International Treaty Examination of the Regional Comprehensive Economic Partnership Agreement

I present a legislative statement on the Regional Comprehensive Economic Partnership (RCEP) Legislation Bill.

💬 DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Regional Comprehensive Economic Partnership (RCEP) Legislation 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 four months and one day after it has its first reading.

It’s a pleasure to speak in support of the RCEP amendment bill. This first reading is also, in effect, the debate on the report from the Foreign Affairs, Defence and Trade Committee, on RCEP. So allow me to thank the committee for their examination of the treaty which this bill implements. The committee met earlier this year to consider the treaty, including calling for and hearing from a range of public submissions. This is an important role that the committee performs and I’d like to thank the members of the committee for their work, as well as the members of the public who submitted on the treaty. I will address some of the points that they raised in the report, throughout my speech.

Multilateralism has taken a bit of a hammering in recent years. The rise of nationalism, right-wing populism, and great power rivalries have all corroded the will of nations to come together in multilateral institutions, and together tackle the great challenges of our time. But the COVID pandemic has brought home to us the importance of continuing to invest in cooperative multilateral approaches in dealing with the great international issues of the day. It’s also shown us how we all suffer when nations reject this approach, and we’ve seen that in disturbing instances of what have been dubbed in recent times as “vaccine nationalism”.

More broadly, the very uncertain strategic outlook and the spilling over of political disputes into the trade arena have reinforced the need for nations to have diverse and robust trade relationships and to look more closely at the resilience of supply chains. It also means, more than ever, that multilateralism needs champions—countries who are willing to be leaders and to strongly and enthusiastically uphold the institutions, the norms, and the rules that make up the international order that all countries, but particularly small states like New Zealand, rely on to get things done, and to avoid situations where a destructive might-is-right ethos undermines what we’re trying to achieve generally, but particularly in times of crisis, like those we’ve seen over the last year during the COVID pandemic.

At one point during the pandemic, nearly 80 World Trade Organization (WTO) members imposed more than a hundred new restrictions and trade barriers. This is on top of the protectionist policies we’ve seen implemented in various major economies in recent years. The direction of travel is worrying, and it’s why, as a Government, we have prioritised both a response to the initial crisis through, for example, initiatives to increase the supply of personal protective equipment (PPE) and vaccines, and maintaining supply chains for our exports, but also through redoubling our efforts to build the trade architecture that will assist ours and others’ economic recovery.

So that is why agreements like RCEP, the Regional Comprehensive Economic Partnership, represent more than the sum of their parts, more than the reduction and removal of tariffs, more than new investment flows, and more than just new markets for our exporters. The 15 countries and 31 negotiating rounds represent a commitment to cooperation and trade. They show that Governments can come together, make compromises, and strike deals that will lift each other up, even in times when it feels like the mood for this kind of cooperation is at a low ebb.

It’s no coincidence that, of all New Zealand’s free-trade agreements to date, they’re all in the Asia-Pacific region. We’ve invested in the region with successive agreements—first, the Agreement Between New Zealand and Singapore on a Closer Economic Partnership; the Trans-Pacific Strategic Economic Partnership Agreement (P4 agreement); the Hong Kong partnership; the China free-trading agreement (FTA); agreements with Thailand, Malaysia, Korea, and, more recently, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). RCEP was, in its genesis, an Association of South-east Asian Nations (ASEAN) initiative. And, of course, South-east Asia is a region that New Zealand has a long and important trade relationship with. Indeed, ASEAN has risen to become New Zealand’s fourth-largest trading bloc.

But this deal also includes a number of countries with which ASEAN has free-trade agreements with: Australia, China, Japan, South Korea, and, of course, New Zealand. The 15 countries that RCEP covers are home to almost a third of the world’s population, including seven of our top trading partners, taking over half New Zealand’s total exports and providing more than half our direct foreign investment. In the year ending December 2019, New Zealand exported more than $36 billion worth of goods to RCEP countries and nearly $12 billion of services.

India was initially part of the negotiations for RCEP, and their withdrawal in late 2019 was a disappointment. However, the RCEP countries have put in place a fast-track accession process for India should it wish to rejoin in the future. I want to say today, on behalf of the Government, that we value our relationship with India and we will continue with pursuing our aspirations to broaden and deepen the political, cultural, and trade links that we enjoy with India.

Given New Zealand’s existing free-trade agreements with RCEP nations, tariff reductions are not where the action is at. It’s not where we will see most of the benefit from this agreement. Though, in saying that, exporters of sheep meat, beef, fish, milk, cheese, honey, and avocados to Indonesia, the fourth most populous country in the world, will see tariffs eliminated on their products above and beyond the current arrangements.

The areas of services and investment are where the big gains will be made, as well as the lifting of non-tariff barriers with China and the largest ASEAN countries, having made investment market access commitments to New Zealand for the very first time. On non-tariff barriers, RCEP creates an expectation that customs authorities will, for example, release perishable goods, such as seafood, within six hours of arrival, including the release of such goods outside normal business hours, which should reduce spoilage and save exporters money. That might seem like a very small practical benefit, but I’ll say this: for our seafood exporters, who are an important part of our export industries, that will be a very significant benefit.

From recent experience, speaking to exporters like our $155 million a year onion exporting industry, just the other day, I know how frustrating these non-tariff barriers can be and what a real impediment they are, getting goods to market. Another key benefit is the establishment of a single rule book covering all 15 markets within RCEP. This represents a significant reduction in cost and complexity for exporters, meaning they can spend more time selling their products and less time filling out paperwork.

Over time, the economic benefit to New Zealand of these changes will be considerable. Independent modelling predicts that once RCEP is fully in effect, New Zealand’s annual GDP will be between 0.3 percent and 0.6 percent larger as a result. That amounts to $1.5 billion to $3.2 billion in annual GDP.

These expected benefits show why trade has been a central part of the Government’s plan to recover from COVID-19. Our trade recovery strategy has three main pillars: re-tooling support for exporters, refreshing the international trade architecture, and re-energising and refocusing our key trade relationships. It’s not just about more and better trade links, but actually helping our exporters make the most of the opportunities in overseas markets. I’m proud to be part of a Government that in turbulent times is leading the way in ensuring that New Zealanders are responsible, proactive, and engaged global citizens. It’s also a Government, however, that does not pursue trade cooperation simply for its own sake. It is a means to an end, because done properly, we know that trade can lift the living standards of New Zealanders and secure the future prosperity of our nation.

The question is that the motion be agreed to and that the House note the report of the Foreign Affairs, Defence and Trade Committee.

Thank you, Mr Speaker. It’s great to be able to stand up this Thursday afternoon and outline National’s support for the Regional Comprehensive Economic Partnership (RCEP) Legislation Bill here at its first reading, and to reflect on both the content of the select committee report and this legislation but also the content, initially, of Minister Twyford’s observations.

One thought that struck me, listening to the Minister’s pretty fair assessment of the benefits that this bill and this legislation will have for the country, is his complete omission over the history of this and where it started back in 2012 under the guidance of Tim Groser. This is a trend that I think is very disappointing. For a number of decades, the Labour Party and the National Party, regardless of who was in Government, had very much a shoulder-to-shoulder approach to trade, because we both could see that regardless of our political perspectives, it actually is in New Zealand’s interest for trade deals to be negotiated, negotiated well, and to have the support of the country. In my view, there was a split from this tradition when we were seeking to negotiate the Trans-Pacific Partnership (TPP), and it split the party and indeed the Labour Party—indeed, the Hons David Shearer and Phil Goff split away because they were disappointed, in their own words, with the politicisation of the TPP process.

You see it here a little bit today with the complete omission of the fact that the genesis of the RCEP concept was heavily driven by the Hon Tim Groser, and they’re completely silent on the fact that, actually, most of the heavy lifting occurred under the previous National Government. They, quite rightly, have taken it forward. I think that’s a missed opportunity to remind the country about the importance of trade, the importance of actually having a degree of bipartisanship around the execution of trade strategy. So my door is open, but, of course, I don’t hold out much hope that this Minister will return us to the sensible bipartisan approach that existed when we were last in Government.

To the bill itself, a couple of observations. RCEP in its genesis was an attempt by particularly the ASEAN countries who were not part of the TPP negotiations to be able to engage with countries from the wider Pacific Rim who had fair-trade agreements, particularly with China—to be able to have them, China in particular, as part of the framework. It did have India in as well, and, actually, when you look at the opportunity that would have presented for New Zealand exporters, having India as part of the RCEP agreement would have been quite a substantial step forward and, in my view, would have elevated this legislation and this trade deal to the level of TPP.

Alas, that wasn’t the case. We were very disappointed on this side when India pulled out. We had seen Todd McClay, actually, pull some remarkable rabbits out of the hat when TPP looked like it would fall over with the United States pulling out, and had hoped that that same energy and effort and focus would have been present in our New Zealand Minister to try and keep India at the table. I have my own view that we were a little bit too passive in those negotiations, lacking in innovation, lacking in thinking of ways that we can keep them in the tent. That is disappointing for us, that that wasn’t the case.

The Minister stepped through the benefits—not huge, but, you know, a benefit between $1.5 and $3.5 billion by 2030 is not to be sneezed at. It really is around the ease of doing business that is implicit in the detail of this legislation, particularly in terms of the reduction of non-tariff barriers, particularly, of course, for some of the horticultural, seafood, and agriculture businesses that get greater tariff relief getting into Indonesia. But, essentially, it reinforces for our part of the world a collective commitment to multi-party, rules-based frameworks to enable trade in goods and services to continue unabated and to be amplified over time. That is only good for New Zealand—it is only good for New Zealand exporters, and it is only good for the New Zealand workers and wider community, and should be embraced and supported in that context.

A couple of chapters that were perhaps missing and caused us some concern when we reflected on it at a committee earlier—there wasn’t an environmental chapter. Sometimes, you know, on our side of politics, when we hear “environmental chapters”, we see that as potential challenges. Certainly I am keeping a very close eye on where the New Zealand - EU and New Zealand - UK negotiations end up in this space. But because we produce the most emissions-efficient animal protein in the world, we should embrace environmental chapters if they are negotiated and written in a way that amplifies our competitive strengths. So we shouldn’t have a view that any environmental chapter is bad. We should say that if it gives our exporters, who already are the best in the world in this space, the opportunity to amplify their competitive advantage, we should grab it. The fact that this was completely silent I think was a missed opportunity, and it’s a shame that we couldn’t, in this multi-party negotiation, get it there.

I’ve already touched on the loss of India. We need to ensure that we keep very, very close to that country, to that fine country, which—this House, and I know I can speak for all of us, watched the dreadful scenes in that remarkable country at the moment. Our heart goes out to them. We hope that they can get through the tragedy of COVID. They are remarkable people with great innovation and great energy, and they are going to be a big part of the Asian century that sits in front of us. It’s really important for this country and this House to strengthen our relationships, not only people-to-people but also business-to-business. It is the National Party’s fervent hope that we stay very connected with India, both at a Minister-to-Minister level but definitely officials and business-to-business, to get them into this agreement in time.

We are concerned about the increasing development of geographical indicators. It didn’t get progressed too significantly as a concept, but we are seeing this being built into negotiated trade agreements, and we’ve signalled that we are concerned that both the UK and the EU might build on what’s here in a way that actually provides impediment for our exporters as opposed to opportunity.

But, overall, we’ll support this. It is a step in the right direction. It connects us with our Asian trading partners that we already have deep trading relationships with—amplifies it; allows the ASEAN countries to feel connected with Australia, New Zealand, China, and others. That works for their evolving economies, and it works for us. Of course, there are a number of consequential amendments that we will need to make to the Tariff Act and the custom and duties Act. We will work through that. They are not particularly consequential. They are, in a sense, required to enable what has been negotiated.

But my final message is that trade is critical for all of us in this House, for the wider country, and it does deserve the best of us in terms of our negotiating strategy and our political perspectives and contribution. I do feel that opportunity and value is being left on the table with the fact that the experience that sits on this side of the House in terms of trade and commercial export arrangements—not only in my context but many other of my colleagues—is simply not being used in a way that benefits “New Zealand Inc.”. When we were the Government, we reached out to David Parker, we reached out to Phil Goff, we reached out to David Shearer, when they each had time in the trade spokesman role, to ensure that they were well-briefed, shoulder-to-shoulder with the Government, so we could present a “New Zealand Inc.” face. What I’m seeing back is too defensive, not engaging at the level that should be occurring, and, actually, I don’t think that works in New Zealand’s interests, and it certainly doesn’t work in our communities’ interests, who want the best of our thinking brought to negotiations. Thank you, Mr Speaker.

Fḁiåk se'ea, Mr Speaker, I stand as somebody in a party that also highly values trade, and it’s a great pleasure to speak on the Regional Comprehensive Economic Partnership (RCEP) Legislation Bill as a member of the Foreign Affairs, Defence and Trade Committee. As we have heard this afternoon, the bill is worth ultimately about $1.5 to $3.2 billion, or 0.3 to 0.6 percent of our GDP growth, and in a Government that has a wellbeing approach, we do recognise, of course, the GDP as one of the really important indicators amongst many indicators that make up the wellbeing of New Zealanders.

This bill really broadens and deepens the trade and investment links of New Zealand. As has been mentioned, it’s an omnibus bill which gives legislative effect to the RCEP treaty. Like my friend on the opposite side of the House, I won’t go into the technical elements, because, really, what I’d like to address today is the broadening of those trade links. The treaty covers 15 countries, seven of our top trading partners, and includes five countries that the Association of Southeast Asian Nations (ASEAN) has free-trade agreements with, including Australia. The Foreign Affairs, Defence and Trade Committee enjoyed a really rich discussion with Her Excellency Patricia Forsythe today, on matters of common interest around trade and regional security, a very valuable discussion. It also links us back again with China, our largest trading nation, and that relationship that has been so aptly described by our Minister of Foreign Affairs, the Hon Nanaia Mahuta, as a relationship between a dragon and a taniwha. But also Japan, South Korea, and ASEAN, of course, have a free-trade agreement with New Zealand. I think we’re all in agreement that ASEAN has become increasingly more robust over the years, and is, indeed, an increasingly important trading bloc.

The countries represented in the agreement make up one-third of the population globally—that’s 15 countries that take over half of our New Zealand total exports—and it’s taken nine years and 31 negotiating rounds to get to the agreement. So I commend the officials for the work that they have done. Look, I’ve had the privilege of working across 13 of those RCEP countries, except for Brunei and Laos, when I was the regional communication director for the British Council. So I was up in that region about every six weeks for a period of two years. In that role I saw the importance of the strategic regional alliances for a small, independent, highly developed country such as New Zealand. I think it’s fair to say, I had a bit of a window into how New Zealand was viewed by both those countries and also by the United Kingdom. The words that come to mind are things like “independent”. Certainly, that was shaped in our nuclear moment under David Lange. But, also, I recall sitting in a lunchtime business speech in Auckland, hearing the former Minister for Foreign Affairs, the Hon Murray McCully talk about our independence. So it has been through successive Governments, and I do think that should be acknowledged as a response to my friend Todd Muller, on the other side of the House. We’re also seen as very connected despite our isolation, progressive on many issues including climate and human rights, and respected for our rules-based approach.

I think that this treaty enables us to continue that global brand proposition. So it’s about respecting and maintaining relationships with our traditional trade relationships, while also enabling us to engage in a multilateral way to diversify our export base and to have more nuanced relationships within the many partnerships that we have as a trading nation. I think it futureproofs us from a trend of nationalism that the Hon Phil Twyford said saw 80 world trade organisations have more than 100 new restrictions or barriers in place recently. So the RCEP promotes economic integration, but it does also bring us into a rules-based book—a rule book—and it reduces complexity and therefore the compliance cost for New Zealand exporters. It injects us into supply chains and it ensures that we remain there.

As has been mentioned by the Minister, our exports remained remarkably resilient in COVID. The virus situation is not going to resolve for a long time, and I acknowledge Todd Muller for recognising that. It has been the exports and keeping our borders safe that have worked for us so far and that will continue to be critical for our recovery. So the RCEP is an important part of that. To those who are nervous about trade agreements, may I assure you that most of the obligations contained in the bill we’ve actually already met. There are no investor-State dispute mechanisms, and those can be problematic in terms of a chilling effect that they can have on domestic policy.

So for those who don’t know what investor-State dispute settlements are, they’re really mechanisms that enable foreign investors to resolve disputes with the Government of a country through independent arbitration, and although they are seen as neutral, they can have a chilling effect on trade. So this agreement doesn’t have that.

Nor does it have any commitment to extend the intellectual property provisions, and that’s increasingly important when we think about technological innovation, digital innovation, cultural intellectual property, which is really important, particularly for Māori business, and also bio-innovation. It also protects and upholds the Treaty of Waitangi provision, although, personally—and I’m speaking personally here—I’m keen to learn more from the Ministry of Foreign Affairs and Trade about how they’re strengthening processes around engagement with Māori on Treaty matters, and I understand that is happening especially in relation to biodiversity.

Just looking at where this trade agreement sits, it fits really nicely into our trade recovery strategy. We had $216 million of the 2020 Budget allocation, which was to support exporters and international businesses, and that was support from New Zealand Trade and Enterprise. We’ve given more help for exporters facing trade barriers and we’re trying to build investment capacity in New Zealand. Securing new trade investment opportunities really complements that recovery strategy.

So, in summary, I think that this agreement aligns with the priorities from the Speech from the Throne. It’s leveraging off our COVID-safe environment to position New Zealand as a safe and secure place to trade with—one that, hopefully, will also be safe to visit openly. It meets our trade policy limbs in terms of improving wellbeing for New Zealanders and it safeguards our tino rangatiratanga.

It does preserve the possibility for India to opt in when it can, and I know it was expressed with great enthusiasm from the submission from Federated Farmers to see India opt in. I echo the words of Todd Muller that that is something that this side of the House feels will really strengthen the trade agreement. But I also see that this is a way of securing trade as part of a rules-based order. It’s so important to have multilateral relationships, to honour the old relationships that we’ve had but also to forge new ones. We are moving into a time when the combined GDP of autocracies outstrip the GDP of democratic countries. That’s really interesting, because we can only influence values-based trade—or trade for a purpose, as it could be called—and we can only mitigate against the potential for the weaponising of trade if we are actually connected globally, if we have rules-based trading relationships, and if we are in supply chains ourselves so that we know how those supply chains operate.

The RCEP treaty helps us to achieve that. It keeps the door open for us to bring India into the picture. It keeps us at a very important table, and it also, of course, brings economic benefit to New Zealanders through the enhanced GDP that will result over time from us being part of this multilateral agreement. So I commend both the bill and also the treaty to the House. Thank you, Mr Speaker.

I look forward, as a member of the Foreign Affairs, Defence and Trade Committee, to considering the bill, that I think will get widespread support for its progress in the House today. As my colleague Todd Muller mentioned, the genesis of this agreement, from a New Zealand perspective, started in the time of the Hon Tim Groser and was carried on through the time of the Hon Todd McClay, and I have to make the comment that it is a shame that some of the bipartisan arrangements that were in place around this sort of arrangement for New Zealand do seem to have fallen to one side. I note too that this is the second trade agreement that the current Government has brought to the House, or its predecessor, the coalition Government. So to only have two trade agreements come through in four years—two trade agreements that were started by the previous Government and substantially taken down the track by the previous Government—and then for that bipartisan approach to fall aside, it is a bit of an indication that trade is not high on the agenda of the current Government, despite what they might say.

What people in New Zealand, I think, increasingly understand is that we enjoy a lifestyle here far in advance of what a domestic economy alone can provide for us. We’ve seen a little bit over the last 12 months, where the COVID-19 virus has affected so many workplaces and so many business opportunities, what it requires from a Government just to hold that domestic economy together, and that’s represented by the billions of dollars—billions of dollars, if not tens of billions of dollars—that will have been borrowed and notified to the New Zealand public in the Budget next Thursday. So to get ahead of that, to be a nation that isn’t burdened by debt, we do need to constantly look for more and better trading opportunities.

This agreement started out of our involvement with ASEAN. ASEAN is a group of Asian countries, and they have dialogue partners, of which New Zealand is one. That’s how we come to be at the table. The invitation certainly was there for India to be part of that. India is going to be one of the world’s great big economies in the years ahead. While we do extend our deepest sympathies to the people living in India who are dealing with the COVID-19 fallout at the moment, we should recognise that in a population of a billion people, there are many, many entrepreneurs who are growing businesses by the day, who are reaching out to the rest of the world, and who are going to have quite an effect on the international economy in the years to come. So leaving the door open, recognising that at the moment there are pressures for the Indian Government to deal with that don’t let them sign up to an agreement like this—leaving that door open for the future with no recriminations and, in fact, a very welcoming hand extended for them to consider their future joining of the organisation or the trade group I think is totally the right thing.

We’ve talked about the value that this might bring to the New Zealand economy, saying that the information we’ve got is about $186 billion added to the New Zealand economy over a period of time, or it’s been expressed as 0.6 of our GDP—0.6 of our GDP is not inconsiderable, but this is not the end game. Imagine if we were every year attaining that sort of growth inside our export economy, if our GDP was able to expand by that or even more. That would help us enormously to protect the purchasing power of New Zealanders’ dollars against the huge debt load that we now have sitting over the heads of all of us. So trade is something that should be pursued with a great deal of earnestness.

I do notice that two of the countries that are listed in the Regional Comprehensive Economic Partnership (RCEP) are China, which is a country we have very good trading relations with, a country that is our biggest trading partner and an extremely important trading partner to us—a country that we should respect for the achievements of lifting so many people from total and abject poverty over the last 40 years, while recognising that they still have that challenge ahead of them despite the size of their economy. We will be able to have our disagreements, as this House expressed last week, concerned about human rights issues, and there’ll be other issues too that we will have disagreement on, but that doesn’t mean that we shut the door on one another and that we close off the trading opportunities that do assist in lifting people from the abject poverty that has afflicted so many in past generations in that country. I notice, too, that Myanmar is here. We don’t have a huge amount of trade at the moment with Myanmar, but it is a country that has enormous potential. It’s a country that we’ve also had a lot to say about in recent times, because New Zealand’s style of government does not fit with the dictatorship, the military junta, that currently runs Myanmar.

So the importance of trade groups is that the benefit that comes from trade for individuals, for the citizens of these countries, can be advanced while there can be, at that political level, great discord about the direction of any particular country. From our perspective, we’re a country that is rules-based. We’re a country that says law, internationally applied, is of little value if it doesn’t respect the rules that are the basis of government in our type of country. So there’s always going to be some conflict around that, but when it comes down to the issue of trade, a lot of that can be segmented away and the opportunities that come from that trade can be enjoyed by parties on both sides of any agreement.

Simon Bridges and I visited India early last year prior to the COVID-19 lockdown, and we got a very, very clear picture of why India were reluctant to embrace RCEP. I’m not going to go into those right now because we don’t have that time available to us, but what I can say is that those are issues that will resolve over time, and once they get through this particularly difficult time for them, I’m very pleased—and I state again, because of its importance—that the door remains open to them.

This is a good agreement. I hope that we see a lot more of them. I hope some of the attitude of the Government to getting that bipartisan support across the House does change and that there can be a faster pace applied to some of the trade opportunities that do exist for New Zealand and that should be on the table in these very interesting and sometimes difficult times. The select committee, I think, will do a good job and report back to the House in due course.

Members, this debate is interrupted and set down for resumption next sitting day. The House stands adjourned until 2 p.m. on Tuesday, 18 May 2021. Kia ora mai tātou.

Debate interrupted.

The House adjourned at 5.02 p.m.