Tariff (New Zealand - Thailand Closer Economic Partnership) Bill

I move, That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a second time. I thank the Foreign Affairs, Defence and Trade Committee for its work on this bill. I note that the committee recommends by majority that the bill be passed with no amendments. The committee also noted in its report that it had previously examined the full national-interest analysis of the agreement, and on that occasion the majority also supported the agreement.

The bill amends New Zealand’s domestic legislation to enable New Zealand to become party to the New Zealand - Thailand Closer Economic Partnership Agreement, thereby allowing the agreement to come into force once Thailand has also completed its domestic implementation processes. 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 1 July 2005, 1 January 2008, 1 January 2010, or January 2015.

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, or the threat of serious injury, to domestic industries caused by increased imports due to tariff reductions or removal under the agreement. Part 2 provides such a mechanism by creating a new regime under the Tariff Act. This regime establishes the right for a New Zealand industry or company that considers 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 and revert to a higher tariff level for a certain period.

The committee addressed several issues that were specific to the content of the bill in particular. The committee considered the consistency of the bilateral safeguard mechanism with World Trade Organization rules. The committee was advised in this regard that the bilateral safeguard mechanism is fully consistent with World Trade Organization rules. The similar strict standards that are currently applied under New Zealand’s global safeguards regime, and that are based on World Trade Organization rules, also underpin this bilateral safeguard mechanism.

During the first reading some members raised the issue of new food-testing regulations being proposed in Thailand and the potential effect of those regulations on New Zealand exporters. Although this issue is not directly related to the content of the bill before us and is not part of the closer economic partnership agreement, I would like to take the time to confirm to the House that progress is being made towards resolving this important issue. Since the regulation was first notified late last year, New Zealand, along with Australia and the United States, has successfully argued for a delay in implementation to allow time for our trade concerns to be taken into account. When I met the Thai Ministers of agriculture and commerce at the time of the signing of the agreement, they gave a commitment to work with New Zealand on recognition of New Zealand’s food safety systems in the application of the proposed Thai regulation. New Zealand’s formal application for recognition of our system has been lodged with the Thai authorities. The New Zealand - Thailand closer economic partnership provides a new avenue to help progress this issue. A special meeting of the bilateral Committee on Sanitary and Phytosanitary Measures will be held in Thailand on 23 June so that relevant experts can put New Zealand’s case directly to the Thai authorities. That opportunity would not have been available before the agreement was negotiated.

I should note, in response to a point raised during the first reading, that under the agreement’s rules of origin only goods of genuine Thai origin will benefit from the New Zealand tariff reductions. Those rules mean that Thailand will not be a back door for preferential entry of goods from other countries.

At the select committee, despite the opportunity to do so, no serious evidence was presented to counter the Government assessment that the agreement will not have an adverse overall impact on New Zealand producers. The adjustment effects arising from the removal of New Zealand tariffs on goods imported from Thailand under the agreement are expected to be negligible. First, some 65 percent of imports from Thailand already enter duty-free. Second, the phase-out arrangements for New Zealand’s more sensitive sectors are very gradual. For sensitive products with a lower tariff, such as whiteware, existing tariffs will effectively be maintained at current levels before being removed in 2010. Finally, adjustment assistance has been made available in the context of New Zealand’s unilateral tariff reductions, to help the textiles, clothing, footwear, and carpet sectors build skills and global competitiveness.

Although the adjustment effects in New Zealand will be limited, the opportunities being created for New Zealand exporters in the Thai market are significant. Thailand is a heavily protected market. Tariffs are levied on virtually all imports from New Zealand—many are in the 20 percent to 40 percent range. Under the agreement, Thailand will eliminate tariffs immediately on over half of New Zealand’s current exports, including most current manufactured exports, and progressively phase out the remainder.

In broader terms, this agreement offers the most far-reaching bilateral market opening for New Zealand since CER. As noted in the select committee report, the bill will deliver real benefits to many New Zealand industries, and will open up opportunities for New Zealand to develop the trading relationship with Thailand to its full potential. I commend the bill to the House.

That was the Minister for Trade Negotiations, who has just announced one of the most wimpish actions I have ever heard of, as an election sop to apple growers in this country. After years of discussions with the Australians over access for apples, that Minister has said—wow—that the Labour Government will have more discussions at the World Trade Organization. The Minister knows that those sorts of things never resolve intractable disputes like this, and he should explain to the House why he is not taking dispute resolution action—something with a bit of guts in it—for our apple exporters.

I come back to the bill. This is the third trade agreement that this country is passing legislation to implement. The first one was CER with Australia, which was negotiated by a National Government. It remains—despite the fact that it was negotiated in 1982, more than 20 years ago—one of the world’s highest-quality trade agreements. The second one was the free-trade agreement—or closer economic partnership, as this Government calls them—with Singapore. That was largely negotiated, as well, by the last National Government. In fact, I signed the heads of agreement on that one prior to the election in 1999. That is also a very high-quality trade agreement.

This is the first trade agreement New Zealand seeks to implement that has been negotiated by a Labour Government. It is a low-quality agreement. It is the first one negotiated by any Labour Government, and it is a poor-quality agreement. We will support it, because it is better than nothing. We made it clear in the debate on the first reading that we will support it, because it is better than not having an agreement, but it is a poor-quality agreement. Of this country’s GDP, 68 percent comprises services businesses, and this agreement does nothing to gain access for our services. This agreement does nothing to gain 68 percent of our economy—service industry providers—access to the Thai economy. All it does is say that in 3 years’ time a services negotiation will be initiated. That is not good enough.

The second problem we have with the agreement is that, despite the fact that the Government says its policy is not to have laws that give more favourable treatment to Māori, the agreement has in it a reservation allowing it to provide “more favourable treatment to Māori”, and National opposes that. I am not allowed to use the word “hypocrisy”, but I do not know how a Government can claim a policy of not having more favourable treatment for Māori, and then, in an agreement like this, have the exact words “more favourable treatment to Māori”.

Our third concern is that, under this legislation, tariffs here in New Zealand will not be phased out in total for Thai imports into the country until 2015. The reason why that is a problem is that the Minister for Trade Negotiations, the Hon Jim Sutton, who is meant to be one of the leading trade Ministers in APEC, has brought into this House legislation that in its effect will breach New Zealand’s commitments to APEC. The APEC Bogor goals that New Zealand has been signed up to for years require us to remove all impediments to free trade by 2010. That is what we signed up to. Labour has never officially resiled from that. If the member for Otaki—who is about to lose his seat, because National has a far better candidate than the little feller, the fifth-former from Ōtaki, Darren Hughes—thinks Labour has officially resiled from the Bogor goals of APEC, he should tell us when that was, so that we know that the Government has done so. If the Government has not resiled from the Bogor goals, why does this agreement extend beyond those goals? Why does it make a mockery of New Zealand’s commitment to APEC? That is the third reason why we consider this to be such a low-quality agreement.

Specifically, at the select committee—incidentally, how long did the select committee have to consider this bill?

💬 Dail Jones: 13 working-days.

Dr the Hon LOCKWOOD SMITH: The select committee had 13 working-days to consider the bill. One meeting was available, and half an hour was set aside for the third trade agreement New Zealand has ever entered into. According to my notes, it was on 2 June that the select committee, very briefly, looked at this legislation. It is too important for such brief examination.

What National questioned extensively was Part 2. Part 2 puts into New Zealand law, for the first time, transitional safeguard measures in a free-trade agreement. The Minister for Trade Negotiations has already acknowledged that in his second reading debate contribution. It is a serious move for New Zealand, for the first time, to put into our law transitional safeguard measures. Those measures, by their very nature, are complex international trade law measures. I will come back to that. The bit that I wanted to make sure National clarified at the select committee was that some concerns were being expressed by people who are reasonably knowledgable about international trade issues as to whether the measures in this legislation were totally consistent with our obligations under the General Agreement on Tariffs and Trade, particularly article 24 of that agreement. Clause 8 of article 24 caused the most concern to observers of New Zealand’s trade measures. But the officials at the select committee, of whom a number are present in the House right now, gave the committee an unequivocal assurance that the specific provisions in Part 2 of the bill that implement the transitional safeguard measures are totally consistent with the requirements of GATT, particularly article 24. National members accepted the advice of officials, but we make it very clear that we do have some lingering concerns, and we are accepting that advice only because the officials were so unequivocal that the provisions were consistent with GATT.

Let me come back to the fundamental problem with safeguard provisions. Clause 7 inserts new sections 15A to 15H into the principal Act. New section 15B states: “(1) The chief executive may undertake a transitional safeguard investigation to ascertain whether goods that have been subject to tariff reduction or removal after entry into force of the free trade agreement—(a) are being imported in increased quantities …”—and I thought trade agreements were meant to result in increased quantities of items being imported and exported—“and (b) are causing, or threatening to cause, serious injury”. Members of the House can understand why this is complex law. How does one establish whether something that is being imported in increased quantities is threatening to cause injury to an industry?

New Zealand has been on the receiving end of punishment from this kind of safeguard provision. Members will have short memories if they do not remember the US lamb tariffs. The US argued that increased export of New Zealand lamb to the United States was injuring, or threatening to injure, its industry, and it imposed tariffs on us. It is complex law. When it is used against New Zealand it can be very damaging. This House should think seriously about the provisions in Part 2. The worst feature is that Thailand reserves the right to impose transitional safeguard measures against our agricultural exports to Thailand. If this agreement is worth anything, they should increase under this agreement, and, therefore, we automatically risk safeguard measures being taken against us.

I think the House should look very carefully at Part 2. During the Committee stage National will examine it in some detail, because I can just see all the actions and investigations being taken to implement safeguard measures, to the disadvantage of trade between our two countries.

I have said a number of times about that member—and I think it is true today—that he makes very angry and sour speeches. I can recall, before I became a member but when I worked in this place, when international trade issues were generally—on both sides, actually, regardless of who was in Opposition and who was in Government—treated in a non-partisan way. I have to say that that was a slightly over-the-top, sour speech. I suppose it is no wonder, given that it was made by a member who will soon become the former trade spokesperson for the National Party when a certain individual, Mr Tim Groser, enters this place on the Opposition benches.

We are looking at the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill 2005. If we look at it in the context of this Government’s track record, we note that it is interesting that this Government has a superb track record in negotiating deals to the benefit of this country. [Interruption] Hold on! Help is on the way. I am coming to it—taihoa. It seems that somebody over there—Mr Carter—is having a bad hair day. This Thailand agreement is projected to be worth hundreds of millions of dollars to this country. I would have thought that that would be a non-partisan, unarguable issue for both sides of the House.

Let us look at this Government’s track record in respect of trade, and let us look at the Singapore agreement that has been implemented. I was reliably advised, before I came into this place, that the then National Government spent an inordinate amount of time negotiating an agreement with Singapore. That is fair enough—good stuff. But I am advised that, in reality, all the goods involved in that agreement were free of tariffs anyway, apart from, I am told, beer. Beer was the only sticking point that National—[Interruption]

💬 Hon Mark Burton: I raise a point of order, Madam Speaker. The member opposite made a very unparliamentary comment, and he should withdraw and apologise.

💬 Madam SPEAKER: I apologise. I was sneezing at the time and missed it, so would the member please withdraw and apologise.

Dr the Hon Lockwood Smith: I withdraw and apologise. I raise a point of order, Madam Speaker. It is very difficult in this Parliament to encourage members to tell the truth to the House. I know that you will say that there are mechanisms for doing it and that it is not a point of order to raise this, but I have just demonstrated the dilemma. It will go into the record of the House that Mr Cosgrove said that National took a long time to negotiate the closer economic partnership agreement with Singapore. In fact, the record will show that it was done in record time—it was done in just a few months. That is the dilemma. When members are careless with the truth, there is no way—unless we go through all the rigmarole of personal statements—to bring them back.

💬 Madam SPEAKER: The member is right; that was not a point of order. But perhaps it is a matter that the next speaker for National could clarify for the record. I remind members to stick to the bill.

I am obliged that you were sneezing, Madam Speaker, and not yawning during my speech.

I come back to the bill and the track record of this Government. The point I was making in respect of Singapore is that I am advised that beer was the only product that could not enter Singapore duty-free. National got hung up and stuck on that—and it took this Government to complete that deal, which we have done. We have also entered into the Trans-Pacific Strategic Economic Partnership Agreement negotiations between Chile, Singapore, Brunei, and ourselves. We are in negotiations now with China, Malaysia, and the whole of ASEAN. So I would have thought that if we rack up the report card between Labour and National in respect of our history in trade negotiations, we beat them hands down. I invite the next speaker for the National Party, in addressing this bill, to point to National’s achievements in respect of trade negotiations in 9 long years of Government. If we go back from there, we hit my predecessor Mike Moore. His track record in the 1980s stands for itself in respect of trade.

What does the New Zealand - Thailand agreement do? It opens up, yet again, hundreds of millions of dollars worth of business opportunities for our people and our businesses. I say to the National members that I would have thought they would agree that this agreement is something we can celebrate. I would have thought they could get beyond politics and not have a sour, derogatory, and very negative attitude. I think that our diplomatic people, who are beyond politics, most New Zealanders, and most New Zealand businesses are gratified for any sort of free-trade agreement, whichever party it comes from, because they want to grow their businesses and they want further opportunities. The deal with Thailand will give them those further opportunities.

It is a little bit rich for National members to stand up and bag an agreement when they belong to a party whose history is one of incompetence and the incompletion of international free-trade agreements. The member mentioned the issue of apples. I recall that National was in Government for nigh on a decade, and the question is: what did it do? Well, those members have seen some action from us on that issue. I invite National members to revisit their track record in respect of trade negotiations. I am told that the member who spoke before was great at turning up at meetings. Whether he ever got to the green room, I do not know. We know that now he will not, for two reasons: first, he is in Opposition; and second, Mr Groser will have his job—and I wonder why Don Brash stabbed the member in the back.

I ask the member and the next speaker from the National Party to show a little faith and a little bipartisanship and to celebrate what is for New Zealand business, for New Zealand jobs, and for Kiwis rich and poor, old and young, and in work and out of work, a great opportunity to take advantage of yet another huge market in Asia—a huge market in the world—where we can push our products and services first and earn money for this country. It is a good agreement. I commend the Minister for his work. Let us just get on with it.

The speech made by the Hon Dr Lockwood Smith was excellent. He was highly critical of the bill. New Zealand First is opposed to the bill, and Dr Smith reinforced New Zealand First’s view that we should oppose it. I do not think the member said anything in favour of it. He was highly critical of it and gave good reasons why we should not support it, and I endorse everything he had to say. He has confirmed New Zealand First’s view that we should oppose this legislation.

I should perhaps mention in passing, seeing as the previous two speakers have referred to it, the issue of apples. I raise with the Minister for Trade Negotiations, Jim Sutton, that the answer he gave me in the House yesterday was not consistent with the facts in so far as apple leaders are concerned. He gave a clear indication to the House that all the apple leaders supported this dispute with Australia going to the subcommittee. My understanding is that that is not the case. They want this dispute on apples to go to the disputes committee. In due course this matter will be taken further in the appropriate way, unless the Minister reconsiders, quite promptly, the statement he made to the House yesterday.

New Zealand First is concerned, in terms of this legislation, about the workers of New Zealand. Today we have not heard Labour members mention workers at all, because they really do not care about them. Clayton Cosgrove gave an apology of a speech that was really based on an attack on Dr Lockwood Smith and offered nothing positive. Mr Cosgrove gave the impression that he was concerned about the delay in bringing a new brand of beer into New Zealand. Perhaps he wished to try it and was concerned that it was not getting here fast enough, so as soon as he came into Government he allowed it to come into New Zealand so he could give it a try. That seemed to be the basis of his whole speech. Surely, Labour members can do better than that.

But let us talk about workers. I read in the national interest analysis, in reference, for a change, to the disadvantages—the officials quite properly set out advantages and disadvantages—the statement: “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.” New Zealand First is concerned about the future of New Zealand’s clothing industry, footwear industry, carpet sector, and whiteware, plasterboard, steel, and textile industries. For the reasons outlined in our minority view, which were confirmed, I believe, by Lockwood Smith, we are opposed to this legislation. I think the words used by Dr Smith were that this is a poor-quality deal, and it is a very minor one in so far as New Zealand trade relations and import and export trade are concerned. In New Zealand First’s view, we should not be setting an example as being anti - New Zealand workers so soon in any trade negotiations.

I have looked at the December 2004 statistics on New Zealand exports to Thailand and imports from Thailand. The top 20 exports to Thailand in 2004 were worth $297 million. Of that, almost $255 million came from dairy products, and suchlike. That is to be commended, as is the fact that we are moving into the baby food area. Asian people—and I was born and brought up in Asia, and came here when I was 15—do not eat or drink dairy products. Dairy food is alien to them in general. It is excellent that our exporters are targeting the baby food market so that those consumers can literally grow into it and the market can constantly grow.

Regarding our imports from Thailand, I know now why the Labour Government wants to support this legislation. We know that Labour does not care about the workers any more. In the reign of Louis XVI, Marie Antoinette said of the starving workers words to this effect: “Don’t worry about them; if they can’t eat bread, give them cake.” I see from the trade statistics that we are importing $21 million worth of caviar from Thailand. It seems to me that the Labour Government’s new saying to the workers might be: “If you can’t get a beer or a decent meal, eat caviar; we’ll get it for you from Thailand.” That is the way things seem to be working. The Labour Government does not care about New Zealand workers at all any more. It can buy off a certain group of people with benefits, and suchlike. Whether in relation to a trade deal or in any other area, the Labour Party does not seem to have any regard for workers at all. The things that are coming in from Thailand at the moment include $121 million worth of trucks and vans, air-conditioning machines, and suchlike. A lot of those things come in duty-free already.

Dr Lockwood Smith from National said that this was a poor-quality agreement. One does wonder why we are spending so much time on something like this. Why did we bother to get into a deal with Thailand at all, bearing in mind that some things, like services, are not covered at all, that so many parts of the agreement do not start until 2015, and that some start dates are even extended to 2025?

I want to take up the point raised by Dr Lockwood Smith as to why we must bring a reference to the Treaty of Waitangi into this bill. Why does article 15.8 of the agreement reserve the right for New Zealand to adopt “measures it deems necessary to afford more favourable treatment to Maori … including in fulfilment of its obligations under the Treaty of Waitangi.”? What is this fetish on the part of the Labour Government and its supporters that when we get into trade deals with places like Thailand and Singapore, we must somehow bring in our obligations under the Treaty of Waitangi? Are our importers supposed to take this into account when they are dealing with Thai people? Is that why caviar exports from Thailand will increase—because sturgeon was not fished by Māori people in days gone by?

Other aspects of this bill should, of course, be borne in mind. New Zealand First has been very concerned about the constant arrogant attitude of the Labour Government. The Prime Minister signed this agreement before the Foreign Affairs, Defence and Trade Committee had finalised its deliberations on the national interest analysis, and certainly before the passing of this bill. We have a bill before us by which Parliament is to ratify the agreement, but the Prime Minister has already signed the agreement—weeks ago, in Thailand. What is the point of coming here if that is the arrogant attitude Prime Minister Helen Clark constantly adopts towards New Zealand? She does not really care about this Parliament. She does not care about what happens here, whether it is a matter of social engineering legislation or of any other type of legislation. This agreement with Thailand has already been signed. The Prime Minister had a grand TV opportunity. How the Prime Minister loves her television opportunities! She has breached the Cabinet Manual, as well. In New Zealand First’s view, the Labour Government has breached the Cabinet Manual, because this matter was considered by the select committee for only 13 working days, not 15 working days. The Government’s whole attitude to this legislation has been cavalier and arrogant. It shows absolutely no regard for this Parliament whatsoever.

I take Dr Lockwood Smith’s point on the service industries. That is an excellent reason why we should not pass this bill, bearing in mind New Zealand’s achievements in this area. The national interest analysis notes some of the disadvantages to New Zealand in entering a closer economic partnership with Thailand. On page 22 is an unusual insertion: “The broader negotiation involved New Zealand meeting some specific Thai interests such as in the area of temporary employment for specialist Thai chefs and, potentially, traditional Thai massage therapists. The access for specialist Thai chefs to work temporarily in New Zealand subject to certain conditions is not however expected to displace New Zealand workers. Care will be taken to ensure the integrity of any system for temporary employment access ultimately offered for traditional Thai massage therapists.” If we look around Auckland, Wellington, or wherever we very soon find out just what a traditional Thai massage therapist is. [Interruption] He is not in my party.

I just say that this is a very unusual piece of legislation. It is a poor-quality bill, and New Zealand First will not support it.

I rise on behalf of the Green Party to say that we will oppose this bill, and we presented a minority report on the bill to the Foreign Affairs, Defence and Trade Committee. Although this bill has some good features and the agreement will bring some advantages, particularly for New Zealand agriculture in terms of promoting and selling agricultural products in Thailand, they are outweighed by the disadvantages for the people of Thailand, both workers and farmers, for workers in New Zealand, and for our manufacturing industry, which will be undermined by this bill and by the agreement on which it is based.

I want to go through some of the disadvantages. Firstly, will the agreement help Thai workers? The proponents of this agreement, and agreements like it, say that such an agreement will help the people of the country we are signing it with. They say that it will help these people develop. It is true that Thailand has developed and that it is not the poorest country, although the Oxfam analysis that was submitted to the select committee on the closer economic partnership agreement shows a great difference between rich and poor and between the rural and urban sectors in Thailand. Wages are very low, much lower than New Zealand wages.

The New Zealand Council of Trade Unions put out a statement a few months back warning of the risks of trade deals such as this. It referred to the Thai agreement, then in preparation. While it noted that the agreement included a process to enable unions to take up complaints about breaches of labour rights in Thailand—which was, it said, an improvement on the closer economic partnership agreement with Singapore, which made no reference to labour issues—it still felt that the agreement fell far short of an enforceable and meaningful process to address breaches of core labour conventions, such as the use of child labour and forced labour, discrimination, and the suppression of union rights.

The Council of Trade Unions referred to a 2003 study of Thailand conducted by the International Confederation of Free Trade Unions that reported on forced labour, sweatshops, the exploitation of illegal migrant workers—including workers involved in the production of clothing for export—and forced prostitution, including national and international trafficking in women and girls. Added to that, Thailand has not signed and implemented all the core ILO conventions. So there is a serious problem as to whether the workers of Thailand will really benefit from this agreement.

The Greens argue that richer nations such as ours have a certain duty to say that if we are going to have trade agreements with other countries, we would have to seriously discuss questions like labour standards and the effect of the trade agreements on communities, and would try to use negotiations to improve a situation for the workers of that country—in this case, Thailand. That has not been done. There are, as the New Zealand Council of Trade Unions said, some improvements over the Singapore agreement in the general text of the treaty, but there is nothing at all in the bill itself that will try to make Thailand adherent of labour standards, ILO conventions, etc. In fact, during the Committee stage, the Green Party will put forward a number of amendments to try to at least get such provisions in the bill before us today.

It is not just the question of Thai workers, either. There was a very interesting submission from Oxfam New Zealand, which I referred to previously, to the select committee on the New Zealand - Thailand Closer Economic Partnership Treaty. As I said at the beginning, there are some advantages for New Zealand in the promotion of dairy exports, but the Oxfam submission actually had a section on dairy farmers in Thailand, which I found quite interesting. Oxfam, of course, is looking at the interests of poorer countries, and often people in the rural sector, in particular. Oxfam said there is a potentially vulnerable sector in Thailand, which is dairy, on which 60,000 Thai farmers and their families are directly dependent.

Oxfam referred to an Australian study by the Department of Foreign Affairs and Trade in Australia, and it quoted a bit from that department: “As for the dairy sector, subsequent intense competition under the terms of an FTA would marginalise Thai dairy farmers, and thus adversely affect employment.” That is what the Australian Department of Foreign Affairs and Trade thinks as they approach fair trade negotiations. They said that perhaps the growing world demand for milk solids might mitigate this, and that it was possible that if countries like Australia and New Zealand help Thai farmers improve their dairy industry, it would reduce that problem for Thai dairy farmers. They also said that that does not seem to be the case in Thailand, because the Australian Department of Foreign Affairs and Trade talks about a new Nestlé plant in Thailand for canned milk, which will be supplied by Australian imports.

I think we have to look at that if we are to make our trade policy consistent with our aid policy, which is what Oxfam is trying to do. We have to assist small-scale dairy farmers in Thailand, alongside developing our own markets there. Oxfam said that the approach of helping Thai farmers should precede any threat to their current livelihoods from import liberalisation. Oxfam was also concerned about making sure Thailand fully implements ILO core conventions, particularly in the light of serious breaches of workers’ rights and safety, most notably in the case of factory fires. That is illustrative of problems for the Thai people flowing from this agreement in the bill we are discussing today.

For New Zealand workers, there could be significant job losses, particularly in the textile and clothing sector, where, if there are no tariffs at all, Thai products could compete very well with their very low wages. That would also undermine our manufacturing industry. It is true there is a transitional provision in the bill. It is not spelt out in terms of years in the bill, but if one refers back to the original treaty, one can see that this transitional period is for a maximum of 3 years. That is not very long to protect New Zealand workers from the competition of very low-paid Thai workers. So that is not sufficient.

In closing, I reinforce what Dail Jones said, which is that it is strange that the select committee was discussing—and in the end approving—this bill after the agreement had actually been signed. I think that shows the need for a provision that came before the House a year or 2 ago when I put forward the International Treaties Bill, which required that Parliament should approve international treaties. Parliament should not just be at the end of the process, and its consideration is actually being treated as irrelevant by the Government of the day. We need a proper process there. The Green Party is also concerned that services are not included in this agreement yet, although there will be negotiations on services. We are concerned that there will be an undermining of our services, and of our control of our own services, be it health, education, or Government services, if we give to businesspeople in countries like Thailand free entry to our market in that respect. We are very concerned, and I think that in total the bill is not one that the Green Party can support.

The ACT party supports the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill and will be voting for it. We recognise that trade is the lifeblood of the New Zealand economy. I acknowledge the good work that Minister Jim Sutton and his officials have done.

We believe that trade should be a non-partisan issue. It is in the interests of the New Zealand economy as a whole to promote freer trade in a global sense. Obviously, like others, we would prefer to see multilateral trade agreements. There are serious advantages that multilateral trade agreements have over bilateral agreements. They are fairer in a global sense. If we think about the work—the glacially slow work—made at the Tokyo round, followed by at the Uruguay round, and now at the current Doha round, it is a disappointment for a country like New Zealand to have the agreements stalled, but we keep plugging away. Successive Ministers in successive Governments of all persuasions have been consistently promoting New Zealand’s interests at international fora in getting and working for freer trade. Overwhelmingly, it is in our enlightened self-interest to do so.

One of the problems with bilateral trade is that the more powerful nation actually has advantages over the least powerful nation. But it is all progress along the way. This particular agreement with Thailand is not perfect. Other speakers have commented that it has limitations. All trade agreements always will have limitations. But each step is a step towards freer and more open, comparative trade. That is why it is certainly in New Zealand’s interests to advocate for freer trade based on comparative advantage, and it is for that reason that we have to accept that although we may have an advantage overall, there will be adjustments. Some of the adjustments may carry some pain. Certainly, if we have areas of quite high protection, or relatively high protection—perhaps in clothing and textiles—then we do not have the comparative advantage, so, yes, we may lose some jobs in that sector. But New Zealand First and the Greens have to understand the point that, to the extent that the overall New Zealand economy will be stronger, other jobs and opportunities will open up that will more than compensate for that. One of the great advantages of trade is that both parties benefit, and the collective benefit actually creates greater prosperity, not just for the countries involved but for the world at large. A rising tide lifts all boats, and that is what freer trade can do.

The other thing to note, of course—and I think I mentioned it at an earlier stage in this debate—is that throughout history, no two openly democratic nations that have traded with each other have ever gone to war. I put out the challenge to members to name two openly democratic countries that have traded together that have ever gone to war. One of the best ways of building global securities is actually to open up for trade, but the xenophobic arguments from the Greens and New Zealand First are the very arguments that create instabilities and problems, in an international sense.

In the big-picture view, I think that one of the greatest obscenities in the world is the way that wealthy nations in Europe and North America insist on free trade in areas where they have comparative advantages, based on high-tech goods, and the like, yet deny developing countries the same opportunity—in fact, engage in massive subsidisation and tariff protection against the developing Third World. It just so happens that although New Zealand is not characterised as a Third World nation, structurally our economy is more representative of being so, with our heavy dependence upon agricultural goods. So it is true that we would benefit, but so would some of those poverty-stricken nations of Africa, and the like. That is why I take exception to the Greens’ argument that says: “Oh, no, no. We should give these countries more aid.”, and then they come to this House and vote against opening up with trade.

There is no better way to assist people to lift their standards of living and to gain prosperity than to trade with them. I find it an incredible hypocrisy and contradiction to promote more aid on the one hand but to deny the opening up of trade on the other hand. Yes, by our standards some of those countries may well operate sweatshops, and employment conditions may be a lot harsher than we would accept, but the way to lift those conditions is to open up trade and, with growing prosperity, those other social standards, and the like, will rise with it. That has been the experience throughout the ages in all economies. Not to do that is to consign those nations to continuing poverty, and everyone, effectively, is the loser.

So without hesitation ACT certainly supports this bill. We acknowledge its shortcomings, such as the lack of a proper breakthrough in services; I understand that the Thais have agreed only to initiate negotiations in 3 years’ time. I am constantly confused by the Labour Government’s race-based laws, if you like. Here we have it again, with favourable treatment for Māori. That should not be necessary. All New Zealanders should stand alone. Ethnicity has nothing whatsoever to do with it. Of course, we know that this Labour Government did a similar thing when Māori corporations were given a lower taxation rate. We are actually glad they have a lower tax rate, but we would like everyone to have a lower tax rate. We are not against Māori corporations having a tax rate of 19c in the dollar; we believe everyone should have a lower tax rate, and there should not be differentiation based on race. To put that into an international trade agreement, as we have here, is certainly, in the eyes of ACT party members, a very, very strange thing to do.

Another good area concerns timber. Although we might be affected by clothing, carpets, and textiles, Thailand is potentially a very significant market for New Zealand’s timber, particularly sawn timber and other products. I understand that we face some very high tariffs there of 20 to 30 percent, or thereabouts. The Minister could perhaps clarify that. This agreement, and the conditions the bill creates, will certainly be a major breakthrough and favoured by many sectors of the New Zealand economy.

In conclusion, I reiterate that the ACT party will support the bill. We think that it is a quite small step in trade liberalisation, but all such steps are supported by the ACT party.

Firstly, as the chair of the Foreign Affairs, Defence and Trade Committee I acknowledge the constructive way in which the committee’s members—although it may not have been all that obvious from the debate this afternoon—participated in the discussions in the committee, both on the national interest analysis of the agreement and on this bill. I also acknowledge the support and advice we received from the officials who advised the committee throughout that process. That advice was most appreciated. It led, I think, to a constructive understanding of the issues, and to a report on both the national interest analysis and the bill, which is balanced and reasonable in the circumstances.

The starting point I want to take with regard to this legislation is the picking up of some of the points, ironically, from the previous speaker. In today’s international environment, multilateralism is clearly an opportunity and an option we wish to pursue. But the glacial pace of international trade reform and some of the political difficulties associated with that have led increasingly to nations seeking bilateral agreements, particularly within their regional sphere of influence. I think that that is part of a national self-interest, and it is no coincidence that in recent years, under Governments led by both Labour and National, New Zealand has sought to develop closer economic partnership arrangements with Singapore, China, the ASEAN states, and the countries in the Pacific Three Closer Economic Partnership agreement, the Thailand agreement, and so on. That is part of our way of ensuring not only the spread of international free trade and the opportunity that goes with that but also the greatest possible opportunity for the people of New Zealand, for our manufacturers and our exporters, to have the chance to sell their wares in other markets.

One of the lessons we have learnt over many, many years as fortress mentalities and nation States have broken down and as national boundaries have evaporated, is that to get the advantage of a deal for us we have to be prepared to make a deal with someone else. That is really at the heart of these types of free-trade agreements. There will be situations where we might quibble about whether the advantage to us is as pure and neat as we might wish, but in reality it will always be a compromise—put crudely, what we can get away with and how little we have to give up in order to get away with it. That is the tension inherent in all these negotiations.

New Zealand has to remember a few things, as well. We are a very small country, isolated, and at the end of the world’s trade routes. We will be more price-takers than price-makers. Although we have some natural advantages, we have some huge disadvantages that we can do very little about. Consequently, in all these negotiations, from the time that Ministers of overseas trade—from Jack Marshall onwards—made their annual trudge to Europe over dairy and sheep meat access in the lead-up to the British entry to the European Economic Community right through to the present, the New Zealand position has always been to ask how we can advance that New Zealand sense of self-interest; how we make sure that in the global scene the New Zealand case has some recognition. I think that tribute must be paid, without exception, to our trade Ministers over the years for their patience, for their endurance and, on the whole, for the success they have achieved on behalf of our country, in terms of furthering the opportunity for “New Zealand Incorporated”.

The world changed vastly when the Europeans decided in the 1950s—and I pick up the point about peace and harmony made by Mr Shirley—that their future would be secured if they stopped fighting each other and started trading with each other. The flow-on effect of that meant that that cosy situation we once enjoyed—where it was a simple exercise of growing the lambs, shearing the wool, putting the meat produce into muslin cloth, refrigerating it on a ship to Britain, and getting the cheque back sometime later—had gone forever. We had to become more dynamic; we had to become more innovative. The whole march of progress towards free-trade agreements that this country has entered into from CER onwards has really been about securing opportunity and a future for this country. Therefore, I get very angry with those who start to take a myopic view, which says on the one hand: “Let’s bring back Fortress New Zealand. Let’s throw out the barriers and pretend that the rest of the world doesn’t exist.”, and on the other hand: “Let’s be so preoccupied about the conditions in other countries that we forget about the opportunities in our own country.” That is at the heart of this agreement.

The bill is actually a very narrow one. It deals with the implementation of some of the tariff provisions related to this particular agreement. It has an unusual feature in Part 2, but, as we were advised at the select committee, that has occurred as much because of the insistence of the Thais in putting something similar into the agreement at their end as because of the result of New Zealand pressure. There are some useful steps in that, and it is fair to report that after committee members had teased out those issues with the officials, we were satisfied that those provisions not only were consistent with out GATT obligations but also were likely to deliver “real benefits to many New Zealand industries and will open up opportunities for New Zealand to develop the trading relationship with Thailand to its full potential”.

That is the heart of this issue. That is what this bill is about. It is what this agreement is about, and it is what the whole history, in recent years, of trying to develop closer economic partnerships with other nations in our part of the world has been about. As I have said, I applaud the initiative and the energy of successive trade Ministers in bringing that about. I am pleased to say on behalf of United Future that, as a consequence of those measures, we support this legislation enthusiastically and wholeheartedly, and we support the process that is seeing opportunity brought to New Zealanders because of a willingness on a bipartisan and, increasingly, a multipartisan basis to embrace the notion of free trade and the notion of these types of partnership arrangements with the countries with which we have the closest contact.

I would like to thank the member who has just resumed his seat, and to acknowledge the previous speaker, the Hon Ken Shirley, for what I thought was a useful intervention, as well. The Tariff (New Zealand - Thailand Closer Economic Partnership) Bill is a fairly technical bill that reads into law the changes to the tariffs schedule brought about by the New Zealand - Thailand Closer Economic Partnership Agreement.

The debate is an opportunity to note the high level of bipartisan support for this type of trade agreement, which is relatively widely held in this House—perhaps, for the listeners, unusually so. There is broad consensus in the House that multilateral trade reform is always the “first, best” option when one is a small, remote country reliant upon good, transparent rules regarding international trade law for one’s prosperity. Successive Governments have done their best to further that agenda, with success that indicates that New Zealand’s diplomatic service and trade diplomats, in particular, punch above their weight. It is also recognised that in these difficult days it takes some time to bring fruition to a multilateral agreement. For that reason, complementary regional and bilateral agreements have a role to play, of which this is one.

I would like to address the objection brought about by the Green Party, because it is a fundamental one in any debate on international trade. It is answered by the theory of comparative advantage—that is, even if a country is the weaker player in every industry, it is still better off by trading so that it exports what it is relatively good at producing and imports what it is relatively poor at producing. I find myself in strong agreement with Ken Shirley on the point that it is obscene that various developed countries—and probably the European Union is the most notable—protect themselves from low-cost imports from the Third World. The benefit to those protectionist countries is far greater than the benefit from the aid that flows south to the developing world. That is a sad truth, and it is one that successive New Zealand Governments have worked to overcome. So that is all, I think, relatively bipartisan across this House, and I acknowledge the work that the former Minister for International Trade, Dr the Hon Lockwood Smith, has also done. That work was carried on in great spirit by the Hon Jim Sutton, and it was recognised by the Foreign Affairs, Defence and Trade Committee.

But there are some differences between the two sides of this House. There is a tendency on the right to believe that simple market opening will deliver the kinds of gains that New Zealand needs to be a prosperous economy in the 21st century. On that point, this side differs. We say that market opening is a necessary condition but it is not a sufficient condition. It must be balanced by active development of the capability of our exporters to deliver the goods—in other words, to drive through the opening that has been created, and to form the kinds of partnerships with our overseas partners that will derive value back to New Zealand. That is a new agenda. It is required that we have the statistical capability to measure it, that the national interest analysis follows it, and that we have the support through New Zealand Trade and Enterprise and others to implement it. This debate is about reading into law the tariff preferences created by this agreement. This is a good bill and I urge its adoption.

I am just getting over a dose of, if not the flu, certainly a heavy cold, but one of the things we can smell is the stench of the dying, decaying Labour Government, can we not? One can smell it in the House. I went through it in 1999, when it happened with the National Government. People could smell the decay around us. Well, it has been transplanted across to the Government members.

💬 Hon Trevor Mallard: Where’s that Don Brash—has he gone for his afternoon sleep?

The member who just resumed his seat is an absolute example of that—along with the Minister of Education, whom I will talk about shortly in the context of this bill. He told us that he would fix all those things about having special preference for Māori, and what has he done? He has done absolutely nothing. He told the country that he would fix it up. He said: “We’ll fix it. We’ll make sure it’s all even and all fair, and that there’s no preference given.” What do we have in this agreement? We have special preference for Māori.

💬 Hon Trevor Mallard: No.

Oh, the Minister says “No”. I will quote him shortly.

💬 Hon Trevor Mallard: Read it.

I will. Let me just read something out: “It concerns me that article 15.8 reserves the right for New Zealand to adopt measures it ‘deems necessary to accord more favourable treatment to Maori …’.” It is in the agreement. The Minister should go and look. The Minister who has the race relations portfolio does not even know that that is in there. How disgraceful is that?

First of all, I want to talk about the positive sides to this agreement, because there are some, and I do want to congratulate the Minister for Trade Negotiations on making at least some gains. He is to be commended for that, as are, as has been said in this House, previous Ministers who have done so.

💬 Hon Trevor Mallard: You’re too kind.

Well, I do not think I could ever be said to be too kind, but at least I am a reasonable person who will acknowledge that at least this agreement is a step forward. It is good to have trade agreements; there is no question about that. The National Party supports that concept absolutely, and, of course, it supports this agreement, apart from the fact that we have concerns about some parts of it. It is worth noting that currently only 4 percent of the goods that we export to Thailand are duty-free, and on 1 July, after this agreement takes effect, 52 percent will be duty-free immediately. That is of huge value to our industries.

The problem is that some of the qualifications in the agreement cause us concern. The first thing is the qualification that goods be free of chemicals, which the Minister actually referred to in his address. That is a worry because growers in New Zealand will have to certify—we assume that this will happen; negotiations are still going on—that the goods being exported are free of chemicals. There is nothing wrong with doing that, other than that the cost of gaining the certification is quite likely to be more than the cost of the tariffs that are currently imposed. So the growers themselves may not actually end up receiving any financial benefit out of this agreement, at all. We will wait and see.

But the second thing that worries me about this particular part of the agreement is that it has to be negotiated. Regarding the cost of negotiating and the time delays—although the Minister has tried to assure the House that it will happen rather rapidly—I have to say that the track record is not flash. If we look, for example, at the negotiations between New Zealand and Australia around apples, we see that they certainly have not been rapid, at all. Indeed, in the last 6 years there has been no progress at all with regard to that matter. All that has happened is recently the Minister finally decided that we will refer the dispute between Australia and New Zealand over apples to the Committee on Sanitary and Phytosanitary Measures for discussions. Well, what does that mean? Absolutely nothing! Why does the Government not take the bull by the horns, as National did on lamb tariffs when we were in Government, and take the matter to the World Trade Organization to get it sorted out? The disputes process is there; let us just get it done. It worries me that if that is the track record of this Government in regard to trying to settle disputes, what will happen when we are in the middle of negotiations on issues that this bill provides? I suggest that there will be delays and complications, and, as a consequence, there will be significant costs to our growers.

One of the previous speakers from Labour talked about its track record in negotiating trade agreements. Well, the only one that Labour has had any involvement with, as a Government, apart from this one, was the Singapore agreement, and all it had to do was sign the final piece of paper. To be fair, the previous member who spoke acknowledged the work that had been done by my colleague Lockwood Smith in regard to the Singapore agreement. That work was all done under the National Government. Yet a previous Labour speaker—I think it was the member for Waimakariri, whose name I cannot recall at the moment—

💬 Hon Member: Cosgrove.

Clayton Cosgrove claimed that Labour had a fine track record. Well, actually, when one looks at it, one sees that the equivalent of Labour’s track record is a flat tyre on a vehicle that is broken down. That is about as good as it gets.

This agreement is Labour’s first attempt, and there are lots of qualifications in it. I say to the House that we need to be concerned about some of the conditions in this legislation that may well put different sorts of tariffs on our exporters. It is unfortunate that we have any qualifications at all. At least, the Singapore agreement was clean, done, and end of story; it was just a straight trade agreement. CER was the same sort of thing. This agreement is a case of “Yes, we can do it, but with all sorts of ifs and buts.”, and that is most unfortunate.

I want to talk about the one part that does concern me, as I said I would, and I hope the Minister in charge is listening. It is the issue that appears in article 15.8. Why in the world do we have to have in a trade agreement an article that states that New Zealand reserves the right to adopt “measures it deems necessary to accord more favourable treatment to Māori … including in fulfilment of its obligations under the Treaty of Waitangi.”? I ask Parliament why that clause is in an international trade agreement. It mystifies me. I asked that question during the first reading and no one was able to give me a reasonable answer.

I wondered whether it is because some of the fruit that Māori grow is different, but I do not think it is. I do not think the apples that Māori grow are different colours from other apples. I would not have thought so. I am sure the apples are the same varieties and the same colours as the apples that non-Māori grow and export to Thailand. I am sure they are the same, so why would Māori need preferential treatment? I cannot think why. Maybe the cherries are different. Maybe the blush is a different colour or something. I do not know why. But it really mystifies me as to what the advantages are to this country and to the Māori people in having that clause in the legislation. The Thai people, I am sure, do not know what the Treaty of Waitangi is. I doubt whether they have ever heard of it, actually—well, one or two of them will have heard of it now because it is in this agreement. It is a real mystery.

This Government, 12 months or so ago, gave this country an absolute assurance that there would be no more preferential treatment, and that all those kinds of clauses would go. Trevor Mallard, the Minister in charge of that, said: “Forget about it. You don’t need to worry about it. This Government’s got it under control.”, and here we are, signing an international agreement that puts it back under the spotlight. Quite honestly, the Government needs to explain—and I hope the Minister in charge of the bill will do so during the course of the Committee stage—why that particular provision has to be in this sort of legislation and in these sorts of agreements. It actually does this country no good, in my view.

National members look forward to the debate in the Committee stage, and we will explore some of these clauses more closely during that debate.

I am pleased to rise in support of this bill.