Trade (Safeguard Measures) Bill

I move, That the Trade (Safeguard Measures) Bill be now read a third time. The Trade (Safeguard Measures) Bill proposes four major changes to New Zealand’s safeguard regime. These changes relate to the body responsible for the undertaking of safeguard investigations, the time frame for completing such investigations, the imposition of a provisional and final safeguard duty, and the introduction of guidelines for determining whether safeguard action is in the public interest. These changes will be implemented by repealing the Temporary Safeguard Authorities Act 1987 and replacing it with a new Act that provides for a new safeguards regime that is consistent with World Trade Organization (WTO) rules and that promotes efficient, transparent, and objective investigative and decision-making processes.

Industry in New Zealand is subject to increasing competition from imports through unilateral tariff reductions, the last of which were made in July 2009, and through continuing tariff reductions under free-trade agreements. If the WTO Doha round of negotiations is finally successfully completed, then further tariff reductions may be required. This bill will ensure that New Zealand is well placed to respond to any surges of imported goods by providing any necessary temporary protection to a domestic industry to allow time for it to adjust, to increase competition from imported goods in order to promote longer-term efficiency and competitiveness.

Four safeguard inquiries have been carried out since 1987 and in only one case was a safeguard measure imposed. However, as a small, open economy, safeguard measures are highly relevant to all New Zealand industries in the tradable goods sector. The bill proposes that safeguard investigations will be carried out by the Ministry of Business, Innovation and Employment, rather than by persons appointed as temporary safeguard authorities. This will align the conduct of safeguard investigations with other trade remedy investigations that are carried out by the ministry and will allow the expertise of the ministry to be fully utilised in undertaking safeguard investigations, and ensure a more efficient use of resources.

The bill also proposes that the time frame to complete an investigation will be extended from the present 30 working days to 75 working days, or 85 working days if provisional duties are requested. The extension of the time frame will allow sufficient time to undertake a high-quality investigation and reduce the risk of any safeguard measure taken by New Zealand being overturned through the WTO dispute settlement process. To allow swift action to be taken to provide protection to a domestic industry while an investigation is being completed and to ensure an industry is not disadvantaged by the extension of the investigation time frame, the bill proposes that the Minister of Commerce be authorised to impose a provisional safeguard duty in order to provide protection to a domestic industry while an investigation is being completed. The bill also proposes that the Minister of Commerce be authorised to impose a final safeguard duty to allow a quick and efficient means for taking safeguard action.

Lastly, the bill proposes the introduction of guidelines for determining whether the imposition of a safeguard measure is in the public interest to increase the certainty and transparency around the processes of considering public interest issues. Providing protection to the New Zealand manufacturers from offshore competition does not always find favour with economic purists who insist that open competition is always the best option. I believe, however, that New Zealand should have available to it a tool that is permitted under the WTO rules to allow what is only a temporary protection to an industry that is facing a sudden increase in import competition for the express purpose of providing time to adjust to that competition where the facts show that it would be sensible to take this course of action.

To conclude, the Trade (Safeguard Measures) Bill aims to provide for a more efficient process for taking safeguard action where that is necessary to allow time for structural adjustment by New Zealand manufacturers to sudden increases in competition from imported goods while ensuring that public interest considerations are properly taken into account before this type of action is taken. This is an important safety mechanism in an environment where the remaining tariffs are low and are being reduced further through free-trade agreements—a process that is likely to accelerate over the next few years as further free-trade agreements are concluded. I would like to thank the Foreign Affairs, Defence and Trade Committee for its valuable contribution to the development of this bill. In addition, I would like to thank officials for all of their work that has gone into the drafting of this legislation to bring it to this point. I commend this bill to the House.

Labour supports the Trade (Safeguard Measures) Bill, but I have got to say that the Minister of Commerce’s ministerial explanation and read speech was pretty unconvincing as a justification for what we are doing in the House tonight. What disappointed me about the Minister’s speech as well is that he persisted in his refusal to give an explanation as to why this bill—the title clause of which says “The Trade (Safeguard Measures) Act 2008”—is coming back to the House in 2014, as he did during the Committee of the whole House. That is over 5 years—

💬 Dr Paul Hutchison: Labour didn’t put it through. Too slow.

Just to pick up Paul Hutchison’s interjection there, Labour introduced this bill at the end of 2008. So Labour got the bill into the House and this National Government, by itself—by its incompetence and by its mismanagement—has spent over 5 years on a bill that is not controversial and is now finally and tardily going through its third reading in the House tonight. So I want to know from Mr Hutchison or Mr Hayes, or from whoever will be the next speaker from the National Party, what the explanation is for that huge delay in the passage of this legislation. Is it indeed incompetence? Is it indeed poor management? Is it because John Banks was in charge of the bill for a while, and the last thing that the National Government wanted was John Banks exposed in the chair as the Minister in charge of the bill? Or is it—and perhaps this is a likely explanation—simply because National, in its heart, does not believe that this bill is actually necessary?

Whichever one of those explanations is the most compelling, I think that the National Government owes it to the House to give that explanation because the Minister failed to do so in the Committee of the whole House. We are reporting back in the third reading on the Committee of the whole House. That is what the third reading is about. But I have got to report to you that the only reason we knew that that the Minister in the chair was actually alive was that occasionally he blinked. Occasionally he blinked, but he did not get up and answer questions. What is the point of paying a Minister a salary and putting him in the chair if he is not going to actually do what he is paid to do and give an explanation to the House to genuine, rational questions that are raised in the Committee of the whole House?

I want to come back to the point about whether the Government actually believes that this bill is necessary. We are, of course, a free-trade country and we are proud of that. Way back in the 1980s we removed the high levels of protectionism that actually damaged the economic future of this country. By the way, it also made it more difficult for trade Ministers because it took away our negotiating coin when we were trying to negotiate agreements for free trade with other countries. But the question is whether we need these particular safeguard mechanisms. Free trade does not mean to say that you do not have to have measures to ensure that trade is fair. There are clearly some safeguard mechanisms that are patently necessary for any country. Most of those in our country are contained in the Dumping and Countervailing Duties Act 1988. That Act provides genuine safeguard measures that stop another country from dumping goods in this country at a price lower than it costs to produce them. That is not a level playing field. That is not fair competition, and of course you need anti-dumping measures to stop other countries doing it. You also need countervailing duties. Countervailing duties are what we put on when the Government in the country where the exports are coming from is subsidising those exports, which again makes the trade unfair and not on a level playing field.

But this bill does something different. It sets out safeguard measures and provisional safeguard duties that apply—

💬 Hon Tau Henare: Are you reading it?

I do not read my speeches, Mr Henare. You probably cannot read your speeches, but, anyway, it is nice that you are in the House tonight and it is nice that you are still with us, albeit for another couple of months. You will be going with quite a number of your colleagues, some of whom are going voluntarily, and many of whom will be going because the country has had enough of them. But I do not want to be distracted by Mr Henare. That has probably been the major achievement of Mr Henare over his years in this House—to provide a distraction. Sometimes it is humorous, and we welcome that.

But the fact of the matter is that these safeguard measures are designed to provide protection when there is a surge of imports coming in. They are designed to facilitate adjustment by the domestic industries affected. What we heard, at last, from the Minister in his third reading speech was how many times these measures have been used since 1987. They have actually been put up four times and countervailing duties have been applied once—in how many years? We are talking about 25 or 30 years. So the question is: how important are these measures? What are the industries that might be protected by the employment of these measures? I am going to ask Mr Hayes that, because he should take the next call, as the chairman of the Foreign Affairs, Defence and Trade Committee. What are the industries that are likely to be protected by this bill, given that our average tariff rates are probably around 2 percent? I have got to say that I do have some doubts as to whether these measures are actually going to be employed, and that is probably the reason that the Government has dawdled over this bill for the 6 years that it has taken with it.

I have also got to express my concern because I know that, too often, special safeguard mechanisms can be abused. Mr Hayes and Mr Hutchison know from our recent trip to China that, actually, the special agricultural safeguard mechanisms that are being employed against our exports are not actually justified by the rationale that we are causing damage to the Chinese dairy industry. I did not want the special safeguard mechanisms in the free-trade agreement. I actually opposed those, but the fact of the matter was that the Ministry of Agriculture in China wanted to maintain dairy tariffs. It was absolutely miffed when I negotiated with the Chinese Premier Wen Jiabao to remove the tariffs completely over a period of time. The consolation to the Chinese Ministry of Agriculture was a special safeguard mechanism that we thought would never be used, because we set them well above the level of prevailing trade.

Actually, because of the massive increase in trade following the free-trade agreement, those special safeguard mechanisms now come into effect quite early in the trading year, and they cost us tens of millions of dollars. We are not happy about that. We do not complain too much about it because of the very good return we are getting on the sale of our dairy products. I raise this as an example of how a safeguard mechanism can be misused, not for the legitimate purpose of protecting an industry against damage, but—as in the case of China where our exports have increased, which is not causing damage to the Chinese industry—because the demand has risen hugely.

So the question is: why this bill? Well, if the Minister will not answer—and I suspect the National Government will not answer—I suppose we have to answer our own questions. The fact is that this bill does do some useful things. It streamlines the process of responding to allegations of dumped and subsidised goods. It removes the requirement for temporary safeguard authorities, and I think that the Ministry of Business, Innovation and Employment can quite readily do that work in a more cost-effective way. We do not need special safeguard authorities. And the bill does set a more realistic time frame for the completion of a safeguard investigation. Thirty days is not enough time to do it properly; 75 days is certainly more realistic.

I think that the bill, as drafted by Lianne Dalziel, does set out very clearly the actions that the Minister can take and the process that the Minister must follow. That is important because it helps ensure that the safeguard mechanism is not misused. It sets out that you have to prove injury, that the injury was unforeseen, and that this measure is necessary to prevent or to remedy the injury. The safeguard has to be of an appropriate extent and duration. It must be in the public interest—and that is probably the most important safeguard against the misuse of safeguards that there is in the bill. And it must be compatible with New Zealand’s international trade negotiations. We made some useful amendments in the select committee to that process. We will be supporting the bill, but I have got to again express my regret that the Minister utterly failed to justify the bill that is in his name.

I have got to say that the first part of that speech from Mr Goff was absolutely outrageous, from a member in the twilight of his career whose future is always back there in the past. I always remember my father, who was overseas in World War II, reading the biography of Field Marshal Montgomery, and I think there were about 55 “I’s” on every page. I look forward to reading that sort of biography from the last speaker because we can see it coming if we study his Hansard in this House. But I am pleased that Mr Goff eventually came round and conceded that it is a very good bill that we have got passing through the House this evening, the Trade (Safeguard Measures) Bill. Yes, I acknowledge that it has taken some time to get here.

💬 Hon Phil Goff: Why? Why? What’s the reason?

The reason is this, Mr Goff. If you could just be a little bit patient, a little bit less pushy, and a little bit less arrogant, I could say to you that there have been four cases, as you also pointed out and as the Minister of Commerce pointed out, that have been brought up as safeguard measures. The first was in 1989, when the product was footwear. No measures were taken. Then in 1992 was the second, and that related to men’s and boys’ underwear, Mr Goff. Measures were imposed there for about a year. In 1993 measures were sought on used car tyres, and nothing happened, and, again, in 1995, on abrasive discs, and no measures were imposed.

The point is that when you are thinking about the framework of the Government’s legislative programme, these things need to be done. This bill is absolutely essential, but you do what makes sense in a time frame that makes sense, and I think that this bill is being progressed in a very sensible time frame.

It is going to have an impact on companies in my electorate, like Harvest Electronics in Masterton, or, if I go a bit further north, on Metalcraft Industries. People manufacturing products in New Zealand could find themselves with a business set up, with trade under way, with a whole manufacturing setup, and with people employed, and suddenly a deluge of very low-priced, competitive products completely disrupts their business. In those circumstances this bill would enable them to very sensibly buy time for a period to deal with whatever the threat coming from overseas was.

This is an excellent piece of legislation. I make no apologies for the speed at which it has gone through our Foreign Affairs, Defence and Trade Committee. It is going through the House. It will be in legislation in the term of this Parliament. That is an excellent outcome. Thank you.

Kia ora, Mr Assistant Speaker. I am pleased to speak at the third reading of the Trade (Safeguard Measures) Bill. It is my first contribution on this bill, so I have quickly come up to speed. Talking about time frames, I noticed just in flicking through the bill that today marks the 20th anniversary, to the day, of the signing of the World Trade Organization (WTO) agreement that was adopted at Marrakesh on 15 April 1994. I guess that forms the basis of this bill because we are, as a member of the WTO, adhering to the measures that have been recommended in the agreement—that we do provide some trade safeguard remedies. But it has taken a long time, obviously—20 years to the day since the adoption of that agreement. I can just imagine that 20 years ago in Marrakesh, under the Atlas Mountains, with those beautiful Arabian nights, red souk markets, the Berbers and the belly dancers, and a few cups of mint tea, our officials must have been working hard to see the completion of that agreement 20 years ago to ensure that we are all taken care of.

So that agreement was passed, and now, 20 years since the WTO agreement, we have got to this bill. It was introduced under the previous Labour Government. The policy decisions were made back, I think, in 2007. Lianne Dalziel—a very, very able Minister in her time—shepherded this bill through to the House. So it has taken a while, and here we are in 2014 at its third reading.

The measures in this bill are, as we say, non-controversial. I guess we know that we do need to protect certain industries when there is dumping of underpriced product that makes our industries uncompetitive. I know that we have got restrictions in this country on the importation of things where we need to protect our industries, like canned peaches from far-flung places like China, South Africa, or South America, and galvanised No. 8 wire. So there are those measures in place for those particular industries, but this goes a step further. In the—who knows—rare occurrence that we are faced with an influx of products from a country that causes harm to our New Zealand - based industry, which is the test in the legislation, there are defensive measures that can be adopted to ensure that there is a more level playing field.

So we commend those measures in the bill. They are not new, as we know. This bill replaces an Act that is, I think, from about 1987, which is 27-odd years old. It is in need of updating. The measures are very sensible, such as referring the investigations, or these queries, to the Ministry of Business, Innovation and Employment to look into so it can ensure a swift and expeditious type of investigation or inquiry. Likewise, extending the time frame in which it can deal with and, perhaps, put in place provisional duties from 35 days to a longer investigation period of between some 75 or 85 working days is, again, more sensible. As has been mentioned by previous speakers, it aligns our obligations so that we are, probably, less open to appeal through WTO procedures. Likewise, the guidelines and all the measures that are in the bill to do with the public interest are sensible.

These are rarely used tools. As we have heard, there have been, I guess, only four types of actions taken under the Act, and countervailing duties have been imposed on one occasion. But I guess the manufacturers of the shoes and the car tyres and other manufacturers of those times benefited from those measures. But in this global environment that we are part of, we are a small, open economy. We have forged free-trade deals, and I do acknowledge my colleague the Hon Phil Goff for the momentous work that he did with the China free-trade agreement and many others during his time as a Minister. We do live in a world where we are actually seeing an opening up of the trade and a reduction of the tariff barriers right across the world. So these sorts of measures seem sort of counter-intuitive to that, but, nevertheless, they are an important tool. They are an important tool that we need at our disposal to protect our New Zealand industries should the need ever arise.

I am just trying to think: what could be an industry that could, perhaps, look to protection? It could be any New Zealand industry. I am thinking just off the top of my head, but I am thinking of the New Zealand pork industry, an industry that my colleague the Hon Damien O’Connor knows well. The New Zealand pork industry fought this Government all the way to the Supreme Court—all the way to the Supreme Court—to protect its industry from the importation of raw pork meat from far-flung places like Canada and other places. In fact, most of the pork that Kiwis do eat is not Kiwi-raised pork. It is actually pork from Canada. So the New Zealand pork industry fought tooth and nail all the way to the Supreme Court and fought the Ministry for Primary Industries to impose tougher standards so that there would be a more level playing field. But, alas, the pork industry lost that case, and now we have an influx of container after container of pork from Canada and many other places, which really does place our own New Zealand pork industry at a disadvantage. So, rather than actually getting the protection, the industry is actually disadvantaged by the actions of the Government. Maybe if there is a great influx—I do not know, a bumper season of pig rearing and we get an avalanche of pork containers coming into the country—the New Zealand pork industry may need to resort to some protection under this piece of legislation.

So that is really all I have to say. I hope my colleagues on the other side of the House enjoyed my very learned participation in this debate. It is a very commendable piece of legislation. As I gaze up to the clock there, I see that we are 10 minutes to the top of the hour. This is a very commendable piece of legislation. It is non-controversial. It is important that we have these measures in place. In the rare occurrence that it may be required, it is always good to have the legislation on the books. Therefore, I commend this bill to the House. Kia ora tātou.

I rise to speak on the Trade (Safeguard Measures) Bill. The Greens are supporting this bill, but we have some serious concerns about it. We are very clear that we like the point of this bill, in terms of it being an anti-dumping bill. However, this is about free trade, not fair trade, which is what we want. We want fair trade. We do not want the free trade that is happening at the moment that is destroying industries in this country more and more. Every week we see more jobs going overseas, more businesses going overseas, because they are having to compete against cheap products being allowed into New Zealand far too easily. As well, we are losing expertise as these businesses go overseas.

The really disturbing part of this bill, in fact, is that it is just about a temporary fix all the time. Clause 3 is very, very clear about that. It provides that the purpose is to: “(a) provide temporary protection to a domestic industry from serious injury caused by increased imports;”—note the word “temporary”—“and (b) facilitate adjustment by a domestic industry to increased competition from increased imports.”

Yes, we have to support the bill because we have got to do anything that will help domestic industry, but this is a stopgap bill. It is clear that the Government in particular is not worried that that is all it is. In a previous speech I think I used the term that this is the “Hey Fellas (Organise Redundancy for Your Staff) Bill”. This is a bill that says: “Yes, we will give you a little bit of a break, a little bit of an adjustment, but too bad. This stuff is coming in. Get ready, and adjust to it.”

Think about it. What about the local communities, when we know that something is coming down? We are losing something. We are losing jobs, we are losing expertise, and we are going to have products that we have nothing to feel proud about, coming from another place on the planet. There is no need for it.

I was thinking about it as I was just sitting here. What have we got? What have we lost? We have lost the clothing industry in a big way. We have lost a lot of our footwear industry. We have lost a lot more. I just thought I would check what I was wearing, to see whether I was sort of putting my money where my mouth is. I notice my tie is made under licence, but it was made in New Zealand. I know my suit was. I know my shirt was. I know my shoes were built in Dunedin, at McKinlays. They do not quite suit my suit, but that is where they came from. Everybody in this House could be wearing McKinlays shoes or clothing made by some other company in New Zealand. But by hang, they have got this dump of shoes, footwear, and clothing coming into the country from other places, putting New Zealanders out of jobs.

Pork was mentioned before. When I first spoke on this bill in 2012 we were talking of 40 percent of the pork consumed in New Zealand coming from overseas. Now, in excess of 45 percent of the pork consumed in New Zealand is from overseas. It is shocking. There is absolutely no need for any pork to be imported from overseas into this primary-producing country. We can produce the food for it, we have got the space, and we have got the expertise to do it. The reason we do not need pork from overseas is that, for one, the standards nowhere near match what we aspire to in New Zealand. The rubbish that the animals are fed overseas is way worse than what we are feeding the pigs in New Zealand.

The level of use of antibiotics overseas is way worse than anything that we do here. Other pesticide residues in that pork—we have no idea. And then, this Government will not even enforce something like country-of-origin labelling, which our trans-Tasman partner Australia does and makes better year on year. So New Zealanders get junk food, and then they cannot even get it labelled. This bill does not quite address that, but it is just a temporary fix, as I say, for some unfortunate industries as they head towards the wall because of free trade, not fair trade. We have lost that expertise. We have lost self-reliance in this country, and as we head into the increased impacts of oil shocks, natural disasters, and social and civil disasters internationally, we need to have a higher level of self-reliance. We have no self-reliance from something like this—just the phase out. It is absolutely temporary.

The problem with the World Trade Organization—which we are very connected with, and we work on to try to get it to work for us; we look to it, to try to smooth trade internationally—is that it is very, very strong on trade and very, very weak on environmental and social concerns. [Interruption] Hey, the bill before this was a bill concerning foreign charter vessels. The same bunch of people over here did not mind decade after decade of slave-like conditions on those boats—and some from that side of the House too. Free traders do not mind what the labour costs are and do not mind what the costs of those people are to the human rights—[Interruption] Yes, you find it very surprising. You find this very surprising because you are light years away from human rights and fair trade.

When we get that sort of integrity back into this House, we will be able to stand proud in this country about what we are doing for the environment, what we are doing for social rights, and social justice—

💬 Sue Moroney: We’re all right with that.

You are all good with it. It is good that Labour is all good with it, too.

💬 Hon Tau Henare: Thanks for coming.

Thank you. We would love to know what is going on with the Trans-Pacific Partnership in terms of this, as well. Will this bill give any protection for the stuff that you are dealing with around the Trans-Pacific Partnership? We need transparency. We need to be looking after our communities and our regulations in New Zealand. We do not need them traded off in some deal to sell a little bit of milk powder—or what is it? What is the deal with the US that we will lose out on in a Trans-Pacific Partnership? Pushing and pushing, coming from the Government saying: “We need this Trans-Pacific Partnership. It’s going to do all sorts of wonderful things for New Zealand.” It is not even a normal way of looking at tariffs. This is about trading off regulations and community control and say and democracy. So although we will support this bill because there is an element of temporary protection, we do have a lot of concern about the direction of free trade. Thank you.

There it is: the stark choice on 20 September this year. It is him, Steffan Browning, or us—him or us. I have got to tell you that, after that speech, people will be lining up in the blue tent on 20 September. Even the red tent will be coming over to the blue tent, because I tell you what: there is no way in hell there is going to be a Green-Labour Government with that performance. You know, I thought Phil Goff’s performance was pathetic. I thought Rino Tirikatene was great. His whole speech was about pigs—pigs from Canada and pigs from this part of the world. That was a great insight into the world of pigs, but the previous speech took the cake.

Free trade—the bill is about free trade. Do you know what I am holding in my hand? It is the notes on an insurance policy for our country. That is all it is. That is all it ever was. It was to make sure that our country had safeguards in place just in case somebody tried to dump their produce on our shores. That is all it is. That is all it ever has been, and to—

💬 Andrew Williams: Why so long? Why 6 years?

Oh, look—for goodness’ sake!

Debate interrupted.

The House adjourned at 10 p.m.