Tariff (New Zealand - Thailand Closer Economic Partnership) Bill

Part 2 of the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill is the part that introduces a whole range of transitional safeguard measures. As I mentioned at the second reading, this is the first time that such provisions have been entered into New Zealand law in a bill like this. I would really like the Minister for Trade Negotiations to tell the Committee why he and the Government have found this necessary. It will invariably invite a whole new bureaucracy and a rush of bureaucratic procedures.

Let us look carefully at some of the provisions in Part 2. Let us take, for example, new section 15F(1)—inserted by clause 7—which enables the Minister to decide to apply a transitional safeguard measure. It states: “The Minister may decide to apply a transitional safeguard measure …”, which will be higher tariffs or higher duties for a certain product, when there has been an increase in the quantity of that product coming into the country, and—I accept that there is an “and”; that an increase in the quantity coming into the country would not be a sufficient reason on its own—it could threaten to cause serious injury. I invite members to really think about that. If this trade agreement is worth the paper it is written on, it should result in much-increased trade between New Zealand and Thailand. There will be, if it works, a big increase in Thai products coming into New Zealand. Some sectors may say that a big increase in products like theirs coming here poses the threat of injury to their industry, and off we go. Those sectors will be able to apply to the chief executive of Trade and Enterprise, and there will be a whole process of initiating an investigation to establish whether there has been such an increase and whether it does pose a risk of threatening to cause serious injury.

We have seen this sort of stuff at work around the world. We know that it invites action and litigation. Obviously, if, for argument’s sake, manufacturers in New Zealand are producing some kind of product, and they see an increase in imports of it, we will get into trouble. The part even tries to define what “like goods” are. One can seek an investigation into a transitional safeguard measure if a “like good” has been imported into New Zealand in increased quantities. We can see the kind of bureaucratic process that this sort of legislation invites.

New Zealand has never required it before. The Minister could probably say we have not had a bilateral trade agreement with an economy quite like Thailand’s before. I accept that. But why do we want to bring into our legislation this kind of provision? The Minister should be honest with the Committee. First, did New Zealand want it, or did Thailand want it? Is it, in fact, just because New Zealand buckled to what Thailand wanted that we are putting this whole bureaucratic process into our law? It is so woolly. We know that the United States has safeguard measures; its procedures invite applications for consideration of safeguard measures, and we know the problems that cause the United States Government. Do we want this kind of thing in our New Zealand law?

There are other issues that I hope my colleagues will also ask the Minister about. Will the safeguard provisions in Part 2 be applied differently to Māori and non-Māori businesses? As our agreement with Thailand reserves the right for us to apply to treat Māori more favourably under the agreement, could we see Māori applying for transitional safeguard measures—because Part 2 would enable them to apply for transitional safeguard measures—that non-Māori would not get? The agreement provides for more favourable treatment for Māori. If what I am saying is not correct and not possible, the Minister should make that very clear. He should make it unequivocally clear that it would be impossible, under the safeguard provisions in Part 2, for Māori to claim, using article 15.8 of the agreement, special safeguard measures that non-Māori could not achieve.

I want to follow up the issue my friend and colleague Lockwood Smith has drawn to the Committee’s attention in regard to Part 2. In particular, the Committee needs to look at new section 15F(1), inserted by clause 7, which states: “The Minister may decide to apply a transitional safeguard measure if he or she makes a determination, as a result of an investigation by the chief executive … that goods … (b) are causing, or threatening to cause, serious injury to an industry producing a like or directly competitive good.” That really needs to be given a thorough interpretation. I wonder what it means, exactly. I would be interested to hear the Minister comment on that aspect of this part, if he would be so kind.

Under New Zealand regulations—occupational safety and health, for example—and the laws of the politically correct system under which we work, we now have such stringent rules that we restrict the public and our industries from doing all sorts of things, in a way that is not thought of in other countries. I wonder whether that section means that we are taking the opportunity to put up trade barriers, against the spirit of a trade agreement. Is this some sort of backyard deal that allows us to worm our way out of our obligations? If we are signing a free-trade agreement with another country, then there has to be free trade.

💬 Hon David Cunliffe: What a sad speech.

That member will be sad when he is not back in Parliament after the next election, so if I were him I would not worry about being sad now. If I were that member I would be happy to be taking calls, because they will be amongst his last—which will be a blessing to Parliament.

I ask the Minister what new section 15F(1) actually means. A free-trade agreement, on my understanding of the situation, means free trade. I know that people like Keith Locke do not agree with that. That is fair enough; he states his case. But the point is that signing up to a free-trade agreement means that we can put our goods into a country and it can put its goods into ours. We should not need barriers because of different rules and regulations within the countries, yet surely that is exactly what that section states. I think that issue is absolutely important, and I look forward to the Minister explaining to us what that section means.

I want to go back to an issue I have raised already, on which the Minister has not satisfied me and certainly, I believe, will not have satisfied any of the listeners to this debate. It is the issue around the Treaty of Waitangi. Again I ask the Minister to tell the industries involved—because they are the ones that are directly affected—what the agreement means in referring to the fulfilment of our “obligations under the Treaty of Waitangi”. What does that mean with regard to this trade agreement? I do not understand; I do not know what it means. That phrase is just parrot words unless we have some understanding of what those obligations are. I know that the Minister, like his fellow Ministers when they are asked questions, will ignore that question, which is unfortunate. But if he is going to ignore it, why was that phrase put in the agreement at all? Some bureaucrat at some stage will be asked a question about it, and he or she will then be obliged to spend hours and hours on trying to figure out what it means—because the agreement states that someone will have to. It is likely that that person will get it wrong or, after doing hours of research, he or she will not be able to find the answer, either.

It is a serious matter when we have legislation and treaty articles that refer to things that are not defined and that people cannot understand. Quite honestly, they end up being meaningless. Particularly in trade agreements that we arrange with other countries, we should know what absolutely every word in a treaty means, and know what impact an agreement has on our country and on the country with which we are making it. In this case, the Thai people have every right to be able to understand the phrase. In fact, it amazes me that they have not asked for an explanation.

The member John Carter has asked why we have agreed to a bilateral transitional safeguard mechanism. I point out to him that for the mechanism to apply, increased imports must result in serious injury or threat of serious injury, which is a very significant and relatively strict test. It is not expected that there will be recourse to this provision often, if ever. It is a safety net. It was agreed reciprocally. Thailand did press for this provision, and New Zealand agreed to it in the context of an overall deal that met New Zealand’s interests.

I remind the member that under this agreement New Zealand attains, over an agreed period of years, completely tariff-free entry for, amongst other goods, our dairy products into the Thai market. If the member believes that the Thais would have agreed to that without putting in place this relatively modest safeguard against what a lot of Thai producers clearly fear will be an absolute torrent of New Zealand product that will destroy their market overnight, then the member is dreaming. He is dreaming of a perfect world where he is the Minister and everybody around the world agrees with him. He will have a long wait for that.

Opposition members have gone on again about the Treaty of Waitangi and what that clause requires the New Zealand Government or the Thai Government to do. They have suggested that the Thai Government would be forced to give preferential access or preferential exemption to products from Māori businesses when it came to applying the safeguard measure. [Interruption] The member did indeed suggest that, and it is no good his claiming now that he did not. All I can say is that that is a ludicrous suggestion. I point out to him that the Treaty of Waitangi clause does not require the New Zealand Government to favour Māori, but it does mean that if we do something for Māori—such as assisting Māori language broadcasting—we do not have to do it for Thailand. Does the member want to commit the New Zealand taxpayer to pay subsidies for the production of Thai language TV broadcasting in New Zealand? Will those members say yes or no? Do they know what they are talking about? No, they do not.

I was not going to take a call, but the Minister for Trade Negotiations has provoked me now. Is the Minister really saying that this agreement will allow the Māori language to be broadcast in Thailand, that the Māori people of New Zealand will be given a great advantage in their language being broadcast there, and that is what he is aiming at? What a load of nonsense, if that is what he is saying. He actually does not know just what he is saying. That is the point of the matter.

The second point regards one being able to take action if one feels that Thai goods are flooding into New Zealand contrary to one’s wishes, or vice versa with Thailand. That clause is really a lawyer’s dream, because so many cases will be commenced under it. If something like that is allowed to happen, it will happen, and lawyers will just love it. Can members imagine a smaller New Zealand trader trying to compete against someone importing from overseas and wiping out that New Zealand businessman? The small New Zealand business—and, remember, 97 percent of New Zealand businesses are in that small to medium sized enterprise category—would not be able to compete with wealthy Thai exporters who want to destroy the New Zealand market, and to set up something for themselves in terms of getting money from overseas. That is another reason for opposing this agreement.

We should not look at this agreement as if it is the answer to all New Zealand’s worries. In the year ended December 2004, our exports to Thailand totalled $364 million. If we had to rely on that, we would not be going very far at all. However, our imports totalled $659 million. I can see this agreement being rather like the Singapore one, where the Singaporeans are doing better and better relative to New Zealand. The Thais have gone into this agreement for only one reason: they have pulled the wool over the Minister’s eyes and over Helen Clark’s eyes. The Thais are going to do very well out of this agreement, to the detriment of New Zealand workers and suchlike.

💬 Hon David Cunliffe: Is the member supporting the bill?

David Cunliffe does not care two hoots about it; he is too busy with his comparative something or other theory. However, people like Keith Locke, I must say, and New Zealand First members have their feet on the ground and are concerned about the real workers of New Zealand.

It is a little step forward that the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill includes the transitional safeguard measures. Although, as the Minister for Trade Negotiations has just said, it was not the initiative of the New Zealand Government to put those in; it was the initiative of the Thai Government. Perhaps the New Zealand Government even beat them back a bit, if, as the Minister says, the Thai farmers are worried about a flood of dairy products. As I pointed out earlier, Oxfam New Zealand, in its submission on the treaty to the select committee, talked about the problems of Thai dairy farmers, and also quoted from a document of the Australian Department of Foreign Affairs and Trade that made a similar point. But surely, whether it is protecting Thai farmers against New Zealand products, or protecting New Zealand manufacturers and workers against Thai products, this is a very limited arrangement, on two levels.

The Minister has said that the measure has to meet a very high test of serious injury to an industry. There is some good phraseology used elsewhere. A detrimental impact in relation to increased importation of goods is an “actual decline in output, sales, market share, profits, productivity, employment, and utilisation of production capacity;”, or some threat to cause “serious injury to an industry producing a like or directly competitive good.” It is good that the provision is there, but when one reads the fine print elsewhere, one finds that that provision lasts for only a maximum of 2 years, following the elimination of the tariff on the product concerned. So it might help New Zealand workers or Thai farmers for that little period of 2 years, but beyond that we could be in serious difficulty.

The Green Party has three amendments to clause 7. They are of the same theme as my amendments to Part 1, which was to insert into the clauses a little bit extra on labour standards and the environment. Under clause 7, if my amendment is passed, there would be a paragraph (1)(c) in new section 15B that would include in the transitional measures products that “are being produced without acceptable labour standards or in ways which detrimentally affect communities or the environment.” Also, my amendment would insert subparagraphs (i) to (iii) into new section 15D(d) to bring into account “(i) the extent to which the imports have been made by forced labour, child labour or women who are paid less than men for the same work; or (ii) the extent to which the imports have been made in unsafe and sub-standard working conditions; or (iii) the extent to which the imports have been made without reasonable environmental standards”. My amendment to insert paragraph (1)(c) into new section 15F would take into account exclusions on items that “are causing, or threatening to cause, harm to Thailand because they are being produced without acceptable labor standards or in ways which detrimentally affect communities or the environment.”

Those amendments would provide a lot of protection for the rights of people in Thailand, particularly working people, in terms of labour standards, and, in the broader community, in terms of environmental effects and effects on communities. I think there is good reason to be concerned there. If members follow events in Thailand, they will see that the Government does not protect the environment very well in terms of the expansion of industry. At least, those amendments would allow New Zealand, if there is a big outcry from the Thai community and non-governmental organisations that they are not being properly protected under this agreement, to exclude the products that are producing that damaging effect on the Thai people.

So I hope members will support those amendments. They do strengthen the clause. As I said, it is good that the transitional safeguards are there, but they are very wishy-washy and weak.

I have just become aware that, on the closure motion, I wrongly voted nine votes on behalf of United Future. It should have been eight. I seek leave to correct that.

The CHAIRPERSON (Ann Hartley): Leave is sought to correct that. Is there any objection? There is not.

I would like to ask the Minister a question on something that is far from clear to me in Part 2, and express the hope that he will provide a response. We are of course talking about the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill, which National supports with reservations. Part 2 is concerned with the application of transitional safeguard measures and provisional safeguard measures. There is a brief explanation in the explanatory note of the bill as to what all this is about. The note states: “The Agreement 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 by reverting to higher tariffs for a certain period.”

The actual part inserts new sections into the principal Act. There are interpretation sections, and a code that involves investigative procedures: matters to be taken into account by the investigator, who is the chief executive; publication of investigation results; and provisions dealing with transitional safeguard measures and also provisional transitional safeguard measures.

I question the Minister about why this particular part is necessary, and why it is not possible simply to rely on the current provisions in the World Trade Organization agreements. Of course, it is the essence of the World Trade Organization regime that binding tariffs are key to the smooth flow of trade in goods, but there are exceptions, as I am sure the Minister is aware. Three of those exceptions that are well-known would be actions taken against dumping, or selling at an unfairly low price; subsidies and special countervailing duties to offset the subsidies; and—the third is what we are on about here—emergency measures to limit imports temporarily, designed to safeguard domestic industries.

The rules around safeguards in the World Trade Organization context are well known. A member may restrict imports of a product temporarily—take safeguard action—if its domestic industry is injured or threatened with an injury caused by a surge in imports. The injury has to be serious. Well, that is what this part is all about, also. The safeguard measures were always available under GATT’s article 19. They might not have been frequently used in those days; indeed, I understand that some Governments preferred to protect their domestic industries through grey-area measures, using bilateral negotiations outside GATT’s auspices. They would persuade exporting countries to restrain exports voluntarily or to agree to other means of sharing markets.

It also seems to be the case that what Part 2 is seeking to catch is wholly consistent with the safeguards regime in the World Trade Organization, because we are talking about import surges justifying safeguard action, and that can be either a real increase in imports—an absolute increase, as it is called in the trade—or an increase in the imports’ share of a shrinking market, even if the import quantity has not increased. That is the so-called relative increase.

As I look through the safeguard provisions in the World Trade Organization agreement, I cannot see why the Government is getting itself involved—as it is in this bill—with Part 2 issues. I am not a member of the Foreign Affairs, Defence and Trade Committee, but I do not believe that that issue was fully considered by the committee. The only comment I can see about that issue in the recommendations of the committee when it reported to Parliament is this one line: “We are advised that the inclusion of these provisions is fully consistent with our GATT obligations.”

I hope the Minister will answer those very learned questions from my good colleague Richard Worth, because they cover important issues. I would like to come back to the Minister’s response a few minutes ago to questions put to him. I am really troubled by the rave he gave in response to the questions raised about the Treaty of Waitangi and the article about the treaty in the agreement, and how they apply to the part of the bill we are debating right now. The Minister gave the impression in that rant that that provision will somehow avoid giving to Thai people an advantage that Māori may have in New Zealand. I want to make it very clear to the Minister that that is not what this part is about, and I want to go over the words very carefully with the Minister. Article 15.8 in the agreement states: “… nothing in this Agreement shall preclude the adoption by New Zealand”—it is nothing to do with Thailand; this is adoption by New Zealand—“of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement …”. So it is a matter of what New Zealand deems necessary and, clearly, the transitional provisions are covered by that agreement.

I want the Minister to tell the House what he and this Government intend to do, or are contemplating doing, whereby they intend to deliver more favourable treatment to Māori that is not relative to people in businesses in Thailand but is relative to other New Zealand businesses. That is the issue, and that issue concerns New Zealanders. All New Zealand businesses should be treated in the same way under this agreement and under this legislation, but article 15.8 provides for the Government somehow to give more favourable treatment to Māori relative to non-Māori New Zealanders and non-Māori New Zealand businesses. That is what the wording states: “… in respect of matters covered by this Agreement …”—that is, trade matters. Then it goes on to state: “… including in fulfilment of its obligations under the Treaty of Waitangi.” I want the Minister to tell the Committee what bits of the Treaty of Waitangi confer more favourable treatment on Māori in trade matters relative to other New Zealanders. That article is nothing to do with people in Thailand; it covers a domestic matter. What does the Government have in mind? What will it confer on Māori that confers more favourable treatment on them relative to other New Zealanders? And where in the Treaty of Waitangi does it state that that should happen?

I understand that the articles of the Treaty of Waitangi provide for all New Zealanders to be given the same rights, so what does the Government see in the Treaty of Waitangi that may require it, in its view, to deliver more favourable treatment to Māori? This provision in this agreement means that the Government can do that—it can deliver more favourable treatment for Māori relative to other New Zealanders, and not breach this agreement. Now, that is what concerns a whole lot of New Zealanders. Sure, we have done that sort of thing in the past, but I thought that the Coordinating Minister, Race Relations said that the Government’s policy of doing that was finished. Māori have no extra rights, to quote Trevor Mallard in July last year, when of course that was a big issue following the Ōrewa I Speech by National’s leader, Don Brash. We know what this Labour Government is like. Its members will say anything when they come under pressure—especially Trevor Mallard, who could not give a damn what he says; he will say anything. So in July last year, following Don Brash’s Ōrewa I speech, Trevor Mallard said that Māori had no extra rights or privileges under the treaty or in the policy of the New Zealand Government. Then, just a few weeks later, what do we see? The Government has put into an international treaty a provision that shows it intends to reserve the right “… to accord more favourable treatment to Maori in respect of matters covered by this Agreement …”.

All I want the Minister to do is to tell us what is in his mind. What kind of more favourable treatment does he have in mind that Māori need? Maybe then the people of New Zealand could understand. And what obligations under the Treaty of Waitangi make him feel that Māori somehow should be accorded more favourable treatment than non-Māori? When we read the Treaty of Waitangi we do not see where it states that Māori should be accorded more favourable treatment. That is not a big ask, I tell the Minister. I do not think that it is a big ask. What does that article mean? That is all we are after. Actually, we want to know also what the Minister means when he says he reserves the right—

I move, That the question be now put.

I raise a point of order, Madam Chairperson. I seek your guidance as to how you are assessing acceptance of closure motions in this debate, because we are obviously not allowed to raise a point of order when you accept the closure. Could you give us guidance as to whether it is based simply on the time involved in the debate or on your consideration as to whether serious questions are being answered, because I think the public has a right to have questions answered.

An example of the seriousness of what I am raising is that a few minutes ago my colleague Richard Worth asked, for the first time in the debate, a question about a very serious issue relating to the consideration of the World Trade Organization’s provisions for safe transitional safeguards compared with those in this legislation. The Minister chose not to answer a question on a very serious issue, yet you accepted the closure motion prior to that question being answered and before the issue could be pursued by other speakers. I would appreciate your guidance. Do you give any consideration to that kind of thing, or is it purely a matter of the amount of time you consider has been spent on the debate?

The CHAIRPERSON (Ann Hartley): I assure the member that the time does not come into it. The matter is one for the Chairperson alone, and I make my judgment according to the debate.

Clauses 1 and 2