New Zealand-China Free Trade Agreement Bill

This debate includes the Minister Hon Phil Goff’s amendments set out on Supplementary Order Paper 215.

I will take a brief call on Part 3, “Amendments to Radiocommunications Act 1989”. According to my understanding, the purpose of Part 3 is identical, in a sense, to Part 5, “Amendments to Electricity Act 1992”, in that they are the two principal Acts affected by the mutual recognition agreement covering electrical and electronic equipment. I will make brief comments about some aspects of the agreement in relation to Part 3, and when we debate Part 5 I may take another call to look at some other aspects.

This is a highly technical subject, and we should be aware that this debate is linked to deep concern, not just in New Zealand but right throughout the world, about the relationship between standards and international trade agreements. Some people popularly refer to such agreements—deeply misleadingly so—as a “race to the bottom”. The opponents’ view, which is a complete misreading of what this agreement is about, is that by entering via the globalisation framework into trade agreements of this type, countries like New Zealand or the United States are in some way agreeing to lower their standards to those of other countries—in this case a very large, developing country—and that that is “appalling”. That is actually a completely wrong interpretation of what this agreement is about.

In terms of both the mutual recognition agreement and the broader context of the World Trade Organization and other trade agreements, there is nothing to stop New Zealand adopting the standards it wishes to adopt in relation to consumer safety. There is no race to the bottom. There is no reason for New Zealand consumers to be even slightly concerned that this trade agreement will in some way mean a lowering of safety standards on electrical and electronic equipment—far from it. As far as I am aware—obviously I lack technical expertise in this area—we have standards equal to anywhere in the world to protect New Zealanders from poor wiring. We all know we are talking about something that is—potentially—literally lethal. I assume—because I am not aware of a large political debate in this country over this issue—that we have quite adequate safety inspection systems in place. I know that we have issues relating to poor wiring in terms of electrical fires, but I am not aware, for example, of children routinely being electrocuted while opening the fridge, which is, fundamentally, what this issue is about. When we debate Part 5 I will make some other comments about the whole concept of mutual recognition, because it is a very interesting feature of the agreement. I have to say I am surprised, in the pleasant sense of the word, that we have come to an agreement, given some of my own experiences in negotiating mutual recognition agreements. It is quite a credit to the negotiators that this agreement is in place.

The remaining point I want to make relates to the competitive edge that this agreement gives to New Zealand in terms of the recognitions relating to the conformity assessment processes. As I understand the agreement, this will be a first for China. Of course, in that sense the whole agreement is a first for China—not in terms of all countries but in terms of developed countries. It is not quite correct to say that China has no other free-trade agreements, but this is certainly the first in respect of a developed country. The agreement relating to Part 3, “Amendment to Radiocommunications Act 1989” is indeed a path-breaking effort by China in its first attempt to do this with a small but sophisticated country. We should be very pleased that this agreement is being taken forward.

I will just develop the point that was being made by my colleague Mr Tim Groser, who of course brings an enormous level of experience to international trade negotiations. One issue that has come through in amendments to Part 3 has arisen because there was some fear by submitters that through this agreement we would essentially be allowing the importation of dangerous electrical goods from China into New Zealand. It seemed to me at the time that those people were misunderstanding the role of international trade.

I ask the Committee—and I put this to submitters—how successful China would be if it established a reputation as an exporter of dangerous electrical goods to other countries. It is in China’s interests to demonstrate that it is an exporter of high-quality goods, and, by and large, it has been successful in that. We have only to go to any electrical goods store in New Zealand to find a wide range of Chinese-manufactured electrical goods, such as television sets, radios, DVD players, and so forth. In fact, China is already one of the world’s largest—if not the largest—manufacturer of television sets. Those sets are mostly not for local consumption; they are mostly for export. A significant number of Apple iPods are manufactured and assembled in China. The truth is that global companies are increasingly using China as a manufacturing base. Quite clearly, high electrical standards are required.

In this instance we are talking about a global trading nation that produces goods of a standard that is safe for New Zealand. I am not suggesting there have been no problems at all—in particular, there have been problems in relation to lead paint in toys. But those things are still covered by our safety regulations. Just because we have a free-trade agreement, that does not mean we will completely abandon all standards around phytosanitary rules, product safety rules, and so forth. Countries still have to comply with those rules, but this is a particular recognition in relation to electrical goods.

I know that my colleague Mr Groser very, very carefully discussed the nature of the agreement with members of the Government and former colleagues within the ministry. He made a formal recommendation well before the agreement was signed that that part of the agreement was satisfactory for the protection of the consumers of New Zealand. So what we are doing here today is passing that mutual recognition into legislation. I am suggesting, and, indeed, saying, to New Zealanders and to members of the Committee—particularly to those parties that are opposed—that this is not a reason to vote against the agreement. To be fair, I have not actually heard New Zealand First oppose the agreement on this particular point. It has opposed the agreement on other points but not on this point. The Greens have raised the issue from time to time, and Mr Locke raised it in Foreign Affairs, Defence and Trade Committee. I will certainly be anticipating their future contributions.

It is a curious thing that this debate has been going for approximately 2 hours and virtually all the contributions have been made by National members. We think that this is an important agreement. We understand that there will be a third reading tomorrow, and we wish to facilitate that process—we want this agreement to pass into law. But I must say I am surprised that parties that are opposed to the agreement have not been taking calls. Surely the people’s Chamber is where parties might actually set out their arguments as to why the agreement is not beneficial for New Zealand. I have to ask those three parties whether they are a little bit embarrassed about not supporting this agreement. It is widely supported.

💬 Peter Brown: Will the member get back to the part?

It is rightly supported, and I say to Mr Brown that this is not one of those parts of the agreement that he need be concerned about. There is safety for New Zealand consumers based on this acceptance of the standards.

Just before John Hayes takes the floor, I wonder whether we could really concentrate on what Part 3 actually says. I ask the speakers to read the part. It is actually about New Zealand conformance, not Chinese conformance.

Thank you very much Madam Chair, but I would draw to your attention that there is a mirror-image process going on in the Chinese system so that the two sides of the telescope actually connect in the middle. It is, of course, a minor point. I will address the question that you put to the Chamber, which is the question of Part 3. I would particularly like my colleagues in the New Zealand First Party, the Māori Party, and the Green Party who oppose this bill to look at this document: New Zealand - China Free Trade Agreement (And Associated Instruments): National Interest Analysis. I doubt that anyone in this House, with the exception of those on the select committee, will have taken the time to go through that document and to work out what it is talking about. I would particularly like to draw Mr Brown’s attention to page 15 and paragraph 3.1.4 of that document, which talks about the need to make sure that our technical regulations in New Zealand—that is, that the electricity supply will be 240 volts and so many cycles, and have so much insulation—do not constitute a significant barrier to trade in a similar way to tariffs.

Without formal arrangements it is difficult to engage with other countries at that technical level, which is why this bill includes Part 3. What we are trying to say here is that our technical experts in China and in New Zealand need to have a mechanism for meeting together to discuss issues between them. In my electorate, where people have recently invented a machine for monitoring milk production through the use of electronic eartags so that, for example, one can predict mastitis before it becomes a clinical problem, one needs to get people on both sides of this trade agreement having common rules and understanding that this equipment satisfies rules in China. If the Chinese people feel they do not, then one needs a mechanism for dealing with the debate. Because of that we have to make amendments, as required here in Part 3, to the Electricity Act 1992 and the Radiocommunications Act 1989.

This is the Radiocommunications Act part of the arrangement, and it is to create regulation making powers to enable legal action to be taken against people who do not fulfil the requirements of international obligations while purporting to do so, and to provide for the seizure, sealing, or impounding of products in cases of non-compliance with the requirement of the two Acts, including in relation to the Environmental Risk Management Authority. This is done in part by Order in Council, and also by the Radiocommunications Act 1989. It will enable legal action to be taken against people who break the rules. That is the function of this legislation that we are debating now. It is in the New Zealand communities’ interests to do this. [Interruption] I realise that Mr Brown does not have any constituents, at least in an electorate sense, but I can assure him that if he was an electorate MP like me, and if he talked to people and represented their views, he would know that Part 3 is a significant benefit to them. I urge New Zealand First members to really think about what they are doing here and to support this element of the bill even if they do not support the whole concept. Opposing this is actually working against the interests of every New Zealander. That is why, I say to Mr Brown, 80,000 people have left the country in the last 12 months—45,000 of them to Australia.

The CHAIRPERSON (Hon Marian Hobbs): Back to the bill, please.

It is because we have poor government. That is why, in Part 3, we are acting to make sure that our community has good rules and that the community will feel good about living under them. People feel threatened by this legislation we are passing, but I say to them that there is no need for that. If those who opposed the bill had actually read this national interest analysis, they would see that there is absolutely no way one could oppose Part 3.

The question was put that the amendments set out on Supplementary Order Paper 215 in the name of the Hon Phil Goff to Part 3 be agreed to.