Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill

The Tariff (New Zealand-Hong Kong, China Closer Economic Partnership) Amendment Bill provides the legislative framework for what is essentially a free-trade agreement with Hong Kong, but it also rationalises the approach between Hong Kong and China.

The New Zealand - Hong Kong, China Closer Economic Partnership Agreement will allow businesses from New Zealand and those New Zealand businesses that are currently in Hong Kong to move freely and without any impediment by regulation or legislation between Hong Kong and China and between Hong Kong and New Zealand. In other words, this agreement provides part of what will be a seamless network, I think, of free-trade apparatus that allows New Zealand business interests to springboard out of Hong Kong and into China, because the conditions surrounding that export trade have been rationalised and evened out.

This is a significant move not only in the export of goods but also particularly in the export of services. In this respect, some high-tech industries already have a foothold in Hong Kong. These industries are New Zealand - owned and operated and are being run out of Hong Kong, and I think particularly of some high-tech industries that are based in Tauranga.

I thought that I might quickly traverse for the benefit of “Dr No Man” some of the issues relating to the importance of China. In 15 years’ time—

💬 Hon Darren Hughes: I raise a point of order, Mr Speaker. The member Mr Hayes referred to the leader of another party by a name that is not that member’s name. He made a comment about another member and pronounced his name in a way that was clearly intended to deride that member.

The ASSISTANT SPEAKER (Hon Rick Barker): I recall the name, but I did not quite get the significance of whom Mr Hayes was referring to. I was confused about that, myself. If Mr Hayes made reference with an inappropriate name to a person then I ask the member to withdraw and apologise. If he did not, I accept his word.

I did not notice myself doing it, but I will withdraw and apologise to remove any doubt.

In 15 years’ time, in 2025, with 1.5 billion people China will be the world’s second-ranking economic power. At its present growth rate its GDP will outstrip that of Japan in 5 years’ time, in 2015. It will outstrip that of America in 30 years’ time, in 2040. Its share of world GDP, currently 4.5 percent, will rise to 7 percent in 2015 and will be close to 15 percent in 15 years’ time, in 2025. China’s average standard of living should be, by 2050, half that of America’s standard of living, and even if China’s average growth rate is half that of today, it will have a per capita income of US$6,000. Hundreds of millions of Chinese will, by then, belong to the middle class, and tens of millions will belong to its upper class.

We can expect China to continue to finance US deficit for some years to come. We can expect China to become the leading investor in Asia, ahead of Japan and the United States. Despite the efforts of the Communist Party of China, it will eventually have to pass power to elected officials. Unless there are reforms China will have to face many difficulties. Ninety percent of Chinese people have no retirement plan or health insurance. Half the urban people and fourth-fifths of rural people have no access to health care. Half of China’s 500 biggest cities lack drinkable water and sewerage systems. China will have to build urban infrastructure, fight corruption and put a stop to corruption in public finance areas, find work for hundreds of millions of people flowing into towns, improve education, reduce income gaps, train managers, reform an obsolete public sector, and establish judicial systems capable of protecting private and intellectual property. By 2025 the Communist Party of China will have been in power for 76 years. No other political party in the world has lasted in power for more than 70 years. We can expect it to fade in importance.

To the west, India has 1.4 billion people. It should be the most populous nation on the earth by 2025 and the third-ranking economic power after America and China. I was at the launch of the Wellington chapter of the India New Zealand Business Council earlier this week. The Indian High Commissioner at the meeting talked about India having 9 percent compound GDP growth for the next 20 years. India’s democracy will have to meet and deal with very similar challenges to those facing China. These developments will result in a doubling of urban populations within 10 years—that is, 2025—and a doubling of the demand for raw materials.

Against this global background, we must position New Zealand to place our trading relationships on an open and secure footing. New Zealand companies will want to market produce and also services into China. We must ensure certain access to the Chinese markets and to the Hong Kong markets to allow the export of services, because our companies can benefit from liberalisation of both the Hong Kong and the Chinese markets. These are the key reasons behind New Zealand entering into the New Zealand - Hong Kong, China Closer Economic Partnership Agreement. We want secure, more certain access to the Hong Kong services market, and we want to ensure that New Zealand service providers benefit from future liberalisation by Hong Kong in particular sectors. We want to enable traders to benefit from trade-facilitating rules of origin, accompanied by robust verification systems. We want to provide a framework for regulatory cooperation and consultation, and we want to allow for more effective discussion and cooperation on labour and environmental matters in line with New Zealand’s sustainable development and economic growth objectives.

With those few words, I commend the Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill to the House.

I stand to speak in support of the Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill—quite a long name. The reason I support the bill is it will, hopefully, lead to increased opportunities for New Zealand exporters in the Hong Kong market as well strengthening our relationships in the Asian region in general. Closer economic partnerships, or CEPs—trade is full of these acronyms—are a vital part of New Zealand’s economic development policy as they work to break down tariff, quota, and customs duties, which restrict access and profitability for New Zealand exporters and importers. They tend to lead to increased exports and imports and have the potential to add wealth to both countries.

New Zealand signed a closer economic partnership with Hong Kong on 29 March 2010. This bill implements that agreement. The closer economic partnership agreement had its roots in the work of a former Minister of Trade, Jim Sutton, and the next elected Prime Minister of New Zealand, the Hon Phil Goff, during his tenure as Minister of Trade. Whilst we tip our hats to Mr Groser for getting this bill across the finishing line, I think that even he would admit that it is a result of the work of his predecessors, and we must recognise the efforts of those who worked on this issue in the past to get it to this point. Trade is one of those wonderful areas where we all work together when it comes to securing the national interest. How to grow trade is the real challenge, which the National Government does not seem to get, as is evidenced by the latest Budget. However, that is a story for another day.

So what are we talking about when we debate the closer economic partnership with Hong Kong? Well, Hong Kong is currently our ninth-largest export destination, accounting for $823 million last year. New Zealand imported $199 million of merchandise goods from Hong Kong last year, making it the 31st-largest source of imported goods. However, to put it into perspective, Hong Kong counts for only 1.9 percent of New Zealand’s total exported goods and 0.04 percent of our total imported goods. Herein lies the challenge for this economy going forward. Our ninth-largest export destination accounts for only 1.9 percent of New Zealand’s total exported goods. If there is ever a case for global diversification then those figures are it. There is a very strong argument for this type of free-trade agreement. It puts potential trading partners on the map and on the radar of New Zealand Trade and Enterprise as well as potential exporters. Despite Hong Kong’s small size it is a market that is already rapidly expanding, with last year’s total exports increasing by 33.6 percent compared with 2008. However, total imported goods declined by 2.5 percent last year compared with 2008.

What sort of things do we export to Hong Kong? We export about $200 million worth of crustaceans to Hong Kong. The area of largest growth is apples, which is good for the people of Hawke’s Bay, considering that it is the fruit bowl of this country. Other things that increased were milk powder and venison. Frozen meat and frozen beef were second and third in terms of export value. Milk powder exports had dropped, which I was interested to see, and cheese had dropped. But some interesting products are exported there, and we are doing quite well. In terms of imports, the largest area of imports is machinery parts, which accounted for about $16 million, but it dropped by 15 percent. The area that increased by 217 percent was printing machinery.

💬 Hon Darren Hughes: Yeah?

Yes. I suspect there were one or two capital purchases but I am not too sure. Insecticide imports were worth $4 million. They increased by about 400 percent. Believe it or not, spectacle imports increased by 118 percent. Some of the guys on the benches opposite need some spectacles from Hong Kong, because they see the world through rose-coloured spectacles and do not understand reality.

💬 Hon Darren Hughes: They need rear-vision mirrors.

Absolutely. But Hong Kong not only is an important market in its own right, as outlined a couple of minutes ago, but provides a vital foothold for New Zealand businesses wanting to expand into the much larger Chinese market. Building closer economic relationships with Asia is vital to New Zealand’s future economic prosperity, because it is the major market of the future. This closer economic partnership is another step in that direction. So hats off to Jim Sutton and Phil Goff.

Although free-trade agreements and closer economic partnerships come with undoubted benefits, we must not ignore that for some businesses and sectors they can potentially cause harm. This closer economic partnership has been evaluated as having a low negative impact on New Zealand business, largely because Hong Kong specialises in services rather than cheap manufactured goods that could undercut local businesses. New Zealand manufacturers of footwear, textiles, etc. are most at risk from free-trade agreements and closer economic partnerships, and this closer economic partnership has given those sectors the longest phase-out period of tariffs to allow them time to adjust.

We also need to be aware that fiscal costs are associated with this sort of agreement, and they need to be fully understood to ensure that they are outweighed by the benefits. As with any free-trade agreement that results in a reduction in tariffs, there will be lost tariff revenue. In 2008-09 the estimated tariff revenue collected on imports from Hong Kong was around $4 million. This will be phased out by 2016; no revenue will be collected from Hong Kong imports.

I would like to outline some of the advantages of the closer economic partnership agreement. Although Hong Kong already offers duty-free imports for all countries, the closer economic partnership will ensure New Zealand’s existing duty-free access is locked in for New Zealand exports, giving New Zealand exporters added certainty that competitors other than Mainland China do not enjoy. The phase-out of certain remaining domestic duties may also reduce some costs for New Zealand producers who use imported Hong Kong components or capital equipment—for instance, components or equipment relating to electrical transformers, whiteware, and steel products. It is interesting to note that one of our largest exports is recycled plastic. Obviously, Hong Kong turns it into added-value products and brings them back here; it is a pity we cannot do it here.

The closer economic partnership provides New Zealand with the early harvest of most of Hong Kong’s Doha service commitments—that is, Hong Kong is offering New Zealand through the closer economic partnership most of what it is offering the World Trade Organization membership in the yet to be concluded Doha negotiations. The commitments that Hong Kong makes to New Zealand in the closer economic partnership address service sectors of key export interest to New Zealand, including education, business, environmental, and logistic services. New Zealand service exporters have also secured strong future-proofing of their position in the Hong Kong market through the most favoured nation treatment and a ratchet clause. Most favoured nation treatment means that New Zealand exports will automatically benefit from any preferential treatment that Hong Kong provides to future free-trade agreement partners, subject to certain reservations and exceptions. The ratchet clause means that any future unilateral liberalisation undertaken by Hong Kong in certain sectors will be bound and committed to New Zealand. We do not lose; we cannot lose. New Zealand will be using the tariff reduction schedule in the New Zealand - China free-trade agreement—which was also negotiated by the Hon Phil Goff—for imported products from Hong Kong. As I already mentioned, the longest tariff phase-out periods will apply to industry sectors in New Zealand that are particularly sensitive to potential imports from Hong Kong, such as textiles, clothing, and footwear. Delayed tariff phase-outs will apply to other products such as steel, furniture, plastics, and rubber products.

I will very quickly go through some of New Zealand’s legal obligations under the closer economic partnership. These include tariff reduction phasing-out identical to that provided to China; market access and national treatment commitments to Hong Kong service providers similar to those provided in the P4 agreement—which is an agreement between New Zealand, Brunei, Chile, and Singapore—along with some elements provided in other recent free-trade agreements and a few commitments drawn down from New Zealand’s Doha offer, all within domestic policy settings, of course; a reciprocal commitment to extend most favoured nation treatment to Hong Kong in relation to services, subject to specified reservations; doubling the overseas screening regime threshold from existing World Trade Organization levels of $10 million to $20 million; a commitment not to take trade remedy actions in an arbitrary or protectionist manner, and to carry out trade remedy actions in a transparent manner; specific rules of origin to accommodate part-processing of certain clothing products in Mainland China, with robust verification procedures to mitigate any risks from this approach; and commitments on temporary entry of Hong Kong business visitors that go beyond New Zealand’s existing World Trade Organization commitments.

This is a good bill. It is a cross-party bill; we will all support it. I think it will benefit New Zealand, and for that reason I commend it to the House.

With respect to the previous speaker, Stuart Nash—and I do have respect—I say that he is incorrect. This party will not be supporting the proposed Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill. On 30 March the Minister of Trade, Tim Groser, signed the New Zealand - Hong Kong, China Closer Economic Partnership Agreement. He said at the time that it was “a significant achievement that further strengthens the economic links between New Zealand and the Asia-Pacific region.” He said that it complements the existing free-trade agreement with China. Given Hong Kong’s position as a regional trading and investment hub, he said that it would support business engagement with Asia and the Pacific. He recalled the 43 percent increase in exports to China in the last 12 months, which brought in an extra $1 billion worth of export income, and he said that the agreement would add “to a growing collection of high quality and comprehensive FTAs in the region.”

We know all about high-quality, comprehensive free-trade agreements. A veritable raft of free-trade agreements have come down the track over the last 2 or 3 years, as a syndrome of a failed global World Trade Organization agreement that is better known as the “spaghetti bowl” or, to give it an Asian flavour, “noodle soup”. We have free-trade agreements with Thailand, Singapore, ASEAN, China, Malaysia, and now Hong Kong. We shall have the Trans-Pacific Strategic Economic Partnership—the TPP—and we will have Korea, India, and the Gulf States.

I have scrutinised the national interest analysis of each one of these six Asian free-trade agreements. Essentially, they amount to a template. The wording is essentially the same. The reasoning is the same. The underlying beliefs are the same. All that has been changed by officials is simply the names of the countries, pretty much, and little more. That is not, I think, a genuine analysis. Analysis requires objectivity; it requires intellectual rigour. There is none of that in these documents. These documents are more of a credo—let us call it the “Free Traders’ Creed”.

Let us look at the template. There are essentially 10 sections or so. Let us look at the first two sections. The first is the reasons for becoming a party; the second is the advantages and disadvantages of free-trade agreements.

Let us explore the advantages. Almost without exception there are generally about 10 bullet points lined up, and usually nine or 10 out of the 10 pertain to export interests. Let us look at the disadvantages. The disadvantage will even take the form of a lament that the other side was too timid with our exports. I quote the ASEAN agreement national interest analysis: “A more ambitious outcome on the elimination of tariffs was preferred, but was simply was not possible.”

Occasionally—just occasionally—there is an opaque reference to imports, and to the effect of imports on New Zealand. The phraseology used is “negative adjustment effects”, which, basically, is a euphemism for company collapse and job loss. I will quote from a few.

This is from the ASEAN analysis: “The removal of tariffs on products imported into New Zealand can result in negative adjustment effects for import-competing sectors. AANZFTA does, however, attempt to mitigate these impacts by delaying tariff elimination on imports of acute sensitivity to particular New Zealand industries.”

This is from the analysis of the agreement with China: “The removal of New Zealand’s tariffs on imported Chinese products can create adjustment effects for import competing sectors. The FTA attempts to mitigate these effects with various protections,”.

The analysis of the agreement with Malaysia states: “Any trade agreement involving reciprocal tariff removal may have implications for domestic producers as a result of increased exposure to foreign suppliers. In order to mitigate the potential for any negative adjustment effects in New Zealand, the [agreement] includes longer phase-out periods for imports in sensitive sectors in New Zealand relative to other sectors of the economy.”

The analysis in the Hong Kong agreement states: “Any trade agreement involving reciprocal tariff removal while providing better access for exporters, can create adjustment costs for domestic producers.” These are euphemisms, used in the national interest analysis, for company failure and job losses.

Let me give this challenge to this Government, as we prepare for an analysis of the Hong Kong agreement and further readings of the bill in this House. I challenge the Government in the Hong Kong agreement, if not the previous agreements, and if not the Malaysian agreement, all future free-trade agreements, to name the New Zealand companies that will face negative adjustment effects, to estimate the loss of income they will suffer, to estimate the loss of jobs that this will incur for New Zealanders, to be a little more intellectually honest in the national interest analysis, to show a little more moral integrity, and to show a little more political courage.

This is probably not the best time to be considering a bilateral trade agreement between New Zealand and Hong Kong. If we were to ask Hong Kong - based Natural Dairy (NZ) Holdings about its perspectives on the viability of the New Zealand - Hong Kong, China Closer Economic Partnership Agreement, it would probably raise the context of the $100 million deal it was attempting to seal with the bid to purchase the 16 New Zealand farms formerly owned by the Crafar family. The receivers handling the sale of the farms had already signed a sale agreement with Natural Dairy (NZ) Holdings, conditional on our Overseas Investment Office approving their application. Suddenly, out of the blue, Landcorp chairman Jim Sutton suggested it might put in a tender, because of the reputational risks to the New Zealand dairy industry and New Zealand Inc. He referred also to concerns in the wider community about the sale. We in the Māori Party have raised particular concerns around one of the Crafar farms, which is part of the Maraeroa A and B blocks over which Ngāti Rereahu has a settlement interest. The 16 farms are located in the Waikato, the King Country, the Bay of Plenty, Whanganui, Taranaki, and Rangitīkei. Other iwi with significant interests yet to be settled may well be watching the events unfold with great interest.

The next turn of events for the Hong Kong - based company was that the Minister of Agriculture, David Carter, stepped into the ring, saying that a sale to that company was unlikely to go through. The Prime Minister publicly censured his freethinking Minister, but the damage had been done. I remind the House that this company had already signed a conditional purchase contract for the farms. It is no wonder that Natural Dairy (NZ) Holdings now says Landcorp’s interests look like the result of political interference.

I thought that the Crafar farms context would be a very relevant setting in which to consider the environment for a free-trade agreement with Hong Kong. It underlines the range of interests that the Government must consider when we look at the prospect of trade with overseas jurisdictions. The Hong Kong - based company Natural Dairy (NZ) Holdings was also involved in the separate purchase of farms in February this year at Norsewood in southern Hawke’s Bay, Waitōtara in South Taranaki, and the Manawatū. That purchase is now under investigation by the Overseas Investment Office, which is questioning whether the required consents were in place. This action led company director May Wang to retort: “The plain fact is if New Zealand does not welcome the investment it is inevitable the company will take its $1.5 billion to another dairying nation that does want it.”

None of this is the greatest public relations for the Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill, which we are debating tonight, but it provides us with an opportunity to address some of the longstanding concerns that the Māori Party has raised in the past about the nature of free-trade agreements in general. We have raised concerns that although free-trade agreements are established to protect investors and their investments, they have the potential to threaten our own domestic programme, raising concerns for Treaty settlements between Māori and the Crown. In the case of the 16 farms formerly owned by the Crafar family, it should be noted that they employed nearly 200 staff on 8,000 hectares. Our concern, then, with free-trade agreements is to always consider how such relationships impact on the long-term prosperity of workers here in our land. We hope that if such an arrangement was to take place with a Hong Kong company following the passing of this bill, the local mana whenua would be approached with a view to working together collaboratively on employment opportunities that might arise.

The Crafar farms issue has raised some concerns around this agreement, but also I bring to the House the very real value that Māori businesses have talked to us about of having the opportunity to go out and explore international economies. There has been a growing interest from Māori businesses and from iwi leaders in being able to have access to the international market. I was interested to read some of the comments from Te Hōripo Karaitiana, who is chair of the Awatoru Māori economic transformation initiative and a director of a successful Māori agribusiness, with activities in Aotearoa and overseas. Te Hōripo recently participated in the Food and Agribusiness Market Experience programme, studying global food value chains, and has shared his enthusiasm for working to expand opportunities from the China closer economic partnership agreement. If we consider that the majority of the Māori asset base is in the primary industries—seafood, forestry, and farming—we see that they all have major implications for how we operate in the international arena. It is Te Hōripo’s experience that Māori involved in the primary industries should look upon trade with the Asian economy as an opportunity to participate in the value chain, rather than remaining at the production or farm-gate end.

A classic example is that provided by Patrick Wātene of Ngāti Tamaterā Hauraki, who is the founder and executive director of Global Horticulture (Xi’an) Ltd, which specialises in horticultural consultancy and bare-land orchard development. Based in China, GlobalHort provides expertise in value-adding through an integrated value chain from orchard to market. It was because of the example provided by the range of Māori businesses already developed in the Asian economy that in this year’s Budget the Minister of Māori Affairs announced investment in developing a Brand Māori to gain premium prices for Māori-produced goods exported to niche markets.

There was also investment in a delegation of Māori business leaders heading over to the World Expo in Shanghai in September. The key purpose of the delegation will be to help Māori businesses enter growth industries to increase Māori exports and to increase the profile of Māori tourism experiences with overseas providers and visitors. This is really important not just for relationships with China and Hong Kong but for the wider growth of the Māori economy. Māori economic development is important not only for Māori but for New Zealand’s overall economic performance. Māori can represent a considerable source of future growth and, if they do, it is our view that Māori must take a lead role in determining their economic development aspirations and fostering development that works for them. Trade is all about building and sustaining relationships. Māori businesses have been telling us that they believe that the culture of Te Ao Māori connects and resonates particularly with places like Hong Kong, Shanghai, and Greater China.

The Māori Party does not want to close the door on those opportunities. Although we acknowledge that there are a range of strongly held views that we ourselves have put forward about free-trade agreements in general, the reality is that Māori are already confidently and enthusiastically conducting business throughout the world. Māori businesses and all those who invest in them also deserve our support to benefit and develop the unique indigenous point of difference they contribute to business activities.

These are the two views that the Māori Party brings to this bill: fair trade and protection of our domestic programme, particularly the Treaty relationship, or encouragement of the development of a trading partnership based on dialogue, transparency, and respect—a partnership that tangata whenua will also be able to benefit from. We look forward to hearing what the public has to say about this bill.

I rise to speak to the Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill. I note that Hong Kong is New Zealand’s ninth-largest export destination and that New Zealand’s trade with Hong Kong is currently worth $823 million a year. The first reading of this bill is indeed exciting for New Zealand.

I want to comment on the contribution of the previous speaker, Rahui Katene. I note that nothing in this free-trade agreement supersedes the provisions of the Overseas Investment Office, so the issue of the purchase of New Zealand dairy farms by Chinese companies is completely unrelated to the contents of this free-trade agreement.

New Zealand farmers depend on trade, particularly sheep and beef farmers. For example, 90 percent of the Alliance Group’s product coming out of freezing works up and down the South Island is exported, and a lot of it goes to Hong Kong and China. So this free-trade agreement is pretty crucial to the health of the New Zealand sheep and beef industry—not to neglect our dairy industry, as well.

This free-trade agreement is all about boosting innovation in New Zealand and improving export access to world markets, which is one of the Government’s key policy drivers for New Zealand’s export performance. This closer economic partnership is Hong Kong’s first free-trade agreement, aside from its closer economic partnership agreement with Mainland China, and that is pretty significant. The closer economic partnership also complements New Zealand’s free-trade agreement with China, and enhances the potential for Hong Kong to be used as a platform for trade with Mainland China—a point not lost on a speaker from across the House. That makes Hong Kong a strategically important trading partner for New Zealand—as if we did not know that already. This deal will help New Zealand businesses boost trade with Hong Kong and take further advantage of growing opportunities for New Zealand in the region.

I briefly note that the closer economic partnership will ensure that New Zealand’s existing duty-free access is locked in by binding in place duty-free access for all New Zealand exports. The tariff reductions that New Zealand has provided Hong Kong with are the same tariff reductions in the New Zealand - China free-trade agreement. Tariffs are eliminated on 54 percent of exports upon the agreement’s entry into force, and the remaining 46 percent will progressively become duty-free by 2016, which in export terms is not very long in the future. Longer tariff phase-out periods will apply for import-sensitive sectors such as textiles, clothing, and footwear, and also on products such as steel and furniture. It is also worth noting that the closer economic partnership provides for 48-hour customs clearance of New Zealand exports. An easing of those provisions will make trade more possible and more timely with both Hong Kong and Mainland China.

With those few comments, I commend the bill to the House.

Mr Deputy Speaker, may I greet you by saying “Ni hao ma.” I think it is important on this occasion to greet you. I am laughing because my colleagues are making fun of my Chinese when I am trying to get into the mood of the occasion. I have never been to China, but I know many, many wonderful people out in Manukau who are of Chinese heritage and who give and contribute significantly to the local community in Manukau, and, no doubt, throughout this country. In fact, I have met a couple of mayors of Chinese heritage—one in the area of Gisborne, who speaks Māori fluently, and the other in the South Island, who is from Dunedin or Christchurch?

💬 Hon Maryan Street: Dunedin—Peter Chin.

Dunedin. They are wonderful people and wonderful friends. Peter Chin showed me the Chinese garden in Dunedin.

We are debating the Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill, which is a mouthful. I know I have relatives who are of Chinese heritage. In fact, more recently there was the addition to our family, some years ago, of my sister-in-law—although originally from China, she comes from Malaysia, and we will be talking about the Tariff (Malaysia Free Trade Agreement) Amendment Bill later on.

In the past 6 or 7 months, my office has been assisting a young man from Manukau who has a girlfriend living in Hong Kong and who has been attempting to bring her over here. For some reason, it has taken close to 7 months before agreement by our immigration authorities for her to receive a visa to be able to visit this young man in Manukau. I thought I would say those things by way of preface, as we debate this bill. As a young man I always wanted to go to China, and I wanted to be around Hong Kong. In fact, when Bruce Lee came out we all thought he was a relative. Nevertheless, I know that some members of this House are planning to go to China later on this year, or next month, particularly to the Shanghai Expo, which I understand is an expo that will probably be receiving many heads of State from throughout the world.

This is a Government bill that has been introduced by the Hon Tim Groser, the Minister of Trade, and it is about a closer economic partnership agreement. Closer economic partnerships are a vital part of New Zealand’s economic development policy. We in Labour are supporting this closer economic partnership because we believe it will provide increased opportunities and certainty for New Zealand exports to an important market. It is a market that will be very critical for the rest of the world simply because of the sheer size of its population, and with that population will come significant demands for goods—food, in particular. It is also a market that is of concern in terms of other aspects, and I will get into that at a later stage.

Closer economic partnerships lead to increased exports and imports, and the potential for added wealth to both countries. I understand that New Zealand signed this closer economic partnership with Hong Kong on 29 March, so this bill now implements that agreement. The bill amends the Tariff Act. That is part of the implementation of the Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill. The amendments will enable the application of preferential tariff rates under the closer economic partnership. Not only is Hong Kong an important market in its own right, our ninth-largest export destination in 2009, but also it provides a vital foothold for New Zealand businesses expanding into the much larger Chinese market. With the number of New Zealand citizens of Chinese heritage living in this country, I think it bodes well that we are developing relationships not only on the human level but also on the business level and the cultural level. As I have always maintained, New Zealand is a much richer country by accepting that it is not just about business but about building on and developing people and relationships.

No doubt, these things, as I understand them, take time. The closer economic partnership agreement had its roots in the work of former trade Minister Jim Sutton, and it was reinvigorated by the Hon Phil Goff during his tenure as trade Minister. I think it is important that we recognise the efforts of those who have worked on this in the past to get us to this point. I suspect that we will see in the future the fruits of the work that Mr Tim Groser is doing as Minister of Trade—or maybe we will see no fruit, whatever the case may be. The point I am making is that often working towards signing these trade agreements takes some time. It takes some work on people relationships, because if we are not able to build trust, how can we trade?

From Labour’s perspective, we welcome this bill and the closer economic partnership, as it further develops our already close relationship with the people and Government of Hong Kong. It is important from our perspective that we build closer economic relationships with Asia, as that is a vital market for New Zealand’s future economic prosperity, and will be a major market in the future, as I have said. This closer economic partnership is another step in that direction.

I listened to the Green members, and they raised some concerns that I think are fair enough. Although free-trade agreements and closer economic partnerships come with undoubted benefits, we cannot ignore the fact that for some businesses and sectors, free-trade agreements and closer economic partnerships can cause harm. This closer economic partnership has been evaluated as having a low negative impact on New Zealand businesses, largely because Hong Kong specialises in services rather than cheap manufactured goods, which could undercut some of our local businesses. New Zealand manufacturers of footwear, textiles, etc. are most at risk from free-trade agreements. This closer economic partnership has given those sectors the longest tariff phase-out period in order to allow them time to adjust.

Labour rights and environmental sustainability are core New Zealand values, which should not be sacrificed for the sake of increased trade, so when we are undertaking negotiations they need to be high on the agenda. I understand that we are supporting this closer economic partnership because it enhances labour rights and environmental sustainability. The closer economic partnership contains an environment agreement, with shared objectives between New Zealand and Hong Kong aimed at improving the environment and enhancing the capacity and capability of each country’s Government agencies, research organisations, academic institutions, and businesses to address trade and environmental matters.

Finally, the national interest analysis states that the closer economic partnership is “not expected to have any negative effects on the environment in New Zealand that cannot be managed using existing policy frameworks. Its provisions may encourage improved productivity in the use of natural resources.” The concern that I raise initially really has to do with our customs portfolio. Our country has been working quite strongly to ensure that we detect illegal drugs crossing our borders, and I think there will be others who have some concern about that. When we enter into these relationships, I think it is to the benefit of our country that we develop them slowly and that we ensure that laws are in place to implement and enhance them, but I think we also need to be letting the rest of the world, particularly our partners, know that we have certain core values here that we respect.

It gives me pleasure to rise to speak on the Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill. Trade agreements are very much about building relationships, and I was thinking a moment ago that it is a good thing for our country that this is an economic partnership with Hong Kong and not England. I congratulate the New Zealand Māori on beating England tonight. The score was 35-28, which was a great victory.

💬 Hon Nathan Guy: Were you there in Rotorua?

I was in Rotorua last week, when they beat the Welsh, but, no, I was here in Parliament working hard on behalf of my constituents when they won this evening. It is a great victory for them. Therefore, it is a good thing that we are not debating an agreement with England, because that good relationship has been ruined for another week.

I will touch on a couple of points that are important, but first I will recognise what S’ua William Sio said earlier on the importance of China as a nation with a large number of consumers who are increasing their income. Mr Sio said that when he was younger, he thought that Bruce Lee was a cousin or a relation. I am reliably informed that Bruce Lee also thought that Mr Sio was a relation, although one who had done a little less exercise than he had. But I agree with everything Mr Sio said.

This agreement, as with the other trade agreements that have been brought before this House since we came into Government, is about boosting innovation and improving export access to world markets. It is one of the National Government’s six policy drivers for a step change in New Zealand’s economic performance. This agreement with Hong Kong is an important part of National’s focus on free trade and on improving access for our exporters to world markets, which is a priority included in the Prime Minister’s statement to Parliament in February of this year.

In my electorate of Rotorua a number of producers, primarily in the primary sector, will benefit from this agreement when it enters into force. There are some opportunities in forestry, but certainly there are opportunities in the production of kiwifruit, agricultural products, dairy products, sheep and beef, and so on. Currently, we have $823 million worth of trade a year between New Zealand and Hong Kong, and we can expect that amount of trade to increase when this agreement enters into force. It will increase to the betterment of our producers, which will be a very good thing.

The bill enhances our economic integration with the Asian region, and it follows from a great number of other free-trade agreements that have been put into place since we have come into Government: agreements with Thailand, Singapore, and China have come into force, there is an agreement with the ASEAN countries, and agreements with Malaysia and Brunei as well. That is very good for New Zealand producers, and I know that everybody but a few in this House support those fully.

💬 Hon Maryan Street: All your own work. Come on—a little bit of graciousness across the House.

I do recognise, as graciously as I can, that members opposite played a small part in this work, and we thank them for that.

I will also touch on a point made by Rahui Katene about the involvement that this agreement might have in the future with Chinese companies and others that will want to come and invest in New Zealand. The closer economic partnership does not provide Hong Kong investors with preferential access to the New Zealand investment screening regime. As with any other company or person in the world wanting to invest in New Zealand, very strict and stringent procedures are in place, and they will apply under this agreement as they do to others. I think it is important that we recognise that.

This bill is a very good piece of work. I look forward to its referral to the select committee tomorrow morning, and I look forward to supporting it further. Thank you.

on behalf of the Minister of Trade: I move, That the Foreign Affairs, Defence and Trade Committee consider the Tariff (New Zealand-Hong Kong, China Closer Economic Partnership Agreement) Amendment Bill, that the committee report finally to the House on or before 29 July 2010, and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 187 and 190(1)(b) and (c).

Motion agreed to.