ASEAN-Australia-New Zealand Free Trade Area Bill

I address Part 2 of the ASEAN-Australia-New Zealand Free Trade Area Bill, as is a requirement of this debate, and it will be easy to do so because the provisions in this part are exciting, even though they deal with amendments to the Customs and Excise Act. I have to say that a distinct lack of excitement has been shown by Labour members in this debate. That might well be explained away by the fact that not one of them represents agricultural interests, whereas the members on this side of the Chamber are good, provincial, electorate MPs—

💬 Hon Steve Chadwick: I raise a point of order, Mr Chairperson. I point out that this is a serious bill and the Opposition is taking it seriously. We are not engaging in passionate debate about it .

The CHAIRPERSON (Hon Rick Barker): Points of order are about order. That was about the tempo. It is not a point of order.

I am seriously proud to belong to a party and Government that represents rural and provincial New Zealand amongst its ranks of MPs. That is why it is so exciting to have the opportunity to speak on Part 2, which amends the Customs and Excise Act.

The provisions of Part 2 allow the chief executive of the New Zealand Customs Service to designate certification bodies that are authorised to issue a New Zealand certificate of origin for goods to be exported to ASEAN-Australia-New Zealand Free Trade Agreement parties. The reason this is so exciting is that the New Zealand Customs Service will be focused on delivering good service to our exporters. I mentioned this in my Part 1 speech, but I think it needs to be said again: the New Zealand Customs Service will be focused on implementing Part 2 because it has a very important role to play in relation to the certificate of origin provisions and the certification bodies that are authorised to issue a New Zealand certificate of origin.

What our exporters and our primary producers need—those people who produce the goods at the farm gate, whom we represent—is a smoother process through the New Zealand Customs Service so they can take advantage of the excellent provisions in this bill. Part 2 creates criteria that the chief executive of the New Zealand Customs Service must measure applications for certification against. Again, those criteria are very important because the applications must be measured against them before a body is certified to issue certificates.

I want to address a submission made to the Foreign Affairs, Defence and Trade Committee by Fonterra, who note with regard to Part 2: “To ensure smooth implementation and maximise any tariff opportunities of the agreement, lessons need to be drawn from our experiences with the China - New Zealand free-trade agreement, in particular in regard to the operational and certification procedures.” I believe that the new provisions in Part 2, if implemented—and I am sure they will be—by the New Zealand Customs Service, will make the way through the New Zealand Customs Service process smoother for our exporters. That is entirely consistent with and in line with this Government’s desire to create growth and jobs.

Further, Part 2 enables the creation of regulations that will set prescribed terms and conditions for certification, set the criteria, and set the application forms and fees. Speaking of application forms and fees, I say that, again, there was a great deal of discussion at the select committee over application forms, which must be the bugbear of many New Zealand small businesses, many New Zealand producers, and many New Zealand exporters. So it is good news that focus and attention have been given to the matter of application forms and fees, which one might think is minutia but is not. I understand that my time is nearly up, so I commend this part of the bill to the Committee.

Thank you, Mr Chairman, for the opportunity to speak on Part 2 of the ASEAN-Australia-New Zealand Free Trade Area Bill. As my colleague Jacqui Dean so aptly put it, Part 2 is about amendments to the Customs and Excise Act 1996, which are absolutely crucial to the smooth running of the new free-trade agreement. Indeed, the amendments will enable the chief executive of the New Zealand Customs Service to designate certification bodies that are authorised to issue a New Zealand certificate of origin in respect of goods for export to countries that are party to the agreement. A certificate of origin will identify the goods and certify that they are of New Zealand origin in terms of the ASEAN-Australia-New Zealand Free Trade Agreement. It is also important to point out that before designating a certification body the chief executive must be satisfied that the body meets any prescribed criteria, and a designation may be subject to terms and conditions prescribed by regulation or imposed at the discretion of the chief executive.

It is interesting that there were no amendments to this very well-crafted and well-drawn up bill. I must say I congratulate the Parliamentary Counsel Office on that. It is quite rare that we have a bill that has no amendments to it whatsoever. As the bill’s explanatory notes states, regulations may be made that prescribe “criteria to be met by bodies wishing to be designated as certification bodies: forms and fees and the manner in which applications for designation as a certification body must be made: terms and conditions of designations.”

This morning at the Foreign Affairs, Defence and Trade Committee we had before us the Hon Maurice Williamson. He pointed out to the select committee that modern technology was hugely important both to the importation and exportation of our goods. We have, unfortunately, over the last 12 years or so not kept up with the technology that is available worldwide. That technology will free up people by ensuring that the very important aspects of their jobs in ensuring the legality of both exporting and importing is right at the top. By embracing new technology, we will be able to free up those agents. It is very important that New Zealand does lead the world there, because some of the members of this free-trade agreement do indeed have far less sophisticated infrastructure. Countries like Singapore, which Dr Ashraf Choudhary was talking about before, are at the pinnacle of this technology, and trading with them will be extremely easy. We must keep at that peak performance otherwise we will find that we will lose our edge.

There is no doubt that New Zealand farmers are now required by European countries to be right at the top of traceability. Indeed, those requirements will more and more be imposed by the Asian countries that are involved in this free-trade agreement. I note that Fonterra in its submission said this: “We welcome the objective of the agreement to create customs procedures and practices that are predictable, consistent, and transparent and facilitate trade.” Surely this is indeed the very core of where this new National Government is going. Fonterra went on to say: “An excellent rules of origin outcome was achieved which gives exporters the flexibility of choosing between “co-equal” rules to qualify for tariff preference. However, to ensure smooth implementation … of the agreement, … lessons need to be drawn …”.

I am speaking in favour of this ASEAN-Australia-New Zealand Free Trade Area Bill—that I have made clear. I find myself in the very unusual situation of actually agreeing with everything that the last two Government speakers have said.

💬 Hon Member: Very unusual.

It is very, very unusual. In fact, if I had not had a big lunch I think I would probably find myself falling down in my chair and fainting.

This is a very important bill, and Part 2 is a very important part of this bill, as well. It sets out the amendments to the Customs and Excise Act 1996. If we go through a clause by clause analysis of this bill, we find that the first clause of Part 2, which is clause 11, states that the bill amends the Customs and Excise Act 1996. It sets out the regulatory environment that updates what is happening and brings us forward to the 21st century. Clause 12 sets out the purpose of Part 2. The purpose is “to amend the principal Act to provide for a system of issuing New Zealand certificates of origin in relation to goods being exported to countries”. When we talk about certificates of origin, rules of origin, etc., we bring in the Customs Service.

The member who just resumed his seat, Dr Paul Hutchison, talked about our need to have a very robust Customs Service, and I could not agree more with him. He said that this was a priority for the National Government. Well, I say that having a robust Customs Service has been a priority for every Government, and it has to be the priority of all Governments. When we think that our economy is based upon agriculture, forestry, and, a lot of the time, monoculture, we realise that if our Customs Service and our phyto—whatever that big long word is—

💬 Todd McClay: Phytosanitary protection.

STUART NASH:—I thank Mr McClay—our phytosanitary protections are not up to date, then the harm that can be done to our economy is absolutely huge. It is a priority to have a robust Customs Service, which is what we do have, by the way. It is very efficient and is one of the best in the world. In fact, it had to be after 9/11. I think the Chairperson, the Hon Rick Barker, was responsible for turning our Customs Service into one of the best in the world. I fully support that, as well.

If we look at the rules of origin, we see that Part 2 is very important. The inclusion of robust rules around certificates of origin allows New Zealand exporters to effectively take advantage of the preferential treatment and conditions offered under the free-trade agreement for trade of goods without undue compliance costs. A free-trade agreement is about getting rid of undue compliance costs; in fact, it is getting rid of most of the compliance costs. The phrase “undue compliance costs” is almost an oxymoron, is it not? But we all know that there needs to be a certain level of compliance in order to allow for the provision of free trade, to make sure that we get it right, and to make sure that our laws and the host laws are obeyed.

This agreement also provides a mechanism through which originating goods can be cumulated across the parties. The export opportunities under this free-trade agreement are expanded, not only through direct access to New Zealand goods for ASEAN markets but also through the ability to include New Zealand materials and origin assessment of goods manufactured and traded within the region by Australian and ASEAN manufacturers and exporters.

As we have said before, one area that we really need to improve within New Zealand is our manufacturing sector. This legislation helps those involved in the sector, without a question of a doubt. It allows them to set strategic plans and strategic goals. We have heard about the fantastic Hawke’s Bay company called Future Products Group, run by a guy called Robert Darroch. He is the sort of New Zealand manufacturer who will do incredibly well out of Part 2. It means that he can plan with certainty. He can look at his markets, he can put together a strategic plan, and he can know with a high degree of certainty that on certain dates tariffs will be removed from the products that he is sending to all these ASEAN countries.

💬 Dr Ashraf Choudhary: It’ll have the level of origin there, as well.

Absolutely; the level of origin is most important. This will also allow other manufacturers, who are perhaps not in the export market at the moment but who want to get into those markets, to plan with certainty as well. It is very, very important that the New Zealand economy grows and reaches the top half of the OECD, as that will take us forward to 2011, when the next Labour Government will take over.

This agreement also provides co-equal or alternative rules for the majority of product lines. This means that manufacturers and exporters can choose between a change in tariff classification approach and a regional value content approach, with about 40 percent free on board.

It gives me pleasure to rise and talk on Part 2, which amends the Customs and Excise Act 1996. I think that the Customs Act 1966 was already amended, so when I talk particularly about Part 2, it is the 1996 Act that we are looking to amend.

I think that Stuart Nash, the member who has just resumed his seat, is right. I think there is consensus in the Chamber, because this free-trade agreement is a good thing for New Zealand. I think there is consensus on both sides of the Chamber over the importance of the New Zealand Customs Service, its rules, and the job it does, which is sometimes done in extremely difficult circumstances.

There are a couple of things that I want to pick up on before I look directly at Part 2. One of them is the role that different bodies within New Zealand play. The Customs Service is there to control the importation of goods, collect revenue through tariffs where tariffs are in place, and stop the importation of illegal goods.

The Ministry of Agriculture and Forestry looks at sanitary and phytosanitary issues to do with goods. The ministry looks particularly at food but also at other types of goods that might be imported into New Zealand and could do some of our industries a lot of harm, particularly our agricultural and horticultural industries.

The amendments to the Customs and Excise Act do not lessen the importance of the work that the Ministry of Agriculture and Forestry does—which is probably more important when I look at my electorate. Let us keep collecting the revenue. It has certainly stopped the importation into New Zealand of illicit goods and goods that could be used to make drugs. There would be great harm to many, many producers in my electorate of Rotorua if we flouted our sanitary and phytosanitary regulations and requirements and disease and pestilence were imported, particularly for the kiwifruit industry.

Part 2 amends the Customs and Excise Act by allowing the chief executive of the New Zealand Customs Service to designate certification bodies that are authorised to issue a New Zealand certificate of origin to goods to be exported to ASEAN countries. This is extremely important because we have a number of barriers to trade. Some of them are direct barriers, and some include tariff rates.

But there are indirect barriers to trade—or non-trade barriers. In cases where we do not have appropriate rules as to the origin and certification of our goods, and the goods arrive in another country, the officials on that side receive paperwork saying: “This good is of New Zealand origin.”, and that is not accepted or is not accepted quickly, then that becomes a non-trade barrier. That means that our exporters, our manufacturers, and our producers either have to wait longer until their goods are released to their markets or they do not get in there. So that is a barrier to trade.

The certificate of rules of origin will identify goods and certify that they are of New Zealand origin. This is important when we are exporting a finished good or a food product. We know that the 10 countries in the ASEAN bloc are growing economies. They will become much larger economies in the future. From memory, the ASEAN bloc is our third-largest trading group of countries for exports, so it is very important to us.

We know that as the incomes of those countries increase on a per capita basis, their desire to consume the many good products produced by our farmers will increase also. Therefore, good rules of origin—rules that certify that products leaving New Zealand and going into those countries are from New Zealand—will allow us to sell products to them not only to consume but also to manufacture, change, and produce further. That is because once this free-trade agreement comes into force, our goods can go into one ASEAN country and can then be transformed, changed, and exported to another, and the origin as far as tariff rates are concerned will largely and eventually remain the same.

Why is this important? Let us look at dairy products, for instance. Certainly, some dairy products could have much more value added to them in New Zealand, but in many cases they do not. A milk powder that is exported to Viet Nam, for example, could be turned into any number of other products. Without that country having to show that it has substantially altered the product from New Zealand, the sub-tariff line is changed automatically, so that it can continue to trade with its neighbours. That New Zealand product would be treated as if it was of Vietnamese origin, and there would not need to be any other work done around the rules of origin. I think that New Zealand producers will benefit directly and greatly from this.

I congratulate the Minister and the officials on the work they have done. To my knowledge, these are some of the most flexible and liberal rules of origin. Thank you.

I rise to speak in support of and to focus my comments on Part 2 of the ASEAN-Australia-New Zealand Free Trade Area Bill. Unlike most of the other Government and Opposition speakers on this particular measure, I did not have the privilege of sitting on the Foreign Affairs, Defence and Trade Committee as this particular agreement received detailed consideration and as the committee heard from those who had made submissions on it. But it was interesting to hear my colleague Dr Hutchison, a highly respected veteran of the committee, report that some submitters felt that the bill may not go far enough. That is probably understandable, given the perspective of the submitters, but it seems clear that there is pretty broad agreement that the bill—and, in particular, Part 2 of the bill—represents a job very well done and a great step forward for our country.

As we reflect in detail on the provisions of Part 2 of the ASEAN-Australia-New Zealand Free Trade Area Bill I acknowledge again the fine work of Ministers past and present and officials that has culminated in the agreement on this part, which was reached in Thailand in February this year. As has been noted by previous speakers, the purpose of Part 2 is to amend the principal Act to provide for a system of issuing New Zealand certificates of origin in relation to goods being exported to countries that are parties to the agreement that establishes the ASEAN-Australia-New Zealand Free Trade Area. They are important safeguards not only for New Zealand’s producers and exporters in authorising the chief executive of the New Zealand Customs Service to facilitate the authorised issue of New Zealand certificates of origin to goods that will be exported to our ASEAN-Australia-New Zealand Free Trade Area partners but also for those who will import those goods. This part of the agreement gives them the security and assurance of knowing that they can rely on the quality and origin of those products.

As an export-dependent nation, our reputation for quality and reliability is obviously paramount. We can stand up in our corner of the world and be very proud of our long-established record as an honest and quality-focused exporter of goods. Clause 13 of Part 2 of the bill focuses specifically on the issuing of New Zealand certificates of origin currently designated for goods for export to China. The value and projected future value of our exports to China is almost incalculable, and tremendous work has been done on developing those arrangements in recent times. Indeed, the Prime Minister led the mission to China just a few months ago, thereby underlining its continuing importance. I salute everybody involved with that mission for the development of the agreement. The provisions of clause 13 demonstrate how rapidly our trading arrangements are advancing and improving from our perspective.

💬 Hon David Cunliffe: Is there anything the member disagrees with in this bill? Any science to add? Criticisms, perhaps? Why is the member here?

I say to Mr Cunliffe that I absolutely adore this measure. I am delighted to be here to speak in favour of it. I am so thrilled that he too is enjoying my speech, and I invite him to continue listening while I continue to explore the hidden depths, subtleties, and intricacies of this important measure.

Clause 13 of the bill amends the heading to section 64A of the existing Customs and Excise—

💬 Hon David Cunliffe: It is good to see the member enjoying himself, anyway.

I am having a great time. I am glad that Mr Cunliffe is also enjoying my speech. It is heart-warming, as we come close to rising at the end of another sitting week, to know that the House is in such a degree of unanimity and agreement. Excitement about an important measure is definitely stimulating and rewarding for me.

We are amending section 64A of the existing Customs and Excise Act 1996 by omitting “China” and substituting the words “a party to free trade agreement”. I am sure that listeners in the crowded public gallery at the moment will be heartened to learn about the evolution of this aspect of the agreement. It creates the criterion that the chief executive of the New Zealand Customs Service must measure applications against before the Customs Service can certify a body to issue certificates. That is a very important provision. It also enables the creation of regulations that will set prescribed terms and conditions for certification, set the criteria, and set the application forms and fees.