zealand’s contribution to climate change will get worse if this deal, as predicted, leads to an unrestrained expansion of dairy; and is this what she had in mind when she said that New Zealand would lead the world in going carbon neutral?
Hon Dr MICHAEL CULLEN Link to this
The thing that we have to achieve in New Zealand is the ability to expand our agricultural production while reducing our carbon footprint. There is no answer to New Zealand’s economic and social future in simply trying to go backwards 250 years to some kind of imagined heaven in which we danced around maypoles but unfortunately died in large numbers before the age of 1.
Hon Jim AndertonCan the Prime Minister tell the House whether New Zealand is “little more than a producer of raw primary products”, or are New Zealand’s primary products based on enormous investment in highly advanced scientific research and development, and world-leading technology, right across the supply chain?
Hon Dr MICHAEL CULLEN Link to this
This country has invested heavily in world-leading research and development in primary production, added-value processing, and marketing in distance markets. That investment has made us a producer of a choice of high-value food and pastoral products—including wine, and other products—in affluent markets, including the emerging middle-class markets in China and India. The Fast Forward programme of a $700 million investment in these areas is another sign of this Government’s commitment to intensifying those processes.
What does the Prime Minister expect that the preferential trade agreement with China will do to New Zealand’s level of debt, given that our agreement with a tiny country like Singapore has actually increased our balance of payments deficit by more than $1 billion, and now makes up about a quarter of our total trade deficit in 2007?
Hon Dr MICHAEL CULLEN Link to this
Much of our oil comes through Singapore, and that is a large contributor to the trade deficit with Singapore. Once you have a free-trade agreement some trade gets routed through those countries that may be part of that free-trade agreement. What we anticipate is that there will be a much more significant expansion of New Zealand exports to China than Chinese exports to New Zealand, against the base case of maintaining current tariff levels. We should remember that most of the tariffs on current imports from China are due to be largely phased out in any case, irrespective of the Chinese free-trade agreement.
Keith LockeIs it not true that the memorandum of understanding on labour issues is even weaker than that attached to the previous New Zealand - Thailand free-trade agreement—and who would have thought that that was possible—and that the new memorandum does nothing to stop Chinese manufacturers from sending us goods produced by forced prison labour, child labour, or pitifully paid sweatshop labour?
Hon Dr MICHAEL CULLEN Link to this
To have any kind of agreement on labour standards with China is a major breakthrough in terms of free-trade agreements and demonstrates the value of continuing to maintain engagement. I find it very strange that a party that likes to claim to be internationalist on some matters believes that the best way of dealing with the world’s emerging most important power in economic terms is to try to isolate ourselves from it.
What impact is the extension of commitments in the area of construction in the agreement with China likely to have on the ability of New Zealand firms to participate in rebuilding and maintaining our own infrastructure here?
Hon Dr MICHAEL CULLEN Link to this
I do not anticipate it to have any large impact in that regard. Indeed, there will, of course, be impacts in reverse in terms of the ability of New Zealand firms to participate in construction in China. The real underlying issue here is whether New Zealand wants to become a high-value-added, high-quality economy, in which case we are not trying to compete with what China is doing. We are trying to compete in different parts of the market. One of the reasons why New Zealand can be the first developed country to have a free-trade agreement with China is that there is a large level of complementarity rather than competition between the two economies.