Tariff (New Zealand - Thailand Closer Economic Partnership) Bill

, on behalf of the Minister for Trade Negotiations: I move, That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a first time. I intend to move that the bill be referred to the Foreign Affairs, Defence and Trade Committee, with an instruction that the committee present its report to the House on or before 3 June 2005. I also intend to move that the committee have the authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there has been a sitting of the House, on a Friday in a week in which there has been a sitting of the House, and outside the Wellington region on a day the House is sitting, despite Standing Orders 191, 193(a), and 194(1)(b) and (c).

This bill not only paves the way for more trade between our two countries but also acts as another building block in our wider quest for an improved trading environment in our region and worldwide. The Tariff (New Zealand - Thailand Closer Economic Partnership) Bill amends New Zealand domestic regulations to make them conform to our rights and obligations arising from the New Zealand - Thailand Closer Economic Partnership Agreement. This legislation will allow the agreement to come into force.

By way of background, I point out that the agreement provides for all tariffs applying to goods of New Zealand or Thai origin traded between the two countries to be either eliminated immediately or phased out over a scheduled period. Most New Zealand imports from Thailand already enter duty-free under New Zealand’s existing tariff policy. The agreement provides for the remaining tariffs to reduce to zero variously on implementation of the agreement on 1 July 2005, or by 1 January 2008, 1 January 2010, or 1 January 2015.

Part 1 of the bill provides for the preferential tariffs conferred by the agreement to be included in the preferential tariff column of the New Zealand tariff. The actual rates of duty as spelt out in the agreement will be added to the tariff by a subsequent Order in Council.

The agreement also provides for the use of bilateral transitional safeguards by both Thailand and New Zealand. These allow either party to address situations of serious injury to domestic industries caused by increased imports due to tariff reductions or removal under the agreement. If serious injury is found to exist, the party concerned may revert to higher tariffs for a certain period.

Part 2 of the bill provides for the application of such bilateral transitional safeguard measures. The bill does this by creating a new regime under the Tariff Act. This regime establishes the right for a New Zealand industry or company that considers that it is suffering serious injury as a result of a surge in competing imports from Thailand, to ask the chief executive of the Ministry of Economic Development to initiate a safeguards investigation.

I should emphasis, however, that the Government does not expect the agreement to have an adverse impact on New Zealand producers. The adjustment effects arising from removal of New Zealand tariffs on imports from Thailand under the agreement are expected to be very muted. There are several reasons for this assessment. First, some 65 percent of imports from Thailand already enter duty-free. Thailand accounts for only a small proportion of textiles, clothing, footwear, and carpet imports.

Second, the phase-out arrangements for New Zealand’s more sensitive sectors are very gradual. The higher tariffs on clothing, footwear, carpet, and many textile products, will be phased out over a 10-year period. For sensitive products with a lower tariff, such as whiteware, existing tariffs will effectively be maintained at current levels before being removed in 2010.

Third, adjustment assistance has been made available in the context of New Zealand’s unilateral tariff reductions to help the textile, clothing, and footwear sector build skills and global competitiveness.

Looking at the other side of the reciprocal tariff removal commitments under the agreement, this agreement offers the most far-reaching bilateral market opening for New Zealand since CER. Thailand is a heavily protected market. Tariffs are levied on virtually all imports from New Zealand; many are in the 20 to 40 percent range. Under the agreement, Thailand will eliminate tariffs immediately on over half of New Zealand’s current exports, and progressively phase out the remainder. Manufactured exports will virtually all enter Thailand duty-free from 2010.

The agreement should act as a catalyst for generating new forms of collaboration, and identifying synergies between Thailand’s dynamic, and increasingly high-tech, economy and our own. Service sectors will be brought into the agreement through a negotiation mandated to begin within 3 years. The Government will be working actively with businesses to help translate into concrete outcomes the opportunities opened up by the agreement. Following a successful high-level business mission to Thailand last month, a series of seminars is to be conducted next week with the aim of ensuring that New Zealand companies have the information they need to take advantage of opportunities under the agreement.

The arrangements on labour and the environment, concluded in parallel with the New Zealand - Thailand Closer Economic Partnership Agreement, will establish cooperation programmes that support the sustainable development objectives that both countries share.

Finally, our agreement with Thailand, alongside that with Singapore, positions us well in the rapidly evolving South-east Asian regional architecture, and should serve as a building block in the ASEAN - New Zealand - Australia free-trade agreement negotiations that began in February. The Foreign Affairs, Defence and Trade Committee has considered the agreement under the international treaty examination process. Its report to the House expresses majority support for the agreement.

To conclude, the New Zealand - Thailand Closer Economic Partnership Agreement represents a significant economic and strategic opportunity for New Zealand. It enjoys strong support from the business community, and others, including educational institutions with an interest in strengthening relationships between New Zealand and Thailand. The Government would wish to see the bill enacted by 23 June in order to allow adoption by Order in Council of relevant regulations, and subsequent advice to Thailand of the completion of the New Zealand processes for implementing the agreement. This will allow the agreement to enter into force on 1 July 2005. I would expect all Opposition parties to wholeheartedly support this bill, and I commend it to the House.

Let me make it clear that National will be supporting this Tariff (New Zealand - Thailand Closer Economic Partnership) Bill. National is supporting it, despite a number of concerns, because we believe passionately in the importance of trade liberalisation. This legislation and this trade agreement will make some very real improvements for New Zealand.

For example, at the moment only 4 percent of New Zealand’s exports to Thailand are duty-free. Once this agreement is in place, 52 percent of New Zealand’s exports to Thailand will immediately become duty-free—an increase from 4 percent at the moment to 52 percent. That is worth supporting. Also, in the horticultural product area, products such as avocados, cherries, persimmons, and kiwifruit have a tariff at the moment of 30 to 40 percent payable on them. Once this agreement is in place, that tariff will be eliminated.

Although National supports this legislation and this trade agreement for important reasons such as that, we have real concerns. First, let us take those horticultural products. As this agreement comes into being, Thailand is already implementing tightened phytosanitary barriers, which means that New Zealand horticultural exporters will have to test for up to three chemicals on fruit and vegetable products being exported to Thailand. The problem is that the reduction in the tariff that those New Zealand exporters might pay once this agreement is in place is less than the increase in costs they will face from the testing and certification required to meet Thailand’s new tighter phytosanitary requirement for the importation of horticultural products. So we will go backwards. New Zealand horticultural exporters to Thailand will be worse off once this agreement is in place.

The Minister for Trade Negotiations, the Hon Jim Sutton, promised on 19 April, when the Government was signing this agreement with a big flourish, that the Government was going to fix that problem. I think the House deserves to know where that issue is at. Our horticultural exporters deserve to know where that issue is at. If there is to be another Government speaker on this bill, I believe that he or she should tell us where that issue—the quarantine barrier that Thailand is placing in the way of our horticultural products at the very moment that this trade agreement is being implemented—is at. It is no good to supposedly liberalise trade on the one hand, and actually make it more impossible on the other. The Government should tell us where it is getting to on that one.

Our other concerns include issues such as this. The Labour Government’s Coordinating Minister, Race Relations, the Hon Trevor Mallard, claimed last year, I believe, when he made a speech at Victoria University: “Māori have no extra rights or privileges under the Treaty”—of Waitangi, that is—“or in the policy of the New Zealand government.” That is what the Hon Trevor Mallard said last year. Yet this trade agreement states that the Government of New Zealand reserves the right under article 15.8 to put in place: “measures it deems necessary to accord more favourable treatment to Maori … including in fulfilment of its obligations under the Treaty of Waitangi.”

What on earth is that doing in the trade agreement? On the one hand the Coordinating Minister, Race Relations says that it is not Government policy, at all, to accord more favourable treatment to Māori, yet on the other hand this trade agreement has exactly those words. The agreement states that the Labour Government reserves the right to implement measures that it deems necessary to accord more favourable treatment to Māori. That is in the agreement. All I can say is that it is hypocritical in the extreme to say, on the one hand, as Trevor Mallard has said, that the Labour Government does not have a policy of more favourable treatment for Māori, yet on the other hand to include in a trade agreement such as this the policy in black and white. That is our first big concern.

Our second concern is that this trade agreement, and the schedule for removing New Zealand tariffs on Thai products coming into New Zealand, exceeds New Zealand’s commitments under APEC to eliminate all tariffs by 2010. This trade agreement allows the phase-out of tariffs on Thai imports into New Zealand through to 2015. That is a direct breach of our commitments to the Bogor goals of APEC, whereby a developed economy like New Zealand is meant to eliminate all tariffs by 2010, and developing economies are meant to eliminate tariffs by 2020. With this agreement, the Labour Government is damaging New Zealand’s international reputation. New Zealand chaired APEC in 1999. This country is one of the leaders in APEC—it was, at least, under a National Government. But this Labour Government has sullied New Zealand’s international reputation by putting out the transition to 2015 for no purpose.

The New Zealand Chambers of Commerce and Industry made a submission to the Foreign Affairs, Defence and Trade Committee on this trade agreement, stating that it was not even in New Zealand’s economic interest to have a long phase-out of our own tariffs. So why has the Government done it? It is not in our economic interests, according to the New Zealand Chambers of Commerce and Industry, and it breaches New Zealand’s commitments to the Bogor goals of APEC. I think that a Labour member should get up and explain to the House why this trade agreement has that phase-out going through to 2015. It is totally destroying. New Zealand cannot stand up at APEC now and say that developed member economies should phase out tariffs by 2010, because we are not doing it. New Zealand is not doing it; it is not leading by example.

Finally, our general concern with this trade agreement is that services are not included. Sixty-eight percent—over two-thirds—of New Zealand’s economy is not included in this trade agreement. It is not included at all. It is simply stupid not to include services in this trade agreement. All the agreement has is a commitment to initiate negotiations within 3 years. That is not good enough. This is actually a low-quality trade agreement. As I said, National will support this legislation, because I think the benefits outweigh the negatives, but it is a low-quality trade agreement.

Specifically, in respect of the legislation, the Minister, the Hon Damien O’Connor, mentioned the two parts, the first part being the provision to put into our tariff schedule the preferential tariff provisions for Thailand that were negotiated in the agreement. But it is Part 2 that the select committee must look at very carefully. Part 2 implements in New Zealand legislation, really for the first time, this whole concept of transitional safeguard measures. We know that this is difficult legislation. It is difficult international law; it is complex international law. We should not forget that the United States imposed safeguard measures—tariffs—against the imports of New Zealand lamb. We had to take the United States to the World Trade Organization, and we won. There are complex issues in World Trade Organization agreements and in the original GATT agreement around those transitional safeguard measures.

I shall give an example. Article 24 of GATT—the General Agreement on Tariffs and Trade—which is still in place, has certain provisions that follow the negotiation of bilateral free-trade agreements. Transitional—I should say safeguard—measures are not among the provisions in article 24. In paragraph 8(a)(1), I think it is, of article 24, safeguard measures are not included. We risk complex international law arguments with Part 2 of this bill. The select committee will have to look at Part 2 very, very carefully. I really stress that. Complex international trade law issues are involved here.

Finally, I make this point in respect of this trade agreement. The Government has not talked about annex 3 of the agreement, which provides for special safeguards for Thailand to implement against New Zealand exports—special agricultural safeguards. Labour does not talk much about that. Annex 3 spells out constraints on our exports to Thailand of beef, pork, offal—that kind of thing—all milk products, cheese, butter, and anhydrous milkfat whey products. This is a low-quality agreement. It should not be a precedent for further trade agreements. The Singapore agreement that National negotiated was a good agreement; this agreement, I am afraid, is a low-quality one. National will support it, reluctantly, for its benefits.

It is with much pleasure that I stand on behalf of the Government and also for our Foreign Affairs, Defence and Trade Committee to speak in support of the first reading of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill. This is indeed an historic time for us, because this New Zealand - Thailand Closer Economic Partnership Agreement represents a significant economic and strategic opportunity for New Zealand. It not only opens up more opportunities for New Zealand businesses but is an important step towards improving the trading environment in our region and worldwide. The agreement provides for all tariffs applying to goods of New Zealand or Thai origin traded between the two countries to be either eliminated immediately or phased out over a scheduled period. The agreement also enjoys strong support from the business community and others, including educational institutions.

I want to respond to Dr the Hon Lockwood Smith’s comments about Treaty of Waitangi interests. The relevant provision in this closer economic partnership does not have any impact on the nature of the Government’s policy in relation to Māori. It preserves the right of successive Governments to implement policies of their choice in relation to Māori and to fulfil treaty obligations. Dr Smith should remember that in the Singapore closer economic partnership agreement that he led, he agreed to support that clause. Now he has suddenly done a turn-round. The precedent of a reservation like that has been set by many other countries in their international general agreements on trade and services. For example, Australia, Canada, Malaysia, the US, and France have also included that indigenous reservation.

In response to the member’s comments on the coverage of services, I say the services sector is indisputably important to our New Zealand economy. That is why services are included in the agreement and why there is a binding commitment to enter into negotiations on trade in services within 3 years from the entry into force of the agreement. Clearly, New Zealand would have preferred a comprehensive services agreement now, but the fact is that Thailand is not in a position to do that. We have therefore reached the judgment that it was in New Zealand’s interests to schedule a full services negotiation within 3 years.

In terms of the comments made by Dr the Hon Lockwood Smith on APEC Bogor declaration goals, I say New Zealand remains committed to the Bogor goals. The closer economic partnership with Thailand is a bilateral agreement, concluded in advance of the Bogor deadline. In the event that the APEC members do in fact collectively meet the Bogor goals, the agreement with Thailand will not preclude us from doing so. In the meantime, negotiating realities need to be taken into account. New Zealand is prepared to be ambitious, but if our trading partners are unable or unwilling to match us, we will not open up a one-way street. Where they want more time, we will do the same as them rather than give anybody a free ride.

I am delighted that we have agreed on this partnership. It is wonderful for New Zealand, for its economy, and for its global trade.

New Zealand First’s position can be summarised very, very briefly. We have major reservations about this bill and about what could develop from it in this country. We considered it at some length in caucus this morning, and at other times, and we are nervous that this legislation will open the door to a flood of—what can I say—low-valued imports coming into this country. Those imports will be produced in—[Interruption]—conditions like those that that member has just reminded me occur on fishing boats that operate in this country. We do not share the confidence of the member who has just resumed her seat.

New Zealand First at this point in time will not support at all this bill going to a select committee. We were tempted to support its going to a select committee, but after a wider discussion we reassessed our position. We can see the door opening here to all sorts of goods and commodities. Even if they are not produced in Thailand, they may come through the back door of China and end up in this country, to the detriment of New Zealand’s employment. [Interruption] The member there believes everything this Government says it will do with regard to this sort of bill. We believe that those things are all very well in theory, but do not quite work out that way in practice. So, with quite some reservation, we are opposing this bill. I do not think I should say any more. It seems that the Government has the numbers in support of this bill, and we will follow the development of the bill with interest. However, New Zealand First is not prepared to support the referral of this bill to a select committee.

The ACT party is an enthusiastic supporter of freeing world trade. We certainly favour multilateral agreements and endorse the work done by this Government in the Doha round, and indeed, endorse the work done by the previous National Government, and successive Governments, in pursuing multilateral trading agreements. That is clearly in the interests of New Zealand as a major exporting nation. We have here, of course, a bilateral agreement between New Zealand and Thailand. Although bilateral agreements are not as preferable as multilateral agreements, in the absence of progress with the Doha round we certainly support any initiative, whether it is with Singapore, with Thailand, or with any other existing or potential trading partner, to make moves to free up trade.

We believe that trade benefits both parties. Indeed, the evidence of that is overwhelming. Right through history, when trade has been facilitated, the prosperity of both parties has been enhanced. Not very many openly democratic nations that have traded with each other have ever gone to war. I challenge members to actually name two openly democratic nations that have ever gone to war with each other. No such example exists in the history of mankind. So not only is trade good for prosperity—

💬 Hon Harry Duynhoven: The Second World War; Germany and the US.

Germany was not an openly democratic nation. The member for New Plymouth may have thought Nazi Germany was an openly democratic society, but I am happy to tell him that Nazi Germany was not an open democratic nation—it was a fascist State, so it does not meet the test. I am very disappointed that a Labour member of Parliament would suggest that the national socialist party of Nazi Germany was operating in an openly democratic society, just as the Baath socialist party of Iraq was not in an openly democratic society. Indeed, nor is the Mugabe socialist party of Rhodesia—Zimbabwe. My fear is that the “Socialist Party of Helen Clark and Harry Duynhoven” will not be regarded as being in an openly democratic society, if we keep on the path we are going down. Anyway, that is an aside.

The ACT party certainly supports free-trade agreements; there is no question about that. In fact, there is one party whose position we cannot understand in this House. It is a glaring example of—I cannot say “hypocrisy”, so I will not. Parties that badger Governments to increase overseas development assistance on the one hand, and then oppose freeing up trade with them, are being grossly inconsistent. I believe the greatest obscenity in the world of trade is the way the developed, wealthy nations, particularly the USA and wealthy European nations, are happy to insist on free trade when they hold the comparative advantage, but deny free trade to the developing world when the developing world has the comparative advantage. That is the greatest obscenity and distortion with regard to the lifting of living standards amongst the poor nations of the world.

I guess that in many ways Thailand is regarded as a developing nation. It is making rapid progress, and that is good. Certainly, its pay rates are a lot less than those in New Zealand, and its industrial standards are a lot lower than New Zealand’s, but the way to lift them is to actually trade with Thailand. The path to improvement in the social area and the economic wealth - generation area is through trade. Therefore, to just say that we should shovel out more overseas development assistance, but deny trade, is appalling. Yes, when we trade with Fiji or Thailand we may well find that some New Zealand industries, particularly the clothing and footwear industries, will be disadvantaged—unquestionably. That is because overwhelmingly those other developing nations have a clear comparative advantage in things like footwear and clothing. But New Zealand has huge comparative advantages in other areas. It makes sense for a country to trade, based on its comparative advantage. That is how both nations will be better off—how both will have greater prosperity—and global prosperity will unquestionably increase with that. So I just raise the incredible inconsistency that we see, certainly in the Green Party but also in other hard-left parties, and in some groups in society that rail against world trade and demonstrate at the World Trade Organization. I remember a couple of Green MPs—I think one is in the House now—demonstrated. Was it Mr Donald, perhaps?

💬 Rod Donald: No, it was Mr Tanczos and Ms Bradford.

Mr Tanczos and Ms Sue Bradford went to the World Trade Organization meeting, demonstrated, and opposed world trade, when world trade is the vehicle for increasing prosperity.

The ACT party is a champion of free trade. We support the Government’s initiative in this area. We think it is doing too little and too late. We deeply regret the Government’s inability to establish a free-trade agreement with the United States. That is a matter for another debate, and we all know the reason for the inability to establish that agreement: it is another foolish policy of this Labour Government, which is shackling the New Zealand economy. We support this particular bill, and we will be voting for it.

It will not surprise anyone in the House that the Greens will be voting against this bill. That is because we believe it is bad for New Zealand manufacturers, bad for their staff, and bad for Thai workers as well. What should surprise the House is that the two Progressive Party members will vote for legislation that undermines everything that they used to stand for.

Even the once-great Labour Party supported the Pause for a Cause campaign to freeze tariffs on imports, but that was when it was in Opposition back in 1998. Now that it is in Government, with the power to protect New Zealand jobs and businesses, the best it can do is to put some window dressing in this tariff reduction bill. The explanatory note states: “The regime establishes the basic right for New Zealand industry, when it considers that it is suffering serious injury as a result of a surge in competing imports from Thailand, to request the Chief Executive of the Ministry of Commerce to initiate a safeguard investigation, and enables the Minister of Commerce, if warranted, to apply a transitional safeguard measure against such imports.” I guess that is better than nothing, but it only confirms that jobs will disappear—will be sacrificed—as a result of this preferential trade deal.

Indeed, the Ministry of Foreign Affairs and Trade’s national interest analysis admits as much. It states: “Any trade agreement involving reciprocal tariff removal can create adjustment effects for import-competing sectors deriving from increased exposure to foreign suppliers …”. It goes on to acknowledge: “The clothing, footwear and carpet sector, where the highest tariffs of 17-19 percent prevail, has traditionally been the most sensitive to tariff reductions. Concerns in relation to imports from Thailand were also raised in respect of whiteware, plasterboard, steel and certain textiles.” That is bureaucratic doublespeak for good Kiwi businesses going to the wall and good Kiwi workers ending up on the scrap heap as a result of this trade deal.

Of course, trade theory tells us that all of the jobs that will disappear were unproductive and inefficient. One should tell that to the skilled machinists in clothing factories in Levin who are working their hearts out. Trade theory also says they will get a job in one of the export-focused sectors that will expand as a result of this deal. Does that mean those skilled machinists should look for a job on a dairy farm or in a dairy factory? That is the net effect of this agreement. It will slaughter manufacturing that has depended on the protection of tariffs and it may lead to an increase in jobs in the dairy sector. But I say “may” because the national interest analysis states: “Overall effects on employment are more likely to be net positive.” Does that not fill one with optimism and make one feel excited? The Government is not even prepared to take a stand and claim that this agreement will create thousands of jobs in New Zealand.

The Government is hedging its bets in the same way that it is hedging its bets on the impact this deal will have on our trade situation with Thailand. At least with the Singapore deal the two Ministers stood up and claimed that we would have a big increase in exports and, therefore, a trade surplus with Singapore—never mind that they were wrong and we have our biggest ever trade deficit with Singapore and, what is more, our exports to Singapore have decreased. With this deal there is not even a shred of justification for the Minister to say that there will be an increase in exports, let alone a reduction in our trade deficit. That should not surprise anyone, because the trade deficit with Thailand for the year to March, which has just been published, is $355 million. That is an increase of $103 million over the previous year to March. In other words, trade is going the wrong way as this Government removes tariffs and opens up our borders, and this legislation will make that even worse. Will that help workers in Thailand? No, it will not.

The Green Party would be open to trade rules that actually do help people in the Third World. After all, I worked for Trade Aid for 6 years before I came here. I was an importer, helping people in developing countries. But we know for a fact that this trade deal will not help those workers, because we had one of the clothing workers come to visit us from Thailand last year. She in turn went to see Ministry of Foreign Affairs and Trade officials and asked them whether her wages would go up if this trade deal proceeds. The officials said: “No, it does not work like that. More of you will get jobs, but your wages will not go up.” What will happen is that more workers in Thailand will get 77c an hour to make jackets that sell in New Zealand for $160. Who makes the money? Nike with its brand on them and Rebel Sport that retails them, but not Sripai Nonsee and all the people she works with in a sweatshop in Bangkok, because they will continue to be exploited.

Will New Zealand consumers be any better off? They will not be, according to our Prime Minister. When I asked a question about whether cutting the 19 percent tariff on rain-jackets would make them cheaper in New Zealand, Prime Minister Helen Clark said that the market does not work like that and that it would be a matter for market forces.

What is the outcome of this deal? New Zealand clothing workers will lose their jobs. The Ministry of Foreign Affairs and Trade official admitted that when she said there would be more clothing sector jobs in Thailand, which can only mean fewer in New Zealand. The Thai workers will not be any better off. Even more of them will be paid less than the cost of living in Thailand. New Zealand consumers will not be better off because the products will not be any cheaper.

So what is the point of all this? As John Walley from the Canterbury Manufacturers Association said in the Christchurch Press only last week: “Sooner or later policy makers must see the New Zealand manufacturing capability as a necessary and strategic asset, even though it is made up of many disparate small companies, worthy of protection not something that drops off the radar screen when we have a few more containers full of milk powder to sell.”

However, the real issue is not just about whether New Zealand will be better or worse off in trade terms; it is what will happen to workers in Thailand. There is absolutely no doubt in my mind that they will be worse off. There is no benefit to them from this deal and there is every probability that Thailand will continue with its current appalling labour practices, working conditions, and human rights abuses because the Thai Government refuses to ratify core ILO conventions. That means that workers do not have the right to organise and conduct collective bargaining, which is something that we take for granted.

Thai women workers are denied the protection of the convention on discrimination, so they can be paid less than Thai men. Children in Thailand are denied the protection of the convention on the minimum wage. There is something like half a million 13 to 14-year-olds known to be working in Thailand, while an additional 1.5 million children aged 6 to 14 are not registered in schools. We know that Thailand does little to enforce the convention on forced labour, despite ratifying it, so de facto forced labour remains. If we add to that an obscene minimum adult wage of only $6.20 a day, or $31 a week, we have an extremely unfair trade deal, which the New Zealand Labour Government wants to sign up to.

This Government should be trying to level the playing field by protecting New Zealand businesses and workers from unfair trade, but instead it wants to give a preferential trade deal to a country run by a bully. There is no doubt that Dr Thaksin, the Prime Minister of Thailand, is a bully, and he wants to control not only his own economy but the economies of other countries. We say that this trade deal is bad for New Zealand. This bill is bad for our manufacturers and workers, and we oppose it.

I rise on behalf of United Future to support the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill. We support the idea of open and free markets. This bill goes towards a bilateral agreement that helps trade between our two nations in a way that advantages us both. To hear the previous speaker, one would come away with the idea that this would somehow inhibit us. But open markets—

Dr the Hon Lockwood Smith: It’s not a very high-quality agreement.

It may not be. Some of the issues will be debated through the select committee and that is as good as we are going to get. But we need at least to allow this bill to proceed as far as that and support it so that we can improve it collectively, and not simply dismiss it out of hand because we have a prejudice against free markets and the benefits that free markets will provide.

Those benefits are increased production and increased efficiency as a result of utilising the comparative advantages of producers in each country. In the long run it will increase employment on both sides. Despite the doomsday approach of the Green Party, it will lift living standards and, most important, create wealth for all of us.

It is true that some of our manufacturers might suffer some loss in the short term. But that is because they are in industries, or have manufacturing streams, that are inefficient by world standards. It is much better to have the market recognise that and push those producers, resources, and employees into other areas where we do have a comparative advantage. The result will benefit the consumers of both countries. We will profit from it by having more efficient and cheaper provision of services and goods. It is a sad reflection that it will actually be 3 years before services are included, because they ought to have been part of this process, but, hopefully, that will be discussed at the select committee.

The important thing is that we do want to open up our markets to benefit all, and this is a bilateral agreement that puts effect to that. It is a technical bill, in many ways, which arises out of our free-trade agreement and sets up the tariff arrangements under which that will then operate. The Greens want protection for everything other than efficiency and the interests of consumers. They seem to want protection for inefficiency—protection against the best production methods.

💬 Hon Ken Shirley: Fortress New Zealand!

Exactly. I take the points that the Hon Ken Shirley made earlier about the fact that although there will be some short-term losses in both countries, there will be long-term wins for all of us. We will all ultimately benefit from an open, global, competitive environment. We do not need the short-sighted approach that the Greens seem to be pushing.

The previous speaker spoke at length about the sweatshop mentalities of some countries. Well, members should tell that to the Singaporeans of today, who have arisen out of the ashes of their country’s sweatshop background. Rod Donald did mention the 70c an hour that Thai workers were getting for producing those jackets. That is 70c more than they had before. It sets up the possibility of increasing the consumption power within the country.

💬 Metiria Turei: Oh, what!

Well, have a look at Singapore. The simple truth is that it arose out of the sweatshop environment, and it is now one of the world’s most productive economies with one of the highest standards of living in the world. We should envy the progress that it has made in a very short space of time, because it opened up its markets and used its resources as efficiently and as wisely as it could. It is the same process with this bill.

There are problems with this bill, as has been outlined before, but those are the kinds of issues that will be dealt with more correctly in the select committee. On behalf of United Future, I commend the bill to the select committee.

We have listened to a number of interesting speeches this afternoon. I was particularly interested in the speech of Dr Lockwood Smith, who spoke strongly and stridently on the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill. At the end, after raising all sorts of objections and issues, he said that National would support the bill—or, at least, that is what I think he said.

Dr the Hon Lockwood Smith: I said that at the start.

But if one had missed the start and the end, one might have been a little bit confused—as the member sometimes is. I just wanted to be sure that this was not one of those changes of position that sometimes occurs.

We have heard some very interesting speeches, particularly the speech of Ken Shirley. I remind Mr Shirley that in both World War I and World War II, Germany, which had an elected Government both times—although I freely admit to the member that it had taken a few what one might call draconian measures in the period leading up to World War II—had a considerable amount of trade with Western counties that were fighting it, right up until well into the war on both occasions.

But I take the point absolutely that where there is trade, there is much less likely to be conflict. That has always been the case. When countries build up a trading relationship, when they have a relationship based on understanding, and when they have intermeshed economic aims, then obviously the chances of conflict are much reduced.

This bill is of some interest to me personally. I took on the points of Rod Donald very strongly because, like the member, my political beginnings were in the Trade Aid shop movement many years ago. About 30 years ago, at the time of Fortress New Zealand—[Interruption] Actually, it was just before. Mr Shirley is quite right. The issue of Fortress New Zealand was an interesting one, because at that time our country had the belief—right up until about 1984—that our best way forward as a country was to ensure absolutely that we produced everything we possibly could and kept everyone else out. CER was the beginning of that change. I freely admit—

Dr the Hon Lockwood Smith: No. CER was the beginning in 1982.

That was 1982. That is exactly right. As I said to the House just a second ago—if the member had taken care to listen—that view of Fortress New Zealand lasted right up until 1984. But in the period leading up to that, in the last couple of years, there was an element of the then Government that wanted to change that. There were others who staunchly adhered to it.

Like every other country that embarks on a trading arrangement with neighbouring countries, Thailand stands to gain. We stand to gain, too. The way both countries may gain may be different. For example, Thailand may license technologies from us, just as New Zealand has done in past times—and, indeed, as we still do. That is very common across borders when countries have trading arrangements. We have the opportunity to enhance New Zealand’s exports to Thailand by way of the reduction in tariffs, as Dr Smith said. The select committee addressed that issue quite strongly in its report. The committee did a very thorough job on that. It looked at the issue of New Zealand’s strengths in our trade.

What are the things we are strong in? We are strong in exporting high-quality agricultural produce. To add value to that produce is always our challenge, and those are the things New Zealand has developed an expertise in. Two-way trade between our two countries is worth over $1 billion, but the market-access provisions of this agreement will open up significant opportunities for expanding our existing trade and developing new trade. The agreement will provide certainty for business planning, and it puts New Zealand on an equal footing with Thailand’s other free-trade agreement partners, including Australia, with whom we have, of course, CER.

One of the problems for us in increasing our trade into Thailand is non-tariff and tariff barriers—particularly the latter. Currently, 54 percent of our products have a barrier against them. By removing tariffs—trade barriers—we will get an increase in our trade to Thailand. [Interruption] It is 60 percent of exports. I will take the member’s word for that. I was not on the select committee, and he obviously has more knowledge of this than I do.

It is the principle of the thing that is really important. What is the use to New Zealand of having barriers in place against our two-way trade with other countries? The more we can make such agreements that are a benefit to both countries—New Zealand and the trading partner—the better.

I welcome this trade agreement. I think it will be of positive benefit to both countries. I do acknowledge that some adjustments may be needed along the way, and I say to the House that the select committee has done a good job of identifying those, as shown in the report presented to the House. I think it is worthwhile for us to seriously consider those issues and how those adjustments will be made, and ensure that our nearby neighbour benefits from us as we benefit from it. As Mr Shirley said, we should build up those trading relationships that enhance international cooperation and well-being right around the world.

I will make it very clear for the member who has just resumed his seat, and for anybody else who is uncertain. The National Party supports the closer economic partnership agreement. Unlike Labour, the National Party supports free trade. We support free trade because it is in New Zealand’s interests to have free trade right around the world. It would be in New Zealand’s best interests if there were no barriers anywhere. Unfortunately, Labour is slow in picking that sort of message up, and it has taken Labour a long time even to make one agreement. After 5 years, Labour has finally got to a low-quality agreement.

Let me explain why this is a low-quality agreement, remembering that the National Party—and other parties in this House, I might add—support free trade. Firstly, it is interesting that Labour, after 5 years, has at least managed to get one such agreement on the books. Of course, during the election campaign we will see that Labour members will parade it all over the place and be out there banging their chests and saying: “Look what we’ve done for the nation.” Well, the fact is that this agreement is low quality, and I will explain why. There is a benefit, which is that immediately—

💬 Hon Harry Duynhoven: What about Singapore?

Who negotiated the agreement with Singapore? National negotiated that agreement, and Labour came in and did the final little bit of signing off. But this gentleman to my left, Lockwood Smith, and the National Government of the time, were responsible for the Singapore deal. No matter how one tries to dress it up, I tell the member, that fact cannot be taken away. It is on the record that that man and the last National Government were responsible for the agreement with Singapore, and were responsible for CER. So let us not carry on talking about those agreements; we know where credit for those lie. [Interruption]

If we want to start having some interjections, we will have to start talking about low-quality members—or Ministers, actually. Then we will start doing the list of those Ministers in this Government who have been tossed out. There is one tossed out at the moment. In fact, it makes me wonder whether he is actually out there having a game of tennis right now.

But I am off the point, so I want to come back to the benefit in this agreement, which is that 52 percent of the exports to Thailand from New Zealand become duty-free immediately. Right? So that is a plus, an absolute plus. That is great. As I understand it, currently it is 4 percent?

Dr the Hon Lockwood Smith: It’s only 4 percent.

It is only 4 percent currently, but it will rise immediately from 1 July—is it?

Dr the Hon Lockwood Smith: 1 July.

On 1 July it will rise to 52 percent, so that is a plus. But there are some downsides. Let me talk about those, because while the agreement is an advantage, there are some downsides. Some of them have been covered already, but it is worthwhile just putting them on the record again. There will be a reduction in tariffs on fruit—in fact, I understand the tariff will go pretty much to zero for things like avocados, cherries, persimmons, and kiwifruit, etc. However, there is a “but” about it, which is that for some reason this Government has allowed the Thai negotiators to put in a qualification. The qualification—which actually brings to my mind the issue between Australia and New Zealand as far as apples go—is that we have to have a certificate to certify that products, such as the aforementioned, are free of chemicals. Now, that in itself does not sound too big a deal, but two things are important with that. Firstly, there is a cost associated with the certification, and the cost is likely to be more than the amount of the reduction in tariff. So growers are likely to end up being worse off. I know that Mr Assistant Speaker is a man with a fine mind, so I tell him that I find it very difficult to understand how that is actually a benefit.

Something else worries me even more than the fact that the agreement is likely to end up costing growers more—and I bring members back to the Australia - New Zealand apple issue. This Government said that it would get the apple issue sorted out with Australia. Well, what has happened? Nothing—absolutely nothing! The Government tells us that because of the way it has negotiated this deal it will be able to make sure the agreement is not an impediment to our growers—to avocado growers, to cherry growers, to kiwifruit growers—

Dr the Hon Lockwood Smith: To apple growers.

JOHN CARTER:—and to apple growers. Well, I have to tell the House—and this may come as a surprise to members—that I have my doubts about the ability of this Government to be able to manage that aspect of the certification the Government has allowed the Thai negotiators to put in there. When any deal puts a barrier up, then the pluses are negated in that negotiated deal. That is why, at best, this agreement can be described as a low-quality agreement. It is not the sort of thing that National or my colleague Lockwood Smith would have negotiated.

I want to bring the House’s attention to another thing that worries me, and it worried me when I first looked at it. It is in the report and comes under the New Zealand National Party’s minority view. It is the issue around article 15.8 of the agreement, relating to the Treaty of Waitangi. It concerns me because article 15.8 reserves the right for New Zealand to adopt “measures it deems necessary to accord more favourable treatment to Māori … including the fulfilment of its obligations under the Treaty of Waitangi.” The problem with that is: what are the obligations under the Treaty of Waitangi? What does that mean? Why should we give one group more favourable treatment than others, in this country? Are their apples a different shape? Maybe they are a different colour, to need some favourable treatment? [Interruption] Oh, they are all brown. Well, that is probably why. If that is so they need favourable treatment, but I cannot see that under the obligations in the Treaty of Waitangi.

Government members, of course, are all out there wanting to give favourable treatment to one group of New Zealanders, and trapping them into welfare dependency, instead of saying to them: “Get on your feet like every other New Zealander, and make your way in this country.” This lot does not say to the Māori people of this country that they should get on their feet and make their way like all other New Zealanders. This Government puts this sort of absolutely politically correct rubbish in agreements like this—

💬 Darren Hughes: You wouldn’t say that in Northland.

I will say that anywhere; I am happy to say that absolutely anywhere. [Interruption] You bet! Make no mistake—if that member wants to come up and campaign on my patch, he should feel free. If he were to stand beside me in front of the Māori people up there and say that the best thing he would do for them is give them a benefit, he would be laughed out of the hall. Because that is all this Government is doing for them—but not the National Party. We are there because we know the Māori people in this country—

The ASSISTANT SPEAKER (H V Ross Robertson): I say to the members on my right that Mr Carter is making a hard-hitting speech and, although some interjections are acceptable, I want to hear what he has to say. He cannot be drowned out.

Thank you, Mr Assistant Speaker. It is unlikely that I will be drowned out, but I appreciate your support, nevertheless. It worries me that this politically correct Government is out there hankering away to a certain group of people, when it should actually be interested in all New Zealanders, and in making sure we have every opportunity for every New Zealander. The Māori people in this country are just as capable as anyone else of getting on their feet and doing things. Many of them do, and they make their contribution, so they do not need that sort of claptrap in agreements like this agreement.

Quite honestly, I also say that a couple of other things are a worry in this agreement, and I want to draw the attention of the House to one extra thing before I conclude. National members are concerned that the agreement does not include services. We should be concerned about that, because that is a huge part of our GDP.

Dr the Hon Lockwood Smith: Two-thirds of our economy.

Yes, it is nearly two-thirds of our economy. Yet, all that is in this low-quality agreement made by the Labour Government is that negotiations are to be initiated within 3 years. What does that mean—that someone writes a letter to somebody? It will probably be in Māori, under the obligations of the Treaty of Waitangi, and over there in Thailand they will not understand what it means. This is a low-quality agreement, but I remind the House that National supports it nevertheless, because free trade is good for the country.

As my learned colleague has just said, National supports the introduction of the bill. John Carter has wide experience in this field, as does the Hon Dr Lockwood Smith, who, as a former trade Minister, understands the protocols involved in such an important part of New Zealand’s economy. Although we say we will support the bill, we do have major reservations. My colleagues have said this agreement is low quality, but at least it is a starting point for New Zealand.

Dr the Hon Lockwood Smith: It’s the best that Labour can do!

After 5 years that is the best it could do. New Zealand is in the international marketplace. National supports free trade. We are proactive in supporting free trade. It is important for the economy, because we get a win-win situation. It is not only good for our producers, but also good for the country that we are dealing with.

I note the point made by the Hon Ken Shirley that when trade is freed up, standards rise in the country we deal with, and stability and security issues do not become a concern. Increasingly, we see that happening throughout the Pacific, where security has become a major issue. If New Zealand is able to enter into an agreement with Thailand, that is of benefit not only to New Zealand but also to the security and stability of that part of the region.

Last year I was fortunate to visit Beijing for the Asia Pacific Parliamentary Forum and talk specifically about trade and security in the Pacific. Of the 23 countries that border the Pacific, 20 were represented. The progress being made by those countries is absolutely outstanding. It was my third visit to China, and the progress I have seen there is amazing. If members have a chance to visit, they will see what China has been able to achieve. It has a population of 1.3 billion, and 100 million enjoy living standards equal to those of New Zealand. A lot of progress has been made, but 100 million is only a drop in the bucket. The Olympic Games will be held in China, and it wants to move into trading arrangements. So an agreement with China is something that New Zealand is pushing for at this time and it is something that should be encouraged.

Our isolation can be a competitive advantage in terms of agriculture and other export areas. But there will be some losers in our economy. It has been identified that some parts of the manufacturing sector, especially footwear and clothing, may well be disadvantaged by this agreement. But we always have to build on our strengths, and as the economies of the world start to improve their living standards and buy more goods and services from us, we achieve a win-win situation.

My colleague Dr Lockwood Smith said that unfortunately this closer economic partnership agreement with Thailand does not cover a very important service—that is, consultancy. We have major consultancy services and our expertise in certain fields is in demand around the world—in particular, in the Asia-Pacific region. Our agricultural consultants, people in the World Bank—those sorts of consultants—could be providing that sort of service. Unfortunately, that is not in the agreement, initially. But the bill says it will be looked at over the next 3 years, whatever that may mean.

National has identified that this is a low-quality tariff agreement. It is low quality, but there are some advantages. Currently only 4 percent of our products are duty-free, and that will rise to 52 percent from 1 July. Certainly, that is an advantage and National welcomes that opportunity. But we make the point about some other primary industries, such as avocados and kiwifruit, and the qualification that will be put on them. In relation to kiwifruit, and especially Zespri or Chinese gooseberries, I just mention that in the hotel where I stayed in Beijing, the menu for breakfast and other meals had kiwifruit prominently displayed, as was New Zealand butter. It is always good to see our products represented. However, I reiterate the point that in relation to some of our horticultural products, be they kiwifruit, cherries, persimmons, or avocados, a major qualification will be put on them.

So are we or are we not going to have free trade? Because as soon as one puts a “but” into the equation or a qualification on it, one has to weigh up the extra costs involved and the compliance costs involved in being able to meet those standards. Either we have free trade or we do not. That is one of the areas that I am sure the select committee will be looking at as this bill is progressed. If there is no competitive advantage, no market advantage, for us, then at the end of the day it will not be worth doing. We have said right along that we support, and will continue to support, free-trade agreements that will allow New Zealand’s living standards to rise. We have to export. We are an exporting country. If we do not sell products and services, then we cannot raise the living standards of New Zealanders. The win-win situation is that as other countries lift their living standards, they will buy more products in larger volumes and at higher prices. That helps us all. But also if we consider it beyond that, we see that the security and stability of these countries improves markedly and that is to New Zealand’s advantage in the bigger scheme of things.

So National is supporting the bill. We have some reservations, some serious points that need to be covered in the select committee, but we are happy to support the bill through to the select committee.

I move, That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be referred to the Foreign Affairs, Defence and Trade Committee for consideration, and that the committee present its report to the House on or before 3 June 2005, and that the committee have the authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day in which there has been a sitting of the House, on a Friday in a week in which there has been a sitting of the House, and outside the Wellington region on a day the House is sitting, despite Standing Orders 191, 193(a), and 194(1)(b) and (c).