Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill

I move, That the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill be now read a first time. I nominate the Foreign Affairs, Defence and Trade Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House on or before 3 November 2015. A report presented by the committee on or before 3 November will enable New Zealand to notify the completion of its domestic procedures for the purposes of the agreement’s entry into force as soon as possible. For entry into force to occur, Korea and New Zealand must have each notified that they have completed their domestic procedures.

The free-trade agreement between New Zealand and the Republic of Korea is a significant development in our bilateral relationship, which stretches back to the Korean War. Since then, Korea has become an important trading partner. Korea is New Zealand’s sixth-largest export destination and our eighth-largest source of imports. Our total two-way trade with Korea for 2014 was $4.5 billion, and two-way investment amounted to nearly $1 billion. There is significant potential for trade and investment to grow over the coming years. The free-trade agreement will support this growth by breaking down trade barriers and by establishing a framework for resolving issues in the future.

Strategically, the agreement advances New Zealand’s wider trade policy interests of strengthening economic integration in the Asia-Pacific and multilaterally. The agreement will add to our existing network of trade agreements and supports our objective of broader trade reform and liberalisation through the World Trade Organization negotiations. The agreement was concluded following 5 years of negotiations. Given the economic and strategic importance of the agreement, the Government was committed to securing the best possible outcome for New Zealand. The lack of a formal free-trade agreement with Korea has restricted trade growth and has put New Zealand at a distinct disadvantage relative to Korea’s current free-trade agreement partners. The elimination of tariffs under the agreement plays a key role in levelling the playing field for New Zealand businesses. For example, kiwifruit exporters face a tariff of 45 percent on their exports while their major competitor in the market, Chile, is now exporting to Korea duty-free. The agreement is, therefore, crucial in helping New Zealand exporters to remain competitive and to retain their position in the Korean market.

Under the agreement, approximately 98 percent of tariffs on New Zealand’s current exports to Korea will be progressively eliminated. This will take place through yearly reductions. It is estimated that $229 million in tariffs are paid on exports per year. On entry into force, duty-free access will be bound in and tariffs eliminated on approximately 48.3 percent of exports, which is estimated to save approximately $65 million in duties. If the agreement does enter into force this year, then the second tranche of tariff cuts will occur on 1 January 2016, meaning exporters will receive 2 years’ worth of tariff cuts in a matter of months. Therefore, the earlier the agreement enters into force, the earlier these tariff savings can be accessed by exporters.

The phasing out of tariffs on Korean imports is expected also to have a positive impact on New Zealand. Under the agreement, New Zealand has agreed to the elimination, within 7 years, of remaining tariffs on Korean imports. This should provide both consumers and businesses with greater access to high-quality Korean products. For manufacturers using Korean-made components, this should help to reduce costs and, in turn, should increase their international competitiveness. Besides the elimination of tariffs, the agreement includes a range of measures to help facilitate trading goods and services, assist investment flows, and encourage cooperation in areas of mutual interest. The agreement contains improved rules of origin and customs procedures, including the ability for exporters to self-declare the origin of their product. This means that further costs will not be placed on exporters in order to claim tariff preference. Also, the agreement includes other trade facilitating measures, such as the ability to request advanced rulings on origin and tariff classification and a commitment to 48-hour customs clearance. There are chapters covering sanitary and phytosanitary measures, technical barriers to trade, trade remedies, intellectual property rights, and competition and consumer policy.

There are new commitments in Government procurement that secure a level of access to Government contracts with Korea’s central government entities that is equivalent to the access granted by Korea to Australia and the United States, as well as parties to the World Trade Organization Agreement on Government Procurement. The agreement includes a modern, high-quality services framework with commitments that will mean greater services opportunities in both countries, while at the same time recognising the right of our Governments to regulate for public policy objectives. Across a range of sectors, New Zealand’s service suppliers will benefit from improved market access commitments over and above the undertakings that Korea has made in the World Trade Organization—for example, new commitments in adult education services, legal services, and research and development services. As a result, New Zealand’s services suppliers will not be disadvantaged in these areas, relative to competitors from Australia, Canada, the European Union, and the United States, who have secured the same results in their free-trade agreements with Korea.

A “most-favoured nation” provision will ensure that New Zealand service suppliers also get the benefit of any better treatment that Korea grants to any future free-trade agreement partners and will safeguard the competitive position of New Zealand businesses in the future. The agreement includes commitments to facilitate the movement of business people between New Zealand and Korea, which will play a key role in businesses being able to maximise the goods, services, and investment opportunities opened up by the agreement. Korea’s entry commitments under the agreement exceed its commitments under the World Trade Organization, with, for example, new commitments that allow access for New Zealand contractual service suppliers.

Although investment between the two countries has been growing, overall levels of investment are not as strong as they could be. The investment chapter establishes a modern, high-quality set of rules intended to facilitate investment flows between both countries and assist New Zealanders to take advantage of investment opportunities in the Korean market. There are also rules designed to protect investments from unjustified expropriation, or arbitrary or unfair conduct by a party, and to facilitate the transfer of capital related to investment. The investment provisions of the agreement, along with the increased attention and focus that the agreement will give to the bilateral trade and economic relationship, should serve to boost investment interest over time.

The investment commitments being made by Korea and New Zealand include an investor-State dispute settlement mechanism. This provides recourse to negotiation and arbitration if an investor believes that a Government has not honoured its investment obligations under the agreement and that it has suffered damage as a result. The investor-State dispute settlement provisions incorporate transparency requirements and key safeguards to preserve the Government’s right to regulate for legitimate public policy purposes. These provisions have been drafted in a manner that reflects New Zealand’s approach to these provisions in existing free-trade agreements, as well as international developments around investor-State dispute settlement, ensuring an appropriate balance has been struck between investor protections and the rights and responsibilities of Governments to protect public health, safety, and the environment.

The agreement also includes chapters on labour and environment. This is only the second time that New Zealand has included these in the body of a trade agreement. The labour chapter promotes labour rights and enhances our labour capacity and capability, while the environment chapter encourages sound environmental policies. In addition, the agreement includes forward-looking mechanisms such as a joint commission to oversee the operation of the agreement and to resolve issues, and several chapter-specific committees, through which New Zealand and Korea can explore further opportunities to expand trade investment links. The bill amends New Zealand law to implement our obligations under the agreement, thereby allowing New Zealand to ratify the agreement and bring it into force. This requires an amendment to the Tariff of New Zealand to add the Republic of Korea to the list of preferential countries, and amendments to the Tariff Act 1988 to provide for the transitional safeguard mechanism contained within the trade remedies chapter of the agreement.

To conclude, this agreement will play an important role in strengthening our relationship with Korea. It delivers significant benefits across a range of areas, including goods, services, and investments. It helps to reverse the current uncertainty faced by businesses, and it puts the New Zealand - Korea trade and economic relationship on to a very positive track. From a strategic standpoint, it contributes to New Zealand’s wider trade policy interests in strengthening economic integration in the Asia-Pacific region and multilaterally. The Government would like to see the bill enacted by the end of November 2015 in order for the agreement to enter into force as soon as possible. I commend this bill to the House.

The Labour Party will be supporting the first reading of the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. It is well known that there is a high level of agreement across the House, between the two main parties, that New Zealand is a trading nation that has economic advantages from facing fewer barriers to that trade abroad. The Minister of Trade, Tim Groser, can tell me if I have got this wrong, but I think between 2 and 3 percent is the average tariff that is faced by other countries that are selling goods to New Zealand. In contrast, for a lot of our products overseas we face tariffs of over 100 percent in some of our major markets. Of course, that means that the amount of money that is received by the New Zealand seller is less, because they are facing that tariff barrier at the border overseas.

We are proud of being a pro-trade party. We are pleased to claim some substantial credit, most of which goes to the Hon Phil Goff, for the Chinese free-trade agreement. At the time of the free-trade agreement with China, bilateral trade was about $2 billion per annum. It peaked at about $12 billion, and it is still over about $10 billion. It might drop a little bit under that with the drop in the dairy prices. But a massive increase in the two-way trade between China and New Zealand—

💬 David Shearer: Exports are $10 billion.

Exports are $10 billion, and imports are about the same. Yeah, so bilateral trade each way is about that amount. This tariff bill is supported by us for that reason. If we do not pass this bill in Parliament, not only will we not have the advantage of those tariff reductions but our exporters will face competitive disadvantage in Korea when competing against other countries that face lower tariffs—most notably Australia, which already has a free-trade agreement with South Korea. That means that, all other things being equal, if a New Zealand exporter faces a higher tariff going in to South Korea than an Australian company, then either the prices that are charged by a New Zealand seller have to be lower than the Australian price or you will not get the deal because of the differential in the two tariffs. This is, overall, a good free-trade agreement, and for that reason we support it.

I want to thank the select committee for the way in which it was willing to put up with the Opposition’s questions. We did hold a question time, because we wanted to explore some of the criticisms that have been made in civil society where some very well-meaning people in society are getting very anxious about not so much the trade and goods permitted under free-trade agreements but some of the rules relating to services and, in particular, rules relating to investment protocols. I think one of the reasons why we are now having protest marches around the country—anti - Trans-Pacific Partnership rallies that attract thousands of people—is that we are not having an open-enough discourse with members of the public as to the concerns that they legitimately hold. They are not always right in their concerns, but it is their right to hold those concerns and to express them, and it is the duty of this Parliament and, in particular, the Government to engage with these issues so that they can shed light upon the issues at large.

The common complaints that we hear are, for example, that New Zealand will have to change its laws in a way that accommodates the wishes of the country that we have got a free-trade agreement with. I do not think New Zealand has done a very good job of this in the last 6 years, with due respect to the honourable Mr Groser. I do think we need to do better on this, otherwise you are going to have this rising discontent, some of which is misplaced and some of which is well-placed. I want to consider both sides of that. First of all, I would record the very clear advice that we had from officials—and can I thank them for the advice they tendered the select committee—who made it absolutely clear that this agreement requires absolutely no change to New Zealand’s labour laws, no change to our property laws, no change to our taxation laws, no change to our intellectual property laws, no change to our public health laws, or our environmental laws. I think if a lot of the submitters knew that, or are hearing that—and I hope they do listen to that—their concerns would be, at least in part, addressed.

In respect of the freedom of future Governments to act, we drilled into this a lot at select committee. One of the concerns that submitters raised—actually, before I address that, I will just address the process. Normally, the process for consideration of free-trade agreements under the current Government is very, very truncated. We understand that once you enter into a free-trade agreement you want to take advantage of the economic advantages that flow from reduced tariffs faced by our exporters as soon as possible. That is a proper objective, but it does have to be balanced with the right of the public to actually express their concerns and have their concerns heard and dealt with properly. On this occasion we had the normal 15-sitting-day requirement when the treaty came before Parliament. It was referred to select committee and the motion gave us 15 sitting days, which is, generally, only 3 weeks. But because we had a 3-week adjournment in that period, we managed to extend it, effectively, to 6 weeks. That meant that we could give a period of advertising to interested people. We gave them time to give us submissions, and we had some very detailed and thorough submissions given to us, and then we had time to consider them. As a consequence, I think we left select committee with the agreement of all parties, including some parties that are less pro-trade than we are in the Labour Party, which cooperated to write what I thought was a very good report. And so I would congratulate all members of the select committee on all sides, plus the officials, who helped us to achieve that outcome.

In respect of effects on the ability of future Governments to take action, these generally fall into three areas of concern: constraints on the ability of a future Government to legislate for public health, constraints on the ability to legislate for environmental outcomes, and your inability to control your own destiny when it comes to things like land sales. Again, we had very clear advice from officials that, going forward, there is no curb on proper legislation for public health reasons. The example that we used—and we had very clear advice from the officials—was that, for example, if the Government wanted to introduce plain packaging on cigarettes, then that would not breach the free-trade agreement. We had submissions from some submitters saying that there is somehow a chilling effect on the way in which Governments might respond to that, and saying that this was one of the reasons behind the delay for the current Government’s implementation of what Tariana Turia was pushing as Associate Minister of Health—which was plain packaging on cigarettes—but we were told by the Government that that is not correct.

In respect of future restrictions or proper environmental laws like an increase in the price of carbon or other measures that you need to curb carbon emissions, again, we had assurances from officials that that was permitted. In respect of the third area, though, there is a problem. That relates to whether a future Government can limit or ban new categories of land from being sold to overseas people—in this case, South Koreans. We had advice from Amokura Kawharu. Amokura Kawharu is the co-author of the leading text on commercial arbitration in New Zealand. It is called Williams and Kawharu on Arbitration. She is also an academic at the University of Auckland. She gave us advice that it was not possible to add new categories of land, the sale of which can be banned to foreigners—in this case, South Koreans. I think that is a problem in the drafting of this agreement, and it needs to be made clear—I would hope by a side letter—and I would hope that future agreements are clearer that this is permitted by a future Government because although the current Government might not want to have a ban on overseas land sales, other Governments, properly, might want to, and their ability to do should not be constrained by free-trade agreements.

In my last minute I want to say something similar in respect of stamp duty that applies only to some overseas purchasers rather than to New Zealand residents as well. Both of these practices are common overseas and, indeed, the Australians managed to accommodate both of those matters in its free-trade agreement with South Korea, so we should have been able to achieve that also.

The last thing is investor-State settlement provisions. These are very controversial. There are still some problems with the international mechanisms. Arbitrators and panels that are drawn from trade lawyers are faced with the accusation that they are really not like an independent judiciary. They do go back to being trade lawyers, so they arguably are not quite as independent as a judicial officer should be expected to be. There are limited appeal rights and there is a question, particularly in respect of First World countries, whether you should have investors having rights to sue the State, or just have country-to-country enforcement of agreements, which is what has happened previously in respect of most agreements. I know we have got investor-State dispute settlement clauses in the New Zealand - China free-trade agreement, and that is a good agreement, but we have reached the point in the Labour Party where we would be happy to have free-trade agreements with First World countries without investor-State dispute settlement clauses. It is interesting that in countries such as in Europe, Australia, and, indeed, the United States there seems to be an appetite for that too. With those comments I note again that the Labour Party is supporting this bill.

I am very pleased to take a call on the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. I just want to acknowledge the previous speaker, Mr Parker, who subbed on to the Foreign Affairs, Defence and Trade Committee during the select committee process. He drew some important issues to the attention of the committee. I thought that the committee worked very well together. We were all motivated to make sure that we could present the best possible report back to the House, that we could inform the House, and that we could address and allay some of the fears that were raised during the submission process and the select committee process.

We are a small country of 4½ million people, down at the bottom of the world, actually. It is always going to be very difficult to get ahead by trading amongst 4½ million Kiwis, so these free-trade agreements are critically important for the future of our country. Trading with the rest of the world has always been important, and it will continue to be important. I would just like to refer back to some of the free-trade agreements and closer economic relationships that we as a country have formed over the last 30 or 40 years. If I go back to 1983 there was the formation of the Australia New Zealand Closer Economic Relations Trade Agreement. This was one of the most open economic and trade relationships of any two countries. It laid out a comprehensive set of trade and economic arrangements, collectively known as the CER—or Closer Economic Relations partnership. It has been critically important for New Zealand to be able to open up the market in Australia, and Australia is still important to us in terms of both imports and exports.

We have the New Zealand - Hong Kong, China Closer Economic Partnership Agreement, which entered into force on 1 January 2011. We know how important this has been for New Zealand, in terms of China having become a very important trading partner for New Zealand. We have the Malaysia - New Zealand Free Trade Agreement, entered into force on 1 August 2010. Malaysia is, actually, New Zealand’s eighth-largest export destination, with over a billion dollars of exports in 2013. We have the ASEAN-Australia-New Zealand Free Trade Agreement—again, ratified in 2010. We had the New Zealand - China Free Trade Agreement in 2008, which Mr Parker referred to. He highlighted that the Labour Party is also very focused on the fact that trade is important to New Zealand, and, therefore, it was much easier to work together, through the select committee process, to make sure, like I said, that we presented back to the House the best report that we possibly could. Obviously, we have the Trans-Pacific Strategic Economic Partnership, which came into force in 2006. This is an agreement between Brunei, Chile, Singapore, and New Zealand. It was the first multiparty free-trade agreement linking Asia and the Pacific to the Americas. It is also New Zealand’s first agreement with a Latin American country, so it is another very significant free-trade agreement. I could go on, but I just wanted to highlight the fact that we have got a proud history in this country of developing very good free-trade agreements.

I want to acknowledge the Minister of Trade, Tim Groser, who has got a huge background, in terms of having been involved, in several different roles before he actually became the Minister of Trade, with negotiating and dealing in our free-trade agreements in New Zealand. So he brought with him all that experience and all that background.

💬 David Shearer: And all that ego.

Oh, I am not going to say that. I want to acknowledge also the officials—our negotiators—because several of the submissions that we heard in the committee highlighted the fact that this is a better free-trade agreement that has been negotiated than, for example, the Australian - Korean free-trade agreement. So they have done a very good job. To give you an example, our deer and velvet industry is not big but it is still important, and in its submission it highlighted the fact that it has got a much better deal and an easier entry into and opportunity to grow in the Korean market than, for example, our Australian cousins. We heard from all the major industries through their submissions.

We heard from New Zealand wine producers about some of the issues that they raised. They highlighted the fact that our wine industry is an important contributor to the New Zealand economy. It is the sixth-largest export industry, with an export value of $1.37 billion. Korea is currently a small but high-value market whose potential will be realised more fully with a zero tariff for wine on this agreement’s entry into force. They were very optimistic and quite excited about the reductions in tariffs that will come in incrementally with this agreement and about the fact that they are going to be able to grow their own industry and they have got a new market that they will be able to grow in Korea.

We heard from Beef and Lamb New Zealand. Similarly, it highlighted the fact that Korea is currently New Zealand’s fourth-largest beef export market by volume, returning $125 million from 22,000 tonnes of trade in 2014. As recently as 2011 Korea was New Zealand’s second-largest beef export market, but volumes have been dropping in recent years. Actually, the reason for this is the free-trade agreements that have been triggered with other countries, which have meant that tariffs have been reduced and that we are not as competitive. That actually highlights what I feel is a very important point. Of course, the select committee will be receiving this bill, and I think that it would probably be fair to say—and maybe the next speaker for the Labour Party could comment on this—that we will work as hard as we can, as a committee, to make sure that we get this legislation back into the House and to make sure that the free-trade agreement is available and is triggered, so that our exporters can actually start to take advantage of the reductions in tariffs as quickly as they can.

I mentioned the deer industry. It made a very good submission. The Korea - New Zealand Business Council came and made a submission. Of course, it supported this agreement and saw it as critically important, not just for trade but also as another way of establishing a mechanism for developing strong relationships with a very important partner to us—Korea. Zespri sees a huge opportunity and market in Korea. It was very, very pleased to see this free-trade agreement. It is a resilient industry. I was in the Bay of Plenty with the MP down there, Todd Muller, 3 or 4 weeks ago. He was good enough to take me around and show me one of the packing houses, for us to get a briefing on how the industry has bounced back after the challenges it has faced—the new varieties that it is developing. It is actually a really exciting industry that has got huge potential. This Korean free-trade agreement is going to help it to continue. In fact, I think there is $65 million that can come back into the New Zealand economy just off the back of our kiwifruit industry. We heard from Export New Zealand and, of course, Fonterra.

We did receive some very good submissions and some concerns that we had to address around the investor-State dispute settlement provisions. There are just a couple of points. The Minister has already alluded to them but I would just like to go over them and highlight them again. The investor-State dispute settlement provisions in the agreement do not go beyond those established under New Zealand’s concluded free-trade agreements, some of which I have already highlighted and spoken about, and we have already the benefit of history to show us that those agreements have been very successful, without ever having to incur or be too concerned about investor-State dispute settlement provisions or having to enter into any type of disagreement or arbitration. New Zealand has extended investor-State dispute settlement mechanisms to many trade partners—China, the ASEAN countries, and Malaysia are all examples. We have employed appropriate safeguards and exclusions, which have included important public policy areas—health being one of them, of course. Improved protections for investors will not interfere with the Government’s right to regulate for legitimate public policy areas. I do not think that any member in this House would ever be comfortable with the thought that there could be interference in the way that we legislate and the laws that we pass in this country, specifically in relation to occupational health and safety—

I am sorry to interrupt the honourable member but his time has expired.

I rise on behalf of the Labour Party; we will be supporting this legislation. It amends the Tariff Act 1988, basically to give preferential tariff rates to the Republic of Korea—that is, South Korea—which is necessary in order for this country to ratify and bring into effect the free-trade agreement that has been negotiated between our two countries. Korea is an important trading partner for New Zealand. It is our sixth-biggest trading partner, and the two-way trade is somewhere in the vicinity of $4 billion.

It was really necessary to bring this treaty forward. We began the process under the last Labour Government, when I was the Minister of Trade, and I was deeply aware that, with other competitor countries like Chile having already achieved a free-trade agreement with Korea, our exporters in a number of fields—for example, in kiwifruit—were losing their competitive advantage. Subsequently, the Americans and the Australians have moved to get a free-trade agreement, and to not have an agreement of this nature would leave our exporters in an invidious and deeply uncompetitive position. So Labour will be supporting this. I want to congratulate our senior negotiator, Martin Harvey. Martin was also my senior negotiator in the free-trade agreement that we negotiated with the ASEAN countries, so I know from personal experience he is a competent and committed negotiator, and I think he would, with the support of his Minister, have got the best deal that he could from the Koreans.

Having said that, I think I would share with Martin and his team, and with the Minister, our disappointment that there were some areas in this free-trade agreement where we did not get the progress and the comprehensive nature of the free-trade agreements that we negotiated earlier with China and with Taiwan. We have got some areas where tariff barriers will remain in place indefinitely under the provisions of the treaty and this bill that brings it into effect. Important areas like the export of frozen squid are not brought in to the deal, and the tariffs remain on them. Unprocessed deer velvet—I think that is 60 percent of our deer trade with South Korea—is not covered by the agreement. There are some horticultural products that are left out of it; and, importantly, for milk powder—milk powder being our single biggest export outside the tariff rate quota—those tariff rates will remain. So there were disappointments in the treaty, but the problem that New Zealand faced in this negotiation, as with so many, is that we have very little negotiating coin, because we have very few export barriers to, for example, trade from Korea coming in. We do have the ability, of course, to facilitate Korea’s entry into something like the Trans-Pacific Partnership, and I am sure that that was used to give leverage to our negotiators.

The good thing about this agreement is that it eliminates over time most of the $229 million that our exporters pay in tariff rates to the Koreans. Of our current exports, it removes tariffs on 98 percent of them. That figure distorts the reality of the picture. Because milk powder tariffs remain in place, and that is not a high current export because of that tariff barrier, the agreement is not quite as good as it seems on the surface, but it is certainly worth having. For example, for the kiwifruit exporters, they were paying 45 percent tariffs. Chile by now has tariff-free entry into Korea. It is our major competitor, so that was an important gain, and that will come into effect in 5 years. On beef exports we are paying 40 percent. That will be eliminated in 15 years. On sheep meat, 22 percent, and that will be eliminated in 10 years. We will largely achieve duty-free forestry exports into Korea over 10 years, and cheese and butter exports in 14 years.

I think every party in the House that was on the select committee doing the treaty examination acknowledged there is a real net benefit to New Zealand in this treaty. The Greens certainly acknowledged that, and so did New Zealand First. But I think it is very hard to acknowledge that you are getting an important net benefit, and that you will suffer quite serious competitive disadvantage if you do not sign the treaty, and then vote against the bill. I guess the other Opposition parties on the select committee are making a symbolic gesture because there are aspects, including the investor-State dispute settlement procedure, that they do not like, but I think our position is to be honest: if New Zealand is going to benefit from this deal, then we cannot vote against it. It is illogical to vote against it if it is important for New Zealand and we get a good benefit from it.

I want to touch on the investor-State dispute settlement, because that was the area in the treaty examination that really drew the flak. It was not about Korea. I do not think anybody thinks that Korea is going to take us to the investor-State dispute settlement procedures any more than China or the ASEAN countries would. They have been in place for 6 years; nobody has taken us through the investor-State dispute settlement procedures, and Korea is extraordinarily unlikely to. But what happened with this bill when we heard evidence on the treaty examination is that it was used as a stalking horse for the Trans-Pacific Partnership agreement. The concern that people had, and I think it is a genuine concern, was that the United States is a litigious country and it might make use of that procedure, so those members of the select committee started their opposition to it under the Korea agreement. Even though we are not really against the Korea agreement, that fires our shots across the bow of the Trans-Pacific Partnership should it go ahead.

I think the select committee procedure on the treaty examination was really useful and well conducted, and I acknowledge the chair and I also acknowledge the officials, because it brought out the reality rather than the hype and rather than the scaremongering. The reality is that in some trade agreements—the North America Free Trade Agreement probably being one of them—the wording for investor-State dispute settlement procedures was pretty loose. There have been cases taken that people have interpreted as being a United States corporation being able to sue, for example, Canada, because it has put environmental protection in place. Well, the reality is slightly different from that.

Any country has the right to put in place environmental protections, but when it does so it has got to make sure that it is non-discriminatory between the nationals in that country and those that are trying to trade into the country, such as Canada. We found in examining some of those decisions and, I think, looking at the minimum standard of treatment provisions that have been used by corporations to sue countries—Bilcon and Canada was a prominent example—that a North America Free Trade Agreement investment tribunal explained in its decision what the standard of the problem, of the grievance, had to be in order to succeed when an investor-State dispute settlement procedure was invoked. The actions of the Government needed to be “arbitrary, grossly unfair … [lacking in] due process leading to an outcome which offends judicial propriety—”. That is not a low standard; that is a very high standard.

So I am satisfied, and I think the officials satisfied everybody on the committee, that they have built into the wording of the investor-State dispute settlement procedure sufficient safeguards that enable New Zealand to retain its sovereign right to legislate for the public good. For example, in public health areas like plain packaging of cigarettes, I would not support an agreement that took away our sovereign right to stop tobacco companies promoting a product that causes death among 50 percent of New Zealanders who use those products. So I think there are safeguards built in there.

I want to reiterate the concern from David Parker, who raised it, that the one area that is not covered would be the sale of residential land to overseas buyers. The Overseas Investment Act is protected. It is exempt under annex II of the free-trade agreement. That means that we can continue to stop—if the Government had the will to stop, that is—the sale of farm land, but the officials were ambivalent about whether we could legislate to stop the sale of residential properties. Right now we have got house prices going through the roof and there is no New Zealander who believes that foreign investors, wherever they come from, buying up and speculating in residential housing is helping the problem. It is making the problem worse and, unfortunately, the officials could not give us assurance that under this legislation we would be able to expand the Overseas Investment Act to cover residential housing. The Australians have done that; they have made that a provision of their negotiation with Korea. I think the Government was remiss in not providing for that in relation to residential property sales under this legislation and this particular treaty.

With that exception, this is a bill that we can support. This is a treaty that will benefit New Zealand. We will be supporting that, but I think the Government is going to have to try harder to make sure that, in every aspect of where we should maintain our sovereign right to legislate, we are able to do so.

It is a pleasure to speak to this free-trade agreement and to this bill, and I would like to start by acknowledging the Minister of Trade, the Ministry of Foreign Affairs and Trade, and officials for the work that they have done over at least the past 5 years to bring us to where we are today. I would also like to acknowledge my colleagues around the House, those who worked on the Foreign Affairs, Defence and Trade Committee, and the guidance of the select committee chair, Mark Mitchell.

Currently, we import refined oil, cars, electronic equipment, and machinery from South Korea, and we export industrial goods, metals, organic chemicals, forestry products, dairy, beef and lamb, kiwifruit, and buttercup squash. It strikes me that there are four major macroscopic benefits to this agreement with Korea. First of all, we get increased access to a target market of 50 million people for New Zealand trade and investment. Secondly, we get some frameworks that we can pin policy on and that we can work with: frameworks for resolving trade and investment issues, and frameworks for resolving trade and labour and trade and environmental issues. We also get support for New Zealand’s wider trade policy interests in strengthening our economic integration in the Asia-Pacific region. As we have heard, 98 percent of current export tariffs will reduce over time.

I would like to look at some of those in a little bit more detail. What we will see is that the beneficiaries to this free-trade agreement are New Zealand wine, cherries, hides and skins, some forestry products, some aluminium, and many industrial goods exports. They will become duty-free at the agreement’s entry into force. New Zealand beef exports to Korea, currently worth $120.6 million, will become duty and safeguard-free 15 years after the agreement’s entry into force. All duties on New Zealand kiwifruit exports to Korea, currently $44.3 million, will be eliminated over 5 years. If we look at 5-yearly increments—5 years, 10 years, 15 years—what we will see at the end of 5 years is that 67.4 percent of current exports to Korea will become duty-free. At the end of 10 years, that goes up to 79.3 percent, and at the end of 15 years, that is 97.8 percent—clearly a significant reduction in tariffs over time.

We heard from a number of submitters, and I would like to comment also on the Korea - New Zealand Business Council. It reminded us that Korea has already signed agreements with Chile—which is one of our major competitors in this space—the USA, and the EU, and latterly with Canada and Australia. It commented that previously Korea was a relatively closed market and that over the past decade or so the lever for it becoming more open has been the big Korean electronic and car manufacturers becoming more internationalised. With this agreement, we are seeing the benefit of that opening.

It commented also on New Zealand seafood. Even though the green-lipped mussel will have a tariff rate quota placed on it, it commented that New Zealand seafood penetration and entry into the Korean market is a very good thing. More specifically, our green-lipped mussels are perceived as high quality and as having hugely beneficial health effects. As I am sure many of us know, what it is relating to here is the perceived anti-inflammatory benefits of the green-lipped mussel, which may be beneficial to people with arthritis, inflammatory bowel disease, or other inflammatory conditions. It made the point that even though it has a tariff rate quota, it is well respected and well looked at in the Korean market.

Zespri also spoke to us. Zespri is a big player—$1.4 billion in sales of kiwifruit worldwide—and it is projecting to double the volume of its gold kiwifruit in the next few years. For Zespri, Korea is its seventh-biggest market, and it differentiated the Korean market as being very discerning fruit consumers. Quality matters to Korean consumers. In Zespri’s view, this is one of the competitive advantages we have over Chile—that our kiwifruit is high quality and the Korean consumer recognises that. Furthermore, in the kiwifruit space what is really interesting is that we are actually walking the walk with Korea.

So here we are: we have this free-trade agreement, but we actually have skin in the game already, because what Zespri was telling us was that it is already capacity building and risk spreading the kiwifruit market. It is doing that, because it has actually got 100 hectares of kiwifruit growers and kiwifruit that it is growing in Korea and it employs 250 local growers. We do truly come to this agreement with skin in the game. We are already employing people in Korea. We have already got our plants growing in Korea. For kiwifruit growers, their current tariff is 45 percent; Chile’s is zero. There is the reason. There is our loss of competitive advantage right there, which this agreement will change.

We also asked about intellectual property concerns, because as we talk about growing our kiwifruit in Korea, it might be a legitimate concern that we would have with any country that we were doing trade with. We were reassured that there are absolutely no intellectual property concerns with our Korean partners. I would also comment while I am on the kiwifruit story that this is very good news for horticulturalists in Whangarei and the far north. We have a substantial horticulture industry that will benefit significantly from the tariff reduction on kiwifruit.

We also heard from Export New Zealand. It talked to us about the importance of the free-trade agreement in the context of Asia, and what it said was this: “The Korean market is an important one. It is a larger market than the UK and falls only a little behind Japan in market size. Given that New Zealand does not yet have FTA links with the US and Japan, this free-trade agreement is New Zealand’s third most important FTA after those with China and Australia. The duty savings achieved by this agreement are significant and will be greatly appreciated by our members.” Just to highlight, Export New Zealand commented also that it is focusing on the policy aspect and on our relationship with the Asia-Pacific region, which we can often forget the importance of when we are talking about the issue of tariffs. Sometimes that can be the highlight. Our relationship with the Asia-Pacific region is very important as well.

Export New Zealand commented also, as many submitters did, on the investor-State dispute settlements clauses, as my colleagues across the House have raised. I want to read point 9, which they commented to us: “We support the inclusion of the provisions on investment in this agreement. We believe that these will encourage New Zealand companies to invest in Korea and Korean companies to invest in New Zealand. Having an investor-State disputes settlement mechanism is an important protection for investors and we support this.” That is from Export New Zealand. It has 5,300 members, so it has some clout and it has a mandate to be speaking to us in this regard.

I would also like to comment on Fonterra, which was also a submitter and is clearly our biggest exporter. It said to us: “The Korean free-trade agreement allows us to start having similar discussions with Korea as we have had and as we now have with China.” Although part of its skim milk has not been released under this tariff, as was commented on, it sees this as opening wider opportunities with Korea. I would like to read one of the points about the benefits, which it commented on to us. This is from Fonterra: “Importantly, this agreement helps us to create a level playing field for the New Zealand dairy exporters relative to the EU, the US, Chile, and Australia. The EU and US agreements in particular, which entered into force in 2011 and 2012 respectively, have put New Zealand at a significant competitive disadvantage. This disadvantage has started to be reflected in New Zealand’s share of Korea’s dairy imports, which has fallen from 14 percent in 2011 to 8 percent in 2014.”

On that point, I would also like to comment on Fonterra’s reflection on the free-trade agreement and its benefit regarding introducing cheese to Korea. Historically, cheese has been a key dairy export from New Zealand to Korea. However, the preferential access for cheese negotiated by the EU and the US has significantly eroded sales of cheese from New Zealand to Korea. The cheese outcome for New Zealand under the New Zealand - Korea free-trade agreement represents, effectively, parity with the US and the EU for cheddar and block mozzarella. This means that cheddar and block mozzarella exports from New Zealand will reach a zero tariff at the same time as the US and the EU.

I think this is an excellent agreement, and as we heard from most submitters, yes, there are some concerns around investor-State dispute settlements, which we have allayed, and there is some thinking to do on that, as our colleagues have spoken about, but this agreement disproportionally advantages New Zealand. It is an agreement that has been worked on over many years. I have complete faith in this agreement, and I commend it to the House.

I would also like to speak to the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. I did want to start by acknowledging the hard work of the negotiating team over a number of years on this. Whether you are for or against it, you cannot deny that the New Zealand civil servants who worked on this have done a terrific job and have worked very, very hard for a number of years. I would also like to acknowledge Mark Mitchell for the way he chaired the Foreign Affairs, Defence and Trade Committee. I came on to the select committee just for the process of the hearings, and greatly appreciated being given a great deal of their time to air the concerns of the Green Party. Speaking on behalf of many public submitters, Mr Mitchell chaired the select committee in such a way as to ensure that everyone did get a fair hearing, and that the extensive concerns the public have about the provisions that are contained inside this treaty were heard, so I do appreciate that.

I also want to acknowledge that in reducing tariffs between South Korea and New Zealand there will be a benefit in particular to New Zealand exporters. So it will increase the volume of trade, and make some New Zealand exporters more competitive than they had been prior to this agreement. A number of speakers have previously spoken and waxed lyrical about those dimensions of this bill, so I will not spend any more time on that, but I did want to acknowledge that.

I would like to speak to some of the concerns of the Green Party, and of a number of submitters, that we felt were not sufficiently addressed. They were heard but not sufficiently responded to, we felt. In particular, these are concerns around the protocols to the agreement that are around human rights, the environment, labour standards, and so on. None of the agreements that New Zealand has signed up until this point, including this one, contains enforceable and binding protocols, to my knowledge. We have some questions about that. When the Government says that these agreements lift human rights standards, lift labour standards, and lift environmental standards, my question is whether it can prove it. Can the Government prove, for example, that the environmental provisions contained in the ASEAN free-trade agreement have been met? Has there ever been any evidence of any of these protocols ever actually having been lived up to in any way?

We have looked into it, and we have been unable to find any agreements where they have been. So just the presence of human rights, labour, and environmental protocols in these agreements does not seem to result in any actual activity. Just because the language is there does not, actually, mean that there is any activity following up on that. So we do have concerns that, although this agreement does contain human rights, environmental, and labour protocols, they will not actually mean anything, because they are non-binding and non-enforceable. For us to support agreements in the future, we would like to see those kinds of provisions being made binding and enforceable on all parties.

The main thing I would like to speak about—and a number of other speakers have referred to this previously—is the investor-State dispute settlement mechanisms that are contained inside this agreement. I do want to acknowledge Phil Goff, who earlier said that this is kind of a stalking horse for the Trans-Pacific Partnership agreement. There is now widespread public concern about the nature of investor-State dispute settlement mechanisms out there in the public arena, and that does not seem to be lessening. In fact, that sense of public concern is increasing. I would just like to say a few things about that. Our history with investor-State dispute settlement mechanisms is fairly narrow and it is fairly recent. So if you take the New Zealand - China free-trade agreement, for example, which has been in place for half a dozen years or so, you can say that, no, we have not yet been sued by a corporation under the investor-State dispute settlement mechanisms contained in the New Zealand - China free-trade agreement. But the past is not necessarily a guarantor of the future, and the more countries with which we enter into agreements that contain these provisions the greater the risk we expose ourselves to.

Although we have not yet had a case in New Zealand, the thing is that some of our nearest neighbours, such as Australia, have been exposed to them. We say that we here in New Zealand have an excellent legal system; we have a pretty good system of government, which means that these kinds of provisions are unlikely to be triggered. But so does Australia, so does Canada, and, in fact, so does the United States. It gets plenty of exercise, that is for sure. The average cost around the world of even defending oneself is something like US$9 million. So it would be quite easy for a committed corporation to tie up a Government, incurring costs even on claims that it knows are not going to come to anything.

We also know that, as part of the global system, New Zealand is pretty small fry in the grand scheme of things, but sometimes we are asked to take on responsibilities, or we are exposed to situations, not because people are necessarily concerned about what goes on here in New Zealand but because of the example that it shows for the rest of the world. So we know, for example, that large pharmaceutical companies are greatly concerned about Pharmac, not because New Zealand has a particularly large market for pharmaceuticals but because the Pharmac model is world leading, and there are other countries in the world that are looking at Pharmac and considering instituting a similar system in their own countries. So New Zealand can be exposed to a situation where, because those companies are worried about the threat of those kinds of systems being instituted in, say, Viet Nam or Korea or China or other countries that have much larger markets available, we may be subject to action, kind of as a preventative measure in relation to other markets.

We also know that there is a bit of a chilling effect on legislation. New Zealand has postponed the idea of plain pack cigarette laws because we are waiting to see how the investor-State dispute settlement case between Philip Morris and Australia pans out. We understand that it is unlikely to succeed—the courts are unlikely to find in favour of Philip Morris—but in the meantime, with the number of years that that case is taking, Philip Morris is able to continue to extract profits from the Australian market and also to suppress similar types of legislation appearing in other countries, including here in New Zealand. So sometimes it is not so much about what we do here in New Zealand but about the fact that, because we are part of the international system, these kinds of mechanisms expose New Zealand to a great deal of risk. Those are some real, practical concerns that we have. Given the recent and short history that we have in relation to investor-State dispute settlement mechanisms, and given the global history of these kinds of mechanisms, we think there is a great deal of risk in signing any agreement that includes them.

There is also the matter of principle with this. There is the pragmatic question about what the risk is, but also what the principle is here. Do we believe that private corporations should have the right to challenge laws passed by a democratic Government beyond what already exists in our domestic legal framework here in New Zealand? We have a pretty robust system—one of the best legal systems in the world. Surely if a company that invests here feels that it has been wronged by the actions of our Government, it does actually have recourse to remedies for that within the New Zealand court system, rather than bypassing the New Zealand legal system and going to an international arbitration court where there are many issues in terms of jurisprudence, the quality of those decisions, and so on.

So for all of those reasons we do have real concerns about signing up to this particular agreement, because it contains these kinds of provisions. We would like to see trade agreements that encompass the following things: respect for democracy and sovereignty and the promotion of good international governance; respect for human rights, labour standards and the promotion of environmental standards and ecological sustainability; the promotion of just and sustainable development; and that those kinds of provisions in agreements would be binding and enforceable. Until our free-trade agreements do this, we are not really in a position to be able to support such agreements, and therefore we will be voting against this bill. Thank you.

This is an amendment bill that essentially recognises that the Republic of Korea exists in our trade legislation. Previous speakers have, in the main, actually ignored the majority of the submitters who spoke at the select committee. We need to have very real concerns about the core provisions within this trade agreement. But let us actually just look at the agreements around goods and services themselves in the trade agreement. We are amending the law for what has been an agreement that has been on the back step from the very start. In fact, the Government itself describes this trade agreement as a catch-up agreement. We have actually entered into free-trade negotiations without any cards to hold. This was spoken about previously. In fact, the Minister of Trade kept using words like “could” and “should” when he described what he would like to see result from this trade agreement. He kept using those words.

New Zealand First understands that this country is dependent on trade. There are no two ways about it. We rely on being an export nation that exports our goods and services around the world. So, trade agreements like this—and when you actually look at the contractual budget, which does not support this trade agreement—need to be looked at again and need to be looked at as a whole. It is one thing to claim a free-trade agreement, but I believe and New Zealand First believes that this is a free-trade agreement in name only. What good is it to Northland, for example, or to our regions, which are the places that are so dependent on good trade negotiations and good macroeconomic settings? Let me get into that now.

The Minister has signed an agreement that means that less than half of our exports to Korea will actually have their tariffs eliminated on the signing of this—less than half. But here we are today now amending legislation to allow better and more preferential treatment to a trading nation that already has, essentially, unfettered access to the New Zealand economy. This Government has said that we are facing tariff rates of up to 178 percent, for example. In the same breath, the Minister assures us that we should celebrate this trade agreement because it will remove that 178 percent tariff rate—but would that we could. The Minister cannot seriously believe that the Korean free-trade agreement will actually be of any benefit to the dairying economy in Northland. For example, it will take 10 years to reduce those tariffs down to zero. OK, that is a big deal—it is going to take a decade for that to come in—but it is actually more insidious than that, and no one has mentioned it. The fact is that once that 10-year time period comes about and we get that zero tariff, it is only on milk powder to the quantity of approximately 2,000 kilos. That is less than 0.13 percent of our milk powder exports around the world. Everything above that level—every kilo of milk powder sold to Korea—will still attract 176 percent tariff in perpetuity and for the foreseeable future. That is not a successful trade agreement.

The trade negotiators have themselves admitted that for many of our core export commodities it will be at least a decade before New Zealand exporters are able to compete on a level playing field. It was positive to hear the Minister speak earlier today of the quicker phase-out of kiwifruit tariffs. He said that they were at 45 percent. What he failed to mention is that the phase-out will be over 6 years, and he kind of made it sound like a good thing that our kiwifruit competition in South America has no trade tariffs with South Korea at the moment. This is what is being handed to our New Zealand exporters as a good trade negotiation. Zespri itself mentioned how positive this trade agreement was, but in the same breath it mentioned that it would take what it could get. Mr Joyce assured Northland farmers earlier this year that this free-trade agreement would eliminate tariffs on beef. What he admitted at the time was that it would take 15 years for these tariffs to be removed. Further, our seafood industry was spoken of several times today. What did not come out in those conversations was that one-third of our seafood exports to Korea are, and will continue to be, subject to the 22 percent tariff. So there is no provision for one-third of our seafood exports to enjoy the benefits of this supposedly great free-trade agreement. I put it to you that it is not much of a free-trade agreement.

Then we come to the question of what New Zealand has had to give up in order to gain common ground in this trade agreement. We could not negotiate or compromise anything in the way of tariffs or quotas because we are already one of the most open economies in the world. We are holding no cards in this trade game. Actually, we have been handed one card, and we have been forced to play that card. We are now forced to play it every time. I am advised that our compromise—the only thing asked for by the Koreans in this agreement—was the inclusion of the investor-State dispute settlement provision in this agreement. The investor-State dispute settlement clause was pretty much what we were asked to give in return for what I would call a manipulation of tariffs. We are being asked to give up our sovereignty a little bit at a time.

We were advised at the select committee by experts that our two countries have the best legal systems in the world. Korea acknowledges our legal system. We acknowledge how robust and great theirs is. And yet we are being forced into an agreement that has a clause that asks us to incorporate investor-State dispute settlement. For some reason, we agreed to this—or the Government agreed to this. We agreed to a tribunal system that operates as a black box and that operates outside of and independently of New Zealand laws and South Korean laws. So we are agreeing to deal with trade issues outside of our laws. That is what we have done. It is illogical and, I will say again, it undermines New Zealand’s right to create and enforce our own laws, which makes a debacle of the debate around the Magna Carta today, brought to the House by the leader of ACT. The leader of ACT will not support a member’s bill debating this very point, in the House, hopefully, in the not too distant future.

Labour has spoken of the benefits of this trade agreement. Labour and this Government have chosen to ignore the reality that the majority of the submitters to the select committee spoke out with passion and, actually, sound argument, which has been conveniently ignored today. New Zealand First believes that this free-trade agreement did not achieve what was promised. What has been negotiated on our dairy farmers’ behalf, for example, achieves literally nothing. The inclusion of the investor-State dispute settlement provision—a provision that legal and trade experts, not only from New Zealand but from around the world, have said is inconsistent, arbitrary, and lacking in transparency. New Zealand First cannot support an agreement that has achieved so little today. New Zealand First acknowledges that the urgency for good trade agreements is paramount, but we say that this is not one, and these amendments are unnecessary.

I would like to acknowledge the good words that have been said by members of this House in regard to how the Foreign Affairs, Defence and Trade Committee worked on this free-trade agreement. I especially acknowledge the good chair of the committee, Mark Mitchell, who did a great job as chair, so I am acknowledging his ability to chair that committee so well. I also acknowledge the Labour members on the committee, who have made their points well-known during this debate and also through the select committee stage, but at the same time they have recognised the importance of free trade to New Zealand—especially Mr Goff over there, who spoke earlier, who was instrumental in the Chinese agreement. He understands that sometimes you just have to look and make the best agreement you can. You cannot always have everything that you would want, which is contrary to what New Zealand First and Green Party members have said. I just want the members of the public who are listening to this debate to remember that.

On this side of the House you have a National Government that is intent on building our trading base, that is intent on giving New Zealanders the opportunity to prosper and succeed in the world, and that is intent on giving our exporters the tools to go out there and show their wares on the world stage. It is an intent that is actually supported by the Labour Party—good on those members—but it is not an intent that is supported by the other forms of the Opposition, New Zealand First and the Green Party. Whether to have those parties, together with the Labour Party, is the choice that New Zealanders have to make. It is not a choice between National and Labour; it is a choice between National and Labour, the Greens, and New Zealand First. Under that choice of Labour, the Greens, and New Zealand First, New Zealand would not be a free-trading country. New Zealand would not be a free-trading country. There would—

💬 Darroch Ball: Oh, rubbish!

“Oh, rubbish!”—OK, well, your members have voted against this bill—[Interruption] It would be interesting to see whether that member would actually have some rational reason between—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I think we have had a double offence, so you would probably let both of them go. Dr Graham, please do not interject when you are wandering around. Mr Bennett, do not refer to Dr Graham as me. Thank you.

Nobody would refer to Dr Graham as you, Mr Assistant Speaker.

The New Zealand First member asked what was good in this agreement for Northland. What is good in this for Northland? Well, what is Northland but a productive part of our country? Northland produces the goods and services that are shown around the world. It produces the forestry products that we export. It produces the dairy products that we export. It produces the meat products that we export. It produces the food products that we export through all our great ports in New Zealand. The Northland economy has the most to benefit from this free-trade agreement.

💬 Dr Shane Reti: Auckland’s garden.

It is Auckland’s garden but it is also the Garden of Eden for South Korea now, and that is the fact. Without the free-trade agreement, Northland does not prosper.

It is very, very sad that the new member for Northland could not actually be in this House and deliver a speech in regard to that. It is very sad that his associates—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member knows that he does not refer to the absence of a member. He will withdraw.

I withdraw, but the New Zealand First Party is not supporting this bill, and it said—

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will resume his seat. The member knows that he must unconditionally withdraw. The member cannot say: “I withdraw, but”.

💬 Hon Member: That’s an interesting turn of phrase.

Yes. I withdraw.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Thank you.

The New Zealand First Party does not agree with this bill, and it does not see any advantage in this for Northland. Well, there is advantage for Northland. If you are an exporter coming from Northland, you want those tariffs to be removed. Those tariffs that are there are holding back the export potential of that region and, therefore, the growth of that region. That is what this bill is about. It is providing growth and opportunity for the regions of New Zealand—those exporting bases that are important for the growth of our country going forward. I commend all parties of this House that have supported this bill for the ability in the way that they have done that.

All free-trade agreements involve some negotiation. There is no set-piece free-trade agreement that will happen overnight. The New Zealand First members have said that this is a thing that will take a period of time to come to fruition. Well, that is the case. That is the normal nature of free-trade agreements. The question for New Zealand is whether we stay out of free-trade agreements, hoping that we get it all in one hit—which would never occur—or whether we actually go into those free-trade agreements and build that base for our economy going forward. New Zealand needs to enter these agreements.

For example, when we look at the South Korean agreement, the Australian Government had already entered into that some years ago. New Zealand was behind the eight ball. Our competitive advantage was being eroded by our inability to actually compete in that market through not having a free-trade agreement. This free-trade agreement gives us that ability. It is somewhat a number of years later than the Australian one, but it still gets us into that zone and gives us that ability to deliver for our exporters.

If we took the Opposition point of view, New Zealand would not enter these agreements. New Zealand would put up a fortress mentality and believe that it could put in a number of trade barriers, tariffs, and suchlike to stop New Zealanders being realistic in their ability to trade.

💬 Darroch Ball: Rubbish.

The member over there says “Rubbish.”, but that is the party policy of his party. His party is against free trade. It has always been against free trade. It always will be against free trade. That is the case of his party.

💬 Darroch Ball: That’s rubbish.

If it is not rubbish, vote for the bill. Vote for the free-trade agreement. Vote for this agreement that is in front of you today. Why do you not vote for it? Because those members are against free trade—that is why.

New Zealanders know that they need free trade. Look at some of the aspects of this bill. Look at some of those products that are going to be advantaged by this bill. Look at kiwifruit. Kiwifruit has a 45 percent tariff. That is a large tariff, and that will be phased out over 5 years. That is good for the New Zealand kiwifruit industry. That puts us on a level playing field with Chile—one of our biggest competitors in that industry, in that region, in that market—because it already has a free-trade agreement.

If you look at meat products, New Zealand exports about $186 million worth of meat products to Korea each year and we pay about $70 million in duties. That is a 40 percent tariff, which will be phased out within 15 years. A 40 percent tariff phased out in 15 years—that is good for the people of Northland and that is good for the exporters of New Zealand. In forestry, $503 million worth of forestry products is going into Korea. Over 99 percent of those exports will be duty-free within 10 years. That is good news for the people of Northland. That is good news for the people of New Zealand.

💬 Fletcher Tabuteau: Talk about ISDS.

I challenge that party over there, which is anti - free trade and now has the ability to represent the people of Northland, to stand up for the people of Northland. Give them something. Do not take things away from them. Give something to the people of Northland. Give them the opportunity to go out there and to deliver their economic future. Do not take it away because of some pure ideology that their leader may have, which those members will follow like clones over in that party.

Then the Green Party will never agree to free trade. The Green Party will find every excuse in the book to avoid having free trade. It does not matter whether it is the best free-trade agreement that could ever be written. Even if Kennedy Graham had written the agreement he would not vote for it, because those members would not. The Green Party cannot philosophically agree with free trade. So that bloc of the New Zealand Opposition is against free trade, and that is the thing that New Zealanders need to take out of this debate.

The Labour members know it is good. They know they are going to vote for it. They know it is the right thing to do. The New Zealand First Party is against it. The Green Party is against it. The National Government is for it and has delivered this for New Zealanders.

This is a good bill. It is good for the people of Northland, and it is a shame that the representatives from Northland will not vote for it, but that is something that is those members’ prerogative and shows that they do not actually care for the people of Northland. And who did not expect that to happen in this House, because in the end they do not care. They want to go back to the 1950s, to some little space that they can control, and that is not good for New Zealanders. We need free trade and this delivers it. Thank you.

I rise to speak on the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. This bill amends New Zealand’s law to ensure implementation of the free-trade agreement that has been negotiated between New Zealand and the Republic of Korea. I guess it does two things, which I have not heard many of the speakers refer to. It enacts the preferential traffic rates as per the free-trade agreement and it establishes transitional safeguard measures to be applied on imports. So it is very specific. It is not actually voting on the agreement itself. Parliament, unfortunately, does not have the opportunity to vote on that. We had only limited ability to scrutinise the agreement once it had already been negotiated, as is the case with most of our trade agreements. So the Green Party has to use this particular bill to raise concerns that are more general about this particular free-trade agreement.

I have to respond to the previous speaker, David Bennett, who accused the Green Party of being completely against free trade and saying we would not vote for a trade agreement even if my colleague Dr Kennedy Graham had authored the agreement himself. I have to say there is a lot of heavy rhetoric coming from the Government benches about this agreement and about free trade in general, and a lot of rhetoric, as well, about the position of the Green Party. As is often the case, our actual position is far more nuanced and the benefits and disbenefits of trade agreements are far more complicated than the Government members would ever admit or, perhaps, understand. The Green Party is absolutely for trade. We are a trading nation and, if anything, we would like to increase the number of exports and the value of our exports in the world. Unfortunately, the current Government’s policy is not supporting growth in exports. Although it had very ambitious targets to grow exports to something like 40 percent of GDP, they have actually declined since it came into power and it has revised its targets downwards so that it can be closer to meeting them. But we do have real concerns with many of the free-trade agreements that have been negotiated by this Government and previous Governments, including this one.

Firstly, I will just say that we are disappointed that we do not have the opportunity to debate these and scrutinise these properly in Parliament, because it is, I think, a really important role for parliamentarians to have some say over these sorts of agreements. Our biggest concern, of course, with this particular agreement—although I acknowledge that there could potentially be benefits for certain exporters here in New Zealand and we welcome those benefits—is that the text also includes investor-State dispute mechanisms. The problem with those processes is that they actually start to give more weight to the interests of foreign investors than to the people of New Zealand and we have real concerns about that—about the impact on sovereignty and about the impact for us to democratically design laws that will protect our environment, safeguard public health, and enable us to control the out-of-control housing market in Auckland.

The reality is that those are not necessary to reduce the barriers of trade. The investor-State dispute mechanisms have nothing to do with reducing barriers to trade. They have everything to do with protecting big multinational corporates from being regulated by other Governments and that is a huge problem for democracy. It is a huge problem for all of us in the world—the people of Korea, the people of the United States, the people of New Zealand who would like to see real action on environmental degradation, who would like to see real action on climate change, and who would like to protect public health from companies like tobacco companies who benefit, of course, and profit from selling misery to people. It should be the democratic right of people to put in place policies that protect public health and that protect the environment.

I will finish with a quote from the Nobel laureate in economics Paul Krugman, who is pretty lukewarm on many of the trade deals that are being negotiated at the moment, including the Trans-Pacific Partnership agreement. He says that almost everyone exaggerates the importance of trade policy. Although comparative advantage was correct and very important at the beginning, the truth is once markets are fairly open we get very, very small gains from opening them further. It is relatively so.

💬 David Shearer: Where’s the evidence?

The evidence is that there are not usually the benefits that are used to sell these agreements in the first place. We can just look across the Ditch to Australia where a review of bilateral and multilateral trade agreements found that overall the cost to the Australian economy slightly outweighed the benefits. So the benefits of these agreements are being exaggerated. There are huge threats to our ability to regulate in the future and it is for that reason the Green Party will not be supporting this bill at first reading.

Tēnā koe, Mr Assistant Speaker. Thank you for the opportunity to take a call on this particular bill, the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill, the free-trade agreement between New Zealand and the Republic of Korea, otherwise known as South Korea. Our country has a proud history of trade. Many in this House have already touched on it and I think about my ancestors from the far north who, as early as the 1820s and 1830s, were already taking goods offshore and selling them to markets in Australia and also as far abroad as Europe. It is a reality of the global economy and it is a 21st century reality now that in order for our country to remain competitive in global stakes, trade agreements are a necessary part of that. Can I congratulate members on what sounds like a pretty robust and strong process that went through the select committee process—many across the House have congratulated each other and also the officials on the information, the reports, and documents provided to the select committee and to the members across all parts of the House on this particular bill.

We in the Labour Party support this amendment bill at the first stage, at the first reading, and my colleagues on this side of the House who have spoken already—and one is yet to speak—clearly have a heck of a lot more understanding about these types of agreements. I want to support and acknowledge their expertise in this particular field. Labour is about free trade. I have already mentioned that it is a global reality of the 21st century and it is important that we are across these particular agreements, whether they be made with South Korea or with any other country. I believe that in order for these types of trade agreements to be fair, it is important that public dialogue is considered. We have heard mention today about the advice given by officials.

I want to pick up on a point made by my colleague the Hon Phil Goff about the need for appropriate dissemination of information regarding this free-trade agreement. I mention the word “appropriate” because we know, and it has already been mentioned, that it is important you do not put all of your cards on the table. But what is important is that the New Zealand public are fully engaged and that the New Zealand public are well aware of these types of agreements. Mr Goff mentioned too the marches that have happened across the country, marching against the Trans-Pacific Partnership. Some of the scaremongering that goes on can quite easily be allayed by appropriate discourse between this House and of course the New Zealand public.

The value of total trade imports into South Korea is in the vicinity of approximately $490 billion. We support growing our markets worldwide. Although New Zealand is slow in getting our engagement with South Korea, we already note that we follow in the footsteps of Australia—and it is not lightly that I mention that; nobody in this country likes following in the footsteps of an Australian. It is important that we recognise that we are actually quite late to the table. It is important when we sit down and work out these trade agreements that we can maximise the benefit for us and also protect our markets. I just want to point out one of the particular exports from this country that will do well, and I make mention of Zespri and the kiwifruit market. I say that because I currently sit on a trust board, and we have kiwifruit orchards. We are quite excited about the growth of our product and the marketing of it offshore. We can guarantee them that the kiwifruit growing in our orchard is of the highest quality.

But there are some concerns and they have been mentioned. As a Māori, whenever the word “sovereignty” is used everyone gets nervous and the country holds its breath. It is important to note that, and I go back to my point around the dissemination of information out amongst the public and the engagement of the public on these particular matters, so that the fears around sovereignty that are raised by this can be allayed. Also, there is the commitment to prevent foreign investments in property in this country. We are sad that a full commitment has not been made. Australia has done it, to look after themselves. Why have we not done it to look after ourselves and our property here in New Zealand? Kia ora.

As the House continues to debate this bill, which will help to implement many of the aspects of this free-trade agreement, I would just like to acknowledge the ladies and gentlemen in the gallery who were part of the team leading the negotiations on this free-trade agreement. Martin, with his able assistant—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

Mr Assistant Speaker, it is worthwhile acknowledging the hard work—

The ASSISTANT SPEAKER (Hon Trevor Mallard): The officials, rather than their presence, because that is inviting problems.

OK, the officials. I am trying to do something good. [Interruption] You would have made a good hall monitor, Mr Assistant Speaker. I will start again. I wish to acknowledge the excellent work of the officials who have helped to ensure that this free-trade agreement has been through the many stages of negotiations that have led to us now, in this House, debating a bill that will lead to the removal of many of the tariffs associated with goods and services to do with trade with Korea. Minister Tim Groser has also been a passionate advocate for free trade throughout his whole career, and now it must be one of the highlights of his career to be able to stand as a Minister in this Government, announcing the removal of tariffs and putting free-trade agreements through this Parliament. He is done an excellent job too, and it is worthwhile acknowledging that.

Korea is our sixth-largest export destination. There is about $4 billion worth of two-way trade between our countries. Free-trade agreements like the free-trade agreement between Korea and New Zealand lead to better trade conditions for New Zealanders. They lead to better trade conditions for companies, particularly those that are exporting to countries that we have free-trade agreements with. They are able to lift the number of products they are exporting, and that is a good thing for this country. We have heard some debate so far in this House from different parties. We had quite a bit of debate in the select committee when the committee considered the free-trade agreement. I have to say it is good to have the Labour Party and the National Party agreeing on something for once in this House. Quite often we are at loggerheads on issues. But I have to say that sitting on a select committee with the likes of Phil Goff and David Shearer who have a huge amount of understanding, knowledge, and wisdom when it comes to trade matters—as a younger member of Parliament it is always good to learn from older gentlemen and the experienced ones on the committee.

I think it is worth acknowledging that this trade agreement follows on from a number of trade agreements that have been hugely beneficial for New Zealand—most notably the China free-trade agreement that Phil Goff was very much involved with. When we have seen the exports under that agreement going from about $2 billion in 2008 to about $11 billion now, we can see the huge growth potential that is there for New Zealand and for the people who wish to export. The reduction in tariffs that is covered under this bill predominantly is around the New Zealand side, but we must understand of course that there is about $229 million worth of tariffs that New Zealanders are paying when they are exporting to Korea. The reduction in tariffs is absolutely a good thing for New Zealand.

I just want to address a couple of things that we have heard so far in this House. Firstly, Julie Anne Genter said it is unfortunate that New Zealanders have not been able to look at this properly or that Parliament has not been able to look at this properly. I have to say that this agreement is going through exactly the same process that every trade agreement goes through. It goes to the select committee for consideration. Submissions were called for from the public. The select committee, led by Mark Mitchell, conducted thorough hearings on those submissions. It actually helped to form in a significant way our understanding of trade agreements and the Korean free-trade agreement. We were ably assisted by officials whom I am not allowed to name, but they also provided good input into this process. It is also worth remembering that since 2008 the ministry has been conducting consultation with those who are interested in trade agreements like this. It is not as if it was secret that there were negotiations under way. The fact that we have been negotiating as a country with Korea has been very open. So let us just knock on the head this rubbish that it is all done in secrecy, no one knows about it, and that we have not had thorough consideration. The fact we are debating this bill right now is part of that thorough consideration. New Zealanders do get that opportunity.

I also want to talk about the investor-State dispute settlement processes because they were a part of the submissions that dominated much of the discussion at the select committee. It is interesting to note that many people have fears around the investor-State dispute settlement provisions. I think those fears are unfounded, and they have been hyped up a lot by those who are seeking to try to stop New Zealand being involved in the Trans-Pacific Partnership agreement. But it is worthwhile noting a few facts and figures around that. It is not a new thing for investor-State dispute settlement provisions to be included in our free-trade agreements. We have the China free-trade agreement that has this provision in place. The free-trade agreement between New Zealand and the ASEAN nations and the New Zealand and Malaysia free-trade agreement are all trade agreements where investor-State dispute settlement processes are already in place. Have we ever been challenged as a Government under those provisions? The answer is no. We have a good track record under these provisions.

So the next question one might ask themselves is: what is the state of investor-State dispute settlement processes around the world? How many have been challenged? How many nations have been challenged under these provisions? Well, the overall number of concluded cases around the world, according to the United Nations Conference on Trade and Development, has reached 356. That sounds like a lot of challenges if you just look at that number—356. But then, how many actual agreements are in existence that have these provisions in them? The answer to that is 3,268, according to the United Nations Conference on Trade and Development. Around about 10 percent of trade agreements that have these provisions have led to challenges to the Governments where investors have challenged those Governments. It is, actually, a relatively small number considering the many, many decades that these types of provisions have been in place. New Zealand has not been challenged at all under that. In fact, New Zealand has used provisions like this to try to protect our own investments, because it is not just a one-way street. It is not a case of these big, foreign corporations that are out to get New Zealand coming to this country and challenging us. In fact, it actually ensures that our investors are protected as well.

The most important point, I think, that the whole Parliament needs to realise around these provisions is that if we did not include investor-State dispute settlement provisions in our trade agreements, we would not have these trade agreements because they are demanded by many nations around the world. If we want to be a global player and if we want to help to reduce the barriers to trade for New Zealand companies wishing to export overseas, we have to give positive consideration to these provisions. When we hear the New Zealand First Party and when we hear the Green Party say they are opposed to investor-State dispute settlement provisions and they will not sign up to any free-trade agreement that has investor-State dispute settlement provisions in it, they are effectively saying they are opposed to free trade. And when they say they are opposed to free trade, they are saying that they are opposed to the reduction in tariffs for New Zealand companies. When they say they are opposed to the reduction in tariffs for New Zealand companies, they are saying they are opposed to greater growth. They are also saying they are opposed to more jobs for New Zealanders and they are saying they are opposed to higher wages for New Zealanders.

At the end of the day, that is what it comes down to. At the end of the day, we do not enter into these trade agreements for any other reason than because we want to grow our exports, which leads to more jobs, which leads to greater growth and higher wages for our citizens. So let us have the Green Party and the New Zealand First Party being honest with the public. Do not go up there and try to whip up anti-sentiment towards the investor-State dispute settlement provisions without actually telling them what you really mean. What they really mean is that they are opposed to our exporters having a better opportunity to export to these countries. They should be out there talking to the dairy industry, talking to the kiwifruit industry, talking to the meat industry, talking to the forestry industry, and talking to those industries about how they are opposed to the reduction in tariffs for those industries. The half a billion dollars’ worth of exports in the forestry sector would be impacted. The $220 million worth of dairy products exported to Korea would be impacted. These are the real situations that free-trade agreements like this deal with. Our negotiators, our Minister, and our Government, supported by the other side of the House, have come up with a good free-trade agreement here. It is worthwhile the House supporting it.

Can I acknowledge the officials who are in the House today to witness the first reading of this free-trade agreement with Korea. I think 5 long years of pretty tough negotiations—and I will go into some of the details of why they were so tough in a minute—have resulted in what I would consider and what we consider a pretty good agreement. For that reason Labour is supporting this bill, which aims to reduce the remaining few tariffs that could be imposed on Korea to enable us to get this free-trade agreement into effect and to start reaping the benefits from it. This party, the Labour Party, is a party that supports free-trade agreements. We implemented more free-trade agreements in our term in office than the other side has, certainly, but we were supported by the other side, and I think that was the point of the last speaker, Jami-Lee Ross.

Thirty-one percent of our GDP is dependent on exports. Unfortunately, that figure is dropping. It was 31 percent; actually, it is now down to 29 percent, despite the Government’s target of increasing it to 40 percent. One of the most important issues and one of the factors in keeping that figure up was our free-trade agreement with China. I ask you to think of what the situation would have been like going into 2008 with the financial crisis in front of us if we did not have that free-trade agreement with China. We were exporting $2.2 billion to China in 2008. By 2014 it had gone up to $10 billion—$10 billion—and China had become our largest trading partner. You can aim whatever criticism you like at that free-trade agreement, but without it we would be lacking the growth and the jobs that sustained us through that period of the financial crisis, and if we had not had that free-trade agreement we would have been in a much worse state than we are at the moment.

So is a bit a rich for the Greens and New Zealand First, who both opposed that free-trade agreement, to stand up here and talk about the woes and ills of free-trade agreements. It is a bit rich. And to oppose this free-trade agreement when there are so many benefits coming to New Zealand is a bit rich as well, I think. It makes me ask whether, if their vote was the deciding vote of whether this agreement came into being or not, they would actually do it, or whether they are just, in a sense, luxuriating in the fact that they are in Opposition and that they are an Opposition party where their vote does not actually matter because they have got the Labour Party here to support the agreement. My feeling is that if they did not they would be doing New Zealanders out of jobs and New Zealand out of growth that it could have otherwise had.

The free-trade agreement with Korea, as I said, is the result of 5 years of negotiations that came about, and they were tough negotiations, as we were told by the officials, because, basically, New Zealand is really pretty open. We will be taking off and going without $4.2 million of tariffs that we might have otherwise collected from Korea, but we will get $220 million worth of tariffs removed from our exports. So we will immediately start benefiting from having those gone. It will put us on a level playing field with the EU, with Australia, with the US, with Canada, and with Chile. All of these countries have negotiated free-trade agreements with South Korea before us. So it is not just about the tariffs that happen right now, but it means that we will be able to compete with those countries into the future. That is the important point. Korea, which is currently our sixth-largest trading partner, has the potential to grow much, much more.

The example of Chile is an important one. Chile, which entered into a free-trade agreement with South Korea much earlier, now has zero tariffs on its kiwifruit. We currently have a tariff of around about 45 percent on our kiwifruit exports to Korea. We are now going to be able to compete much more effectively with countries like Chile, so the benefits are huge. I want to just go through it: 45 percent in kiwifruit, 40 percent in the meat industry, Fonterra, fisheries, and forestry. Yet we heard from many of the submitters who came before the select committee that somehow—and I quote two or three of them—this free-trade agreement would benefit the few at the expense of the many. Well, look, those industries, which are our core industries in New Zealand, employ hundreds of thousands of people. No, this is an agreement that will benefit the many at the expense of the few. This is about us growing jobs, growing our economy, and benefiting all New Zealanders.

This bill that we are looking at today, as I said, means that we will reduce our tariffs that apply to Korea at the moment. It will be a cost to us of about $4.2 million, but at the benefit of more than $200 million in reduced tariffs to our exports overseas.

Many of the people who came before us—as has been spoken about before—had a number of issues around the entering of free-trade agreements. I will mention one thing that I think the Government has been very remiss on, and that is that it has not been an advocate of what really constitutes a free-trade agreement, and not only in Korea, particularly, but more broadly with the issue of the Trans-Pacific Partnership agreement. When we were negotiating with China—if you go back and take a look at the records, and Phil Goff can, I am sure, support this—the Labour Government went to extraordinary lengths to make sure that we had a wide cross-section of society on board.

When we were in the select committee the other day, we were asking the Ministry of Foreign Affairs and Trade how much outreach had actually been going on other than to business groups. Over the course of a year there would have been maybe five or six civil society groups that had actually been talked to about the Trans-Pacific Partnership and free-trade agreements. That means that there is, out there, I believe, a wrong impression of the value of free-trade agreements versus the costs or risks to New Zealand. It is time that the Government woke up to this fact and actually went out there, that it got down and actually talked with the people, rather than being arrogant and high-handed, as unfortunately it has been, and that it started talking about free-trade agreements.

The investor-State dispute settlement procedures have been talked about, and they were talked about, mainly, with regard to the Trans-Pacific Partnership. We have to look very carefully at these. They are not perfect by any means, and I think some of the submitters made some very good submissions on this. But on the other hand, they are not kangaroo courts, as was often referred to. In the case of the Korea free-trade agreement, it was Korea that insisted that we go into an investor-State dispute settlement procedure and include that in the free-trade agreement. We insisted that we include it as part of the Chinese free-trade agreement, because it gave us a certainty that we could go at least somewhere when we did not necessarily have confidence in that particular country’s judicial procedures.

If we take a look at what has come about through the investor-State dispute settlements, there have been 356 concluded cases—37 percent of those have been in favour of the State, 25 percent have been in favour of the investor, and 28 percent have been settled. In 44 claims against the OECD countries, the State won 86 percent of the time. So New Zealand is not about to be taken to the cleaners here. This is the second obvious point: we have never been taken to an investor-State dispute settlement tribunal before. There has never been a case that was seen to be able to stack up. We have never been taken through the World Health Organization procedures, either. So we have got to get this into perspective a little bit. We are not saying that what we are seeing here is perfect, but what we do need to know is that there is a settlement procedure out there that is not in any way as broken as many people would like to profess.

I will mention one thing that I believe that the Government has not been able to answer properly—and David Parker spoke of it before—and that is the area of residential houses and overseas investment into our residential market. Like all New Zealanders, I do not want to see our residences—our homes, our houses—treated like pork bellies on the New York Stock Exchange. I do not believe, and according to Professor Kāwharu, who gave evidence in front of us—

I am sorry to interrupt the honourable member. His time has expired.

I am delighted to take a call in support of the free-trade agreement between New Zealand and the Republic of Korea. Before I speak about the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill itself, I would like to talk about the World Trade Organization (WTO) and why it is important for us to have free-trade agreements. We all understand that the World Trade Organization played a very important role in developing the world economy. It now has 153 members. It is important for New Zealand to be involved in the World Trade Organization because we are a small trading country. We need a multilateral organisation to support us in negotiations with larger trading partners simply because, under the World Trade Organization rules, beneficial terms agreed bilaterally with one trading partner will also apply to the rest of the WTO members. Also, there is a very good dispute settlement mechanism in the World Trade Organization, which is helpful to small trading countries like New Zealand.

However, we are now facing many challenges because the World Trade Organization has not been very effective in the past decade or so. For many years the World Trade Organization and its predecessor, GATT, or the General Agreement on Tariffs and Trade—played a very important role from 1948 to 1995, when the World Trade Organization officially commenced. Since 2001, when the Doha development round was launched, we have not been able to make major progress simply because there are too many disagreements or different views or interests among the members. Look at this: from 1948 to 1994 GATT—the predecessor of the WTO—received 124 notifications of trade agreements, while since 1995 over 300 trade agreements have been enacted. That highlights the importance of regional trade agreements or bilateral trade agreements in the wake of the ineffectiveness of the World Trade Organization. So that is why we need to focus on free-trade agreements.

Another example, to highlight the importance of free-trade agreements, is our free-trade agreement with China. Many members have mentioned the free-trade agreement with China. New Zealand has a few firsts with China. It was the first developed country to recognise China’s market economy status. It was the first developed, or OECD, country to conclude negotiations with China regarding China’s entry into the World Trade Organization. New Zealand was the first to start free-trade agreement negotiations with China, and was also the first developed country to conclude free-trade agreement negotiations with China. They were concluded in 2008. Since then our exports to China have risen from $2.3 billion in 2008 to over $10 billion in 2014. Our imports also increased, from $5.8 billion to $7.7 billion in 2012. Our exports increased more than our imports so the free-trade agreement with China certainly has been in our favour. It is important for us to expand our market overseas, particularly in north-east Asia. Korea is also a part of north-east Asia—I will talk about this later. Because our trade with China has grown so fast and so well, we have now set a new target for bilateral trade between New Zealand and China. In 2010 Prime Minister John Key had an agreement with Chinese Premier Wen Jiabao that was to increase our trade from $10 billion to $20 billion from 2010 to 2015. Then last year, when the Prime Minister was talking to Chinese President Xi Jinping in Beijing, the two sides agreed to increase our trade from $20 billion to $30 billion by 2020. So that is another target.

North-east Asia has become particularly important. China is part of north-east Asia; Korea is part of north-east Asia. In the 1970s north-east Asia accounted for just 10 percent of our exports, but now north-east Asia accounts for over 40 percent of our exports. So China, Japan, Korea—then you have Hong Kong, Taiwan—these economies are particularly important. That is why we do need to pay attention to this region, and that is why this free-trade agreement with South Korea is particularly important. We all know that South Korea is our sixth-largest trading partner—actually, according to some people, earlier this year South Korea actually became the fifth-largest trading partner for New Zealand. South Korea is our natural trading partner, like many other countries, because we export mainly our agricultural products, while South Korea exports mainly manufactured products. So we have this mutual benefit to expand our trade, and, of course, when we trade we also need to recognise the importance of other dimensions of our relationships. For example, when we do trade it also means that we have more contact with other countries and, therefore, we have better understanding, which will help our tourism, our education industry—all these things.

To come back to the New Zealand - Korea Free Trade Agreement, one particular reason why we need to have a free-trade agreement with South Korea is that South Korea has already had free-trade agreements with some major trading partners, which means that our products in South Korea are basically discriminated against. For example, South Korea has negotiated free-trade agreements with the United States, Chile, the European Union, Australia, and Canada. So these countries have advantages in the Korean market and that means more challenges to New Zealand. This free-trade agreement will make New Zealand products more competitive and will secure the long-term future of New Zealand exports in the Korean market. We received many submissions, of course, at the hearing stage. I could quote a few. For example, here is the Korea New Zealand Business Council. It said: “the agreement overall is a huge advance for New Zealand in the Korean market and is to be absolutely welcomed. It will in due course eliminate the disadvantages our exporters have been suffering from through Korea’s previously agreed FTAs. It will assist, over time, most of our exporters to increase their exports to that country.” I commend this bill to the House. Thank you.

on behalf of the Minister of Trade: I move, That the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill be reported to the House by 3 November 2015.

Motion agreed to.