Estimates Debate — Vote Foreign Affairs and Trade

I will focus my 5-minute speech on the trade negotiations budget and ask whether New Zealand gets value for money for all of Mr Sutton’s overseas trips. The irony of this Budget process is that Mr Goff is accountable for how the money is spent, while Mr Sutton is overseas spending it. I would like Mr Goff to explain exactly what benefit New Zealand has gained from the $4.6 million increase in spending on World Trade Organization negotiations, bilateral so-called closer economic partnerships, and free-trade agreements during the last 5 years. While he is about it, he could tell the Committee what the opportunity cost has been of not spending that money on more productive ways to make our economy self-reliant.

The evidence strongly suggests that the more money the Labour Government spends on imposing its free-trade agenda on New Zealand, the worse our trading position gets. Statistics New Zealand’s trade figures, released today, reinforce this point. Two years ago New Zealand had a trade surplus of $521 million for the year to June, and our exports stood at $32.3 billion for that year. Today, because the Government pursues disadvantageous trade deals, such as the New Zealand - Singapore Closer Economic Partnership, our exports have dropped to under $30 billion and the modest trade surplus has turned into a massive trade deficit—over $3.5 billion for the year to June. I am sure Mr Goff will offer all sorts of excuses for the deterioration in New Zealand’s international trading position. Some excuses have a ring of truth, such as the impact of New Zealand’s higher dollar and the increasing cost of fuel imports.

But, hang on a second, why did our dollar go so high in the first place? In part that is because of the Government’s foreign investment policy, which pushes up the value of the New Zealand dollar—all part of the free-trade and investment agenda. Fuel spending has gone up in part because we waste fuel unnecessarily transporting identical goods back and forth within New Zealand, between Australia and New Zealand, and between New Zealand and other countries. Again, it is all in pursuit of free trade, rather than in pursuit of sustainability.

New Zealand certainly has not got value for money from the trade negotiations budget for the Singapore free-trade deal. Before that deal took effect New Zealand’s trade deficit was a mere $24 million with that country. Now it has blown out to $323 million. Yes, some of that is because of petroleum imports, but the Government cannot hide from the fact that New Zealand’s exports to Singapore have actually declined by $180 million in the last 3 years. There has been a 37 percent decline since the closer economic partnership took effect.

If that is not bad enough, Mr Sutton and his officials did not even seem to know this basic information. When Jim Sutton described the New Zealand - Singapore Closer Economic Partnership as a “stunning success” a couple of weeks ago, he had absolutely no evidence to back up his claim. The Singapore Trade Minister tried to come to his rescue, but was not convincing. Belatedly, Mr Sutton’s office tried to explain away the decline in exports by claiming that a lot of goods had been diverted to Malaysia in the last 3 years. So I ask the Minister why our exports to Malaysia have gone down by $50 million in that time.

The meeting with the Singapore Trade Minister was meant to be a review of the closer economic relations deal—it was not. There was no report published on the deal, no analysis of why the deal has been a one-way street in Singapore’s favour, and no thorough scrutiny of the fact that 46 percent of the shipments from Singapore that were tested for rules-of-origin compliance failed the test. Why was there a complete lack of scrutiny by the Minister and his officials? Perhaps they were too busy trying to do new deals with Thailand and China than look into what has gone wrong with our deal with Singapore.

Why does the Labour Government want to sign a free-trade agreement with the corrupt Thai Government, and another deal with the cruel Chinese Government? These proposed deals make a mockery of the Speech from the Throne in 1999 when Labour made commitments to incorporate labour and environmental standards in free-trade agreements. How can the Labour Government even begin to negotiate a free-trade agreement with countries that refuse to ratify core ILO conventions, let alone ensure that the ones they have signed are complied with?

How can it in all conscience consign Thai workers, including half a million children, to lives of poverty by giving tariff-free access to goods made in sweatshops where pay rates are only 77c an hour? How can it welcome the Thai Prime Minister, Mr Thaksin Shinawatra to New Zealand when it is becoming increasingly obvious that he is corrupt and runs a corrupt regime? Members need not take my word for it. They need only read an article such as the one in the Melbourne Age.

Sometimes the people of this country must wonder when they listen to speeches on trade by the Green Party. That party seems to fail completely to understand that New Zealand is a trading country, and that for both its survival and its prosperity it needs to have access to markets around the world. If the Green Party had its way, somehow right around the world there would be free-trade agreements, none of which encompassed New Zealand. There New Zealand would be, relying on a world market to sell its very largely commodity-based exports, locked out of all of those markets, and refusing on principle to trade with our fourth-biggest market, China, because we did not agree with its politics. Maybe we should refuse to trade with our second-biggest market, the United States, because we do not agree with everything it says. That is a view of the world that is remarkably simplistic and naive, and that sort of attitude really raises questions about the Greens’ readiness to participate in a Government.

I have to say that the Uruguay round for the General Agreement on Tariffs and Trade has resulted in the advantaging of this country to the tune of billions of dollars a year, yet Rod Donald was against that. We would benefit from more billions of dollars each year if we could get the Doha development agenda through, but Rod Donald is against that. What I do not understand about what Rod Donald is saying is that he seems not to have picked up a very basic point, which is that in order for Third World developing countries to thrive in the world today they need access to markets in the developed world, and they need the developed world to cease spending—as OECD countries do—$361 billion a year in export subsidies. That is nearly a billion dollars a day.

The only way we can stop that is by getting the Doha development agenda through, with the critical clause that Jim Sutton is fighting for right now on behalf of New Zealand and the developing world, to ensure that the United States and the European Union step back from the position they have held for many years of subsidising their exports and therefore stopping the Third World from using its comparable advantages to get into their markets. Worse still, that position is stopping the Third World from exporting anywhere else, because the developed world is subsidising its products in a way that puts the developing world out of business. There is only one way to deal with that situation. It is through the Doha development agenda, and that is what Jim Sutton is fighting for right now. I would have expected that member to support him in that, instead of making that dreary liturgy of doomsday and negativism.

I put this to the member: New Zealand’s longest standing free-trade agreement is Closer Economic Relations with Australia. It was 20 years old last year. What has that done for New Zealand? At the time, Mr Donald and his colleagues said that Closer Economic Relations would destroy New Zealand, that we would be overrun by the larger country, Australia, that we could not possibly do it, and that it would damage us hugely. Has it damaged us hugely? No. In that 20 years, New Zealand exports have doubled in real terms with Australia. We now send across the Tasman one-fifth of what we export; before Closer Economic Relations it was about one-tenth. That has been a remarkable success story, which has led to New Zealand being able to develop the level of prosperity we have today. Closer Economic Relations is a success story for New Zealand exporters, and a success story for the Australians. The two countries together have a combined market of $24 million, giving our manufacturers—because Australia is our biggest market for manufacturing—a domestic market that enables them to survive and to compete with the world. And Mr Donald said that that was a bad thing.

Is Uruguay a bad thing? It makes us billions of dollars per year. Is Closer Economic Relations a bad thing? Our economy survives on it. What is more, the free-trade agreements that will be negotiated with Thailand and China, hopefully with Singapore and Chile in the Pacific Three Closer Economic Partnership, and hopefully also with the whole of the ASEAN block, will deliver huge benefits to New Zealand. Although we do not have blockages of trade to this country, those countries have huge blockages—huge tariffs and non-tariff barriers—stopping our entry.

This is win-win for New Zealand. It is time that Rod Donald woke up to that fact and supported the efforts that have been given bipartisan support across the House for years to ensure that New Zealand can go ahead to thrive and prosper in the world instead of being locked out of international markets and having a crumbling economy. That is what the Green policy stands for in this area, and it really is not good enough. Mr Donald needs to do some work to understand why it is vital that we continue to fight in the world for access for New Zealand exporters into those markets.

Vote agreed to.

Vote Justice