India Free Trade Agreement Legislation Amendment Bill

Committee of the whole House

Thank you, Madam Chair. I guess, to many people, this is probably at the heart of the trade agreement—that is, it deals with tariffs, or the reduction of them or the management of them. These are the barriers that cost us more if we export into the Indian market. We go through here, and it’s kind of bland if you look at the wording of what we’re doing in Part 3. Starting at clause 25, it amends the Tariff Act 1988, which is a wee way back. It does a number of things in here, and maybe the Minister for Trade and Investment can answer a few questions.

One is that there’s a transitional safeguard measure in this piece of the bill: that is that if New Zealand and India too—and I guess the reciprocity of this is something the Minister can explain—if we believe that there’s a large volume of products coming in that might be really upsetting one of our sectors. There may be large volumes of wool coming into New Zealand—highly unlikely, but maybe large volumes going into India where they think it’s upsetting a fragile market. The question is: I jest a little bit, but there are legitimate concerns for both goods and, to a lesser extent, services where—and the Minister can perhaps explain—the transitional safeguard measures, where they are in the legislation and how they can be applied to ensure that New Zealand industries are not decimated. Because there will be small fledgling manufacturing areas that may be concerned about this, given the scope and the size and the scale of manufacturing in India. That’s the first question I have: how will these transitional safeguard measures be implemented, and what’s the reciprocity of those in both countries?

Committee of the whole House

Thank you. Perhaps just a supplementary to add on to that question. My question is really about whether those measures—so the import surges criteria—are contained in the free-trade agreement (FTA) or whether they are in legislation. Because my understanding is that the different FTAs we have have potentially different import surge thresholds—shall we say—and so whether the Minister for Trade and Investment considered just applying or negotiating the same thresholds that are in existing legislation, so those could just be repeated.

The second question is in relation to clause 32, which is about concessions. This reference is number 66, which is a list of other FTAs where, when goods are repaired and then re-entered into a country, they’re not subject to an additional tariff because they have effectively already come through. I’m really just wondering about the policy that either does already or will sit behind that. I can’t see detail of whether there’s a proof element required. I know that when goods initially come into a country, you would have something like a certificate of origin, for example—that is your proof point. But if it were returned and then comes back in, it looks like that’s exempt, but I can’t point to anything in the legislation that requires an equivalent certificate. Could the Minister tell me whether there is such a provision in the legislation; or, if there’s not, if there is existing policy that none the less requires some sort of proof point to say that the goods have been repaired and that there hasn’t been a substantially transformed element of the goods post repair to deem it subject to a requirement for a new certificate of origin? Thank you.

Committee of the whole House

I might deal with these few as they go along so we don’t get too much of a backlog. In as far as transitional safeguard measures are concerned, this is merely stating in law that we are able to do this—it was negotiated is part of the free-trade agreement. It gives us the ability to, and of course a provisional or transitional safeguard is put in place while an investigation into harm is being done. It’s a different act of determination as to the condition around that and the thresholds and so on. It doesn’t alter that; it just means that, under the free-trade agreement, we’re able to.

The second question was around how this is done. Well, it’s different legislation. The Tariffs Act or the safeguard Act permits this. After a Tariff Act reduces—or, in this case, goes to zero—there’s a period of time by which you are still able to do these—either the safeguard Act or other measures to be put in place. Again, this is merely allowing that to happen.

For export, for repairs for reimport, Customs do that. It’s often certified before it goes away. There are proof points, of course. This legislation doesn’t alter that. It is standard practice for Customs. Just as, in some cases, where New Zealanders are leaving and they may have something of value with them—they’re taking with them for business or work, a camera—they can get a certificate on the way out to show that when they come back in it is being reimported, as opposed to having been purchased offshore.

Committee of the whole House

Thank you. Just following on from that, I know, for example, there is a business in Wellington here that imports a lot of diamonds to process and then re-export. It’s been an issue with Customs as to how we set up a regime that doesn’t mean that they are effectively stripped of cash in what is a normal business transaction. I guess the question of whether there is some sort of reciprocity there as well, for us—and I can’t think off the top of my head of something like that. But Customs, rightfully, is pretty staunch and rigid in ensuring that, like repairs where we have online purchase—which is actually a new phenomenon, probably over the last 10 years where people can just go on and buy from anywhere in the world. You receive a product that’s faulty, you send it back, you’ve paid the duty on it once, it’s repaired, and then it comes back in. These are new provisions and new legislation—new trade agreements.

I’m just seeking an assurance that—and we’re told that this is covered in this part of the bill here, the repairs. But can I just check on that one around some flexibility around Customs for what may be a growing—and take, for example, diamonds, where they might be sourced from India into here to be processed and exported back out. I think we will build up more partnerships with Indian business, and we’ll need to be flexible. I’m just checking with the Minister for Trade and Investment on that.

Committee of the whole House

Well, there will be men and women all around the country watching tonight—single men and women—who are excited by that member’s great knowledge of the importation of diamonds to a shop in Wellington. But it is a separate piece of legislation. I actually have great sympathy for what he is saying. In the case somebody brings something to send out again, there may well be duty and GST and so on, which can be a burden, but that doesn’t alter any other Act; it doesn’t change that at all. There is not a commitment we have taken on with India around any special arrangements in that area.

Committee of the whole House

Thank you, Madam Chair. I want to check, in terms of Part 3, starting with Subpart 2, when it comes to tariffs. Now, we’ve just in Part 1 been discussing kind of tariffs on the other end in the form of quotas. Can I just check: is there a quota system from our end for tariffs? No, I’m seeing head shaking. That’s good.

I want to check with the Minister for Trade and Investment on clause 32, “Part II Concessions amended”. I guess this is something that both the Hon Damien O’Connor and maybe Vanushi Walters touched on. But I think if we’re able to pull it back even a bit further, if the Minister wouldn’t mind clarifying exactly what Concession Reference Number 66 is. Because it’s been mentioned here and I don’t know if that is standard knowledge or understanding.

I also want to check with the Minister whether this is a typo or something that is supposed to be structured like that. I’m assuming in here, after subsection (8), “(9) Goods re-entered after repair or alteration—(a) in the territory of India; and (b) in accordance with”—that is “free” in terms of concessions; is that what the “free” on the corner of that particular page is referring to? If the Minister wouldn’t mind, I just wanted to clarify what that “free” is in reference to.

Committee of the whole House

The term “concession” is the tariff rate—a concessionary tariff rate that applies and that brings it to zero. The India - New Zealand free-trade agreement means that on entry into force, goods exports from India to New Zealand fall to a concessionary rate of zero. That word “concession” is not something different; it just is lining it up, just as it lines the language up with the European Union free-trade agreement, where the same thing happened. It is a zero-tariff rate.

In as far as exports for goods sent out for repair—sent to New Zealand for repair and so on—of course, if they came from India, they would have a zero-tariff rate against them when they came in. That would be somewhere to India to know whether there was a tariff treatment. But in the case that New Zealanders send something out to India to be repaired and then brought back in, that concession means that if it’s sent out, if it’s certified and the same good comes back in, then there isn’t a duty or tariff to pay on it.

Committee of the whole House

Thank you, Madam Chair. Look, under Part 3, there’s also a provision for the Minister for Trade and Investment to designate an authorised certification body to certify that goods originate in New Zealand, for the purposes of the India free-trade agreement. Can I just ask: what body will that be? Will it be a Government agency or will that be sent out to a private sector or is it a body within the particular industry? I know we have, not necessarily—FernMark might be one of them. I guess there’s provision for that, so an indication of whether it will be privatised, which is what the Government seems to want to do with everything else, or will it be closer to Government to ensure that, actually, what is deemed a product of New Zealand has a Government endorsement. Maybe the Minister can explain.

Committee of the whole House

So this is the Minister of Customs that does this, not the trade Minister, and the Minister of Customs gets to designate organisations in New Zealand that can certify that something is of New Zealand origin. There are a range of these things, but in many cases chambers of commerce have that ability in other agreements, and so on. I won’t get ahead of what the customs Minister may do, but the member will be interested to know it will be no different than other trade agreements.

Committee of the whole House

Thank you, Madam Chair. Just on that particular part, which is clause 26, in terms of regulations regarding the provisions relating to originating food; 51ZPP, originating goods. I understand that the Minister for Trade and Investment, in the chair, is not the Minister of Customs, but this falls under his purview as, I guess, the person who oversees the entire trade agreement. What would the process be for the agency or a private company or any organisation to be able to determine rules for originating goods in line with Chapter 3, Annex 3A, 3B and 3C of the India Free Trade Agreement? That would be my first question.

My second question is—

CHAIRPERSON (Barbara Kuriger): I’m just going to check to see if the Minister got the gist of the first question, because there was some administrative stuff going on here.

💬 Hon Todd McClay: Most of it.

CHAIRPERSON (Barbara Kuriger): Most of it. OK, keep going.

I’ll just finish with the second question, which is: if someone was told, for example, that it’s been determined that it’s not their origin or the rules of the origin, is there a dispute process for, in this case, an Indian exporter importing into Aotearoa New Zealand—is there a dispute mechanism for them to go to a particular New Zealand agency to be able to dispute on the rules of origin?

Committee of the whole House

In the case that something’s important to New Zealand and was outside of the definition of rules of origin, that’s a customs issue. There is a customs dispute panel that could look into this, but duty would be levied upon that import to the importer at that point in time, so it’s not a matter of us having to check something before it comes into the country. If it does come, and we find the origin is not correct as defined under the free-trade agreement, then customs deal with that—and it happens from time to time for a range of reasons—but there is a dedicated process for that to happen under customs.

A party vote was called for on the question, That Part 3 be agreed to.

Ayes 93

New Zealand National 48; New Zealand Labour 34; ACT New Zealand 11.

Noes 28

Green Party of Aotearoa New Zealand 14; New Zealand First 8; Te Pāti Māori 4; Ferris; Kapa-Kingi.

Part 3 agreed to.