Carter David: Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — First Reading 
Carter David: Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — First Reading 
[Volume:663;Page:11590] 
Hon DAVID CARTER (Acting Minister of Trade) 
: 
 I move  
That the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill be considered by the Foreign Affairs Defence and Trade Committee that the committee report to the House on or before 29 July 2010 and that the committee have the authority to meet at any time when the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 187 and 190(1)(b) and (c). Reporting back by 29 July 2010 will enable New Zealand to remain on course to complete its domestic procedures for the purposes of the agreement’s entry into force on 1 October 2010. For this to occur Hong Kong and New Zealand must each have given notice before 31 August 2010 that they have completed their domestic procedures. 
The New Zealand - Hong Kong China Closer Economic Partnership Agreement or CEP as it is often called is an important milestone for New Zealand and is the first free-trade agreement that Hong Kong has signed outside mainland China. Hong Kong is both an important business hub and a significant market in its own right. It is currently New Zealand’s ninth largest export destination. Merchandise trade between our two economies has been growing at an average of 7.5 percent per year for the last 5 years and last year it was worth close to $1 billion. Hong Kong is also strategically important as a trading partner located at the heart of Asia and is an important platform for New Zealand companies entering into mainland China. 
New Zealand is the only country in the world to have trade agreements with both mainland China and Hong Kong. This is important because it is clear that China will play an increasingly larger role in New Zealand’s trading future. In the first year following the entry into force of the China free-trade agreement the increase in New Zealand’s exports to China was some NZ$1.1 billion which is almost as much as our entire annual exports to Korea. China recently surpassed the United States to become New Zealand’s second-largest export market after Australia as well as our second-largest overall trading partner. It is no coincidence that our exports to China grew last year at the same time as we were experiencing a dramatic expansion of trade with China. 
A free-trade agreement with Hong Kong can be of particular use for businesses that want to take advantage of Hong Kong’s knowledge and experience of doing business with China its relationships into the Chinese market and as well its relatively familiar legal system. Hong Kong can also serve as an important base for other markets in north Asia and the wider region as it is an important regional trading hub. 
Let me outline some of the key elements of the New Zealand - Hong Kong China Closer Economic Partnership. One is free trade in goods. One of the key outcomes of many of our free-trade agreement negotiations is the elimination of tariffs which impose costs on our export goods. The tariff barriers that presently exist between Hong Kong and New Zealand are relatively low. The closer economic partnership locks in duty-free access for all New Zealand goods exported to Hong Kong including the 14 percent of Hong Kong tariffs that are not currently bound at zero. New Zealand will phase out tariffs on goods imported from Hong Kong in a way that mirrors the phasing out already agreed on for goods from China. 
We have agreed on rules of origin which broadly mirror those in the China free-trade agreement. This coupled with parallel tariff phasing removes any incentive for Chinese manufacturers to try to circumvent the New Zealand - China free-trade agreement and seek preferential access to New Zealand under the closer economic partnership. 
New Zealand’s service providers will benefit from having greater certainty of access into the Hong Kong services market including in the areas of private education business services environmental services and logistics. Subject to certain exceptions New Zealand service exporters will also have their position in the Hong Kong market future-proofed through what is technically called a “most favoured nation clause”. This clause is important because it will enable our services exporters to benefit from the same treatment that other countries negotiate with Hong Kong in the future. 
New Zealand business people will have the benefit of the expeditious processing of applications for business visas. Short-term business visitors will be able to get a 90-day visa. Further in a broad range of sectors senior managers and specialists employed by New Zealand companies based in Hong Kong will be able to stay for a year which is extendable for up to 5 years. 
New Zealand companies will be guaranteed ongoing access to New Zealand’s Government procurement contracts on a broadly equivalent footing with local suppliers. This will be the first free-trade agreement since the Trans-Pacific Strategic Economic Partnership Agreement with Singapore Chile and Brunei in which we have secured commitments in this area. 
There are other measures to improve the business environment. Measures relating to customs procedures and cooperation sanitary and phytosanitary measures technical barriers to trade intellectual property competition and e-commerce will help to reduce the barriers to doing business between New Zealand and Hong Kong at a practical level. Also a consultation and disputes settlement mechanism is included in this agreement. 
Alongside the closer economic partnership New Zealand and Hong Kong have entered into a memorandum of understanding on labour cooperation and an environmental cooperation agreement. 
There is also a commitment to negotiate new investment rules. Alongside the closer economic partnership New Zealand and Hong Kong have also agreed to negotiate an investment protocol within 2 years of entry into force of the closer economic partnership. This will update the investment provisions contained in the existing bilateral agreement for the promotion and protection of investments which dates from 1995. Although it is envisaged that the investment protocol will provide for strengthened disciplines and protections for investors there is no intention that the protocol would alter the categories of investment which are subject to screening under the Overseas Investment Act. 
In summary this closer economic partnership is an important achievement for both economies. For New Zealand it establishes a clear certain and effective framework within which New Zealand companies can compete in a dynamic and rewarding market. It is important to note that it also complements our ground-breaking free-trade agreement with China. Together this provides us with an unparalleled opportunity to increase our exports to a region that will continue to be of central importance to our economy over the decades ahead. The bill will amend the Tariff of New Zealand by inserting: “Hong Kong China” in the list of preferential countries in note 3 of the Tariff. This is the only statutory amendment required to give effect to the closer economic partnership. Following this amendment certain amendments by regulation will also be required to enable the application of preferential tariff rates under the closer economic partnership. I commend this bill to the House.