Trade (Safeguard Measures) Bill — In CommitteeText is incorporated into the Bound VolumeTrade (Safeguard Measures) Bill — In Committee[Sitting date: 08 April 2014. Volume:697;Page:16951. Text is incorporated into the Bound Volume.]Trade (Safeguard Measures) BillIn CommitteeDebate resumed from 11 March.Clauses 1 and 2 (continued)Dr DAVID CLARK (Labour—Dunedin North):The Trade (Safeguard Measures) Bill is a bill that attempts to ensure that we have the necessary trade safeguards at the border. It is great to be able to speak to it in the Committee. I enjoyed my earlier contribution and I am very very much looking forward to hearing what my colleague Phil Goff has to say.Hon Damien O’Connor: What about the Minister?Dr DAVID CLARK: The Minister in the chair Nikki Kaye too I am sure will make an interesting contribution and so I will be all ears.Hon PHIL GOFF (Labour—Mt Roskill):It is a bit of a shame to have to take the call when we have a Minister in the chair the Minister for Food Safety who does not even know what the Trade (Safeguard Measures) Bill is. She did not even know she was meant to be in the chair. That really degrades the importance of passing legislation through this House because what I wanted to do in the debate on the title and commencement clauses was to ask the Minister in the chair questions about the bill that earlier Ministers in the chair who were equally ignorant about the bill have failed to answer. If we are going to take up the time of the taxpayer and the time of the Committee to have a proper debate on the bill we need to have a Minister in the chair who knows what the bill is. It makes a farce of this place—Hon Nikki Kaye: You have no idea.Hon PHIL GOFF: —if the Minister does not. Oh the Minister says she does. Well look I have got some questions for the Minister. The first question is this: if we look at the title clause we see that “This Act is the Trade (Safeguard Measures) Act 2008.” That is 2008. Well my question to you Minister is first of all why are we still debating this bill 6 years after it was introduced—6 years after it was introduced? I think that the Minister in the chair owes it to the Committee and owes it to the country to explain why it has taken 6 years to get a relatively straightforward piece of legislation to the point where it still has not even got through its Committee stage. This bill was sent to the Foreign Affairs Defence and Trade Committee in the very first weeks of the first term of the National Government. We are now in the last weeks of the last term of the National Government and we have not passed this legislation.So Minister we on this side of the Chamber expect you to take a call and explain to us whether it was just poor management of the House that the Government has just never got its act together to manage its legislative agenda or was it sheer incompetence? Were there problems with the bill that the Government could not come to terms with? Was its incompetence in managing the bill—oh! The Minister has left the chair. Maybe the Minister of Commerce who has just assumed the chair who is meant to know something about this bill—even if he is late in arriving to hear the discussion on it—will answer these questions. Why Minister Foss has it taken 6 years to get this bill to the point where it is now? Is it incompetence? Is it poor management? Is it partly because the Minister who was in charge of this bill is a guy called John Banks? The last thing that the National Government wanted to do was have John Banks in the chair and subject to scrutiny. Whichever way you look at it it is hard to imagine why a Government takes more than 6 years to get through a piece of legislation that is supposedly necessary. If it is necessary why was it not put through the House much earlier Minister Foss? Why has it taken this long?I want to raise some other questions about it. Actually the Labour Government is supporting this bill. The Labour Party is supporting this bill. The Labour Government introduced it and the Labour Party is supporting it. I do not want to have to wait until the next Labour Government albeit in only a few months’ time to actually get the bill through. You know this is about trade safeguards. I am a person who believes in freeing up trade so why would we have trade safeguards? Well there are some very good reasons for having trade safeguards. You need trade safeguards when other countries decide to dump their products in your country at below the value of the product. That is not fair trade. It is not a level playing field. It can damage your local industry There is a clear argument for having anti-dumping trade safeguards. That is touched on in this legislation but it is covered in another piece of legislation.There is an argument too for having countervailing duties. You put countervailing duties on when the exporter is from a country where the Government of that country is subsidising the exports and again it is not fair competition. We do not mind here in New Zealand competing with anybody on a level playing field but if another Government is subsidising the product so that it can out-compete our industries that are standing on their own feet that would also be unfair trade. Again that is touched on in the bill but it is not the central purpose of the bill.The central purpose of this bill is to actually provide temporary protection for when a domestic industry might be faced with increased imports and it needs time for adjustment. But the question I have got for Minister Foss on this is which industries are we talking about that actually require this sort of protection? Because actually our tariff levels are generally either non-existent or below 5 percent and I cannot think of the last time Minister when these sorts of temporary safeguards were actually used. So can the Minister—this is a genuine question—explain to the Committee when the last time was that temporary safeguards were used for the purpose that is set out in this bill and which of the industries potentially need protecting and against what countries. That is a basic piece of information that Parliament and the country are entitled to know.I think that the bill can be justified but my experience is also that trade safeguards can sometimes be utilised in a way that are not productive for fair trading. A number of members of this House have just came back to New Zealand from a trip to China where we were asking questions there about the trade safeguard—the agricultural special safeguard measures—that is impacting on the dairy industry. I know that my colleague Damien O’Connor is particularly interested in this. I negotiated that trade agreement. We put in the special agricultural safeguards—the trade safeguard mechanisms—because frankly we would not have got the free-trade agreement without it. The Ministry of Agriculture in China is still fuming about the fact that we have negotiated the total phase-out of tariffs.But I have got to say that if you look at the Chinese example and relate it to what this bill is about those safeguards are not really justified by the reality. Yes our exports have gone up rapidly. When we set the trade safeguard levels they were set at a level well above the level of trade. Within 5 years there has been a fivefold increase in dairy exports so people are paying that trade safeguard mechanism—actually in the first month of the trading year—and it is costing us some tens of millions of dollars. The Chinese would be able to justify that if there was damage as this bill sets out to the local industry. But there is no evidence that what we are doing is damaging the local industry. Yes dairy production in China has dipped but not for the reason of competition. The reason we are sending the volume of trade into China that we are is the demand. The demand has gone up; we are simply meeting the demand. So we are faced with a situation where a trade safeguard mechanism is being employed but without justification for doing it. I do not think that that is what this bill provides for New Zealand.Of course we asked about whether we might renegotiate those trade safeguard measures with China and the answer was why would China give us something and get nothing in return? There would be a quid pro quo and since the trade safeguard measures are only transitional—they are phased out by the early 2020s—then we probably will not be able to do anything about it. That is an example of where a trade safeguard mechanism can be utilised as a revenue-grabbing mechanism but without being justified by an actual need to protect a local industry. In this bill we say that it is about protecting the local industries but the Minister who was asked earlier during the Committee stage which industries might need this sort of protection failed to answer that question. It is a valid question Minister and I would like you Minister to answer or to attempt to answer that question. That is what you are paid to do. That is why you are sitting in the chair. We do not expect you to do sit there like a dummy and ignore the questions and not do what you as a Minister have a responsibility to do.I said before that notwithstanding the fact that this Government has taken 6 years over this measure I think that the measure is worthwhile. I think that it does a number of things. It streamlines the process of responding to allegations against imported products and the need for the trade safeguards. It removes the temporary safeguard authorities. I do not think we need those now; the investigative work can be done by the Ministry of Business Innovation and Employment. It enables a more realistic time frame to work through the trade safeguards. Currently it is 35 days; I do not think that is sufficient. It increases the period to 75 days and actually 85 days where provisional safeguards are being requested. And it also sets out clear criteria. Those criteria are set out in clause 12 of this bill. I think they are sensible measures. The chief executive must look at whether the increased imports are actually causing serious injury. He or she needs to look at whether the increased imports are due to unforeseen developments; whether they are necessary to prevent serious injury; and if they are necessary which goods should be subject to it which measure is appropriate and what is the extent and duration of time—JAMI-LEE ROSS (Junior Whip—National):I move That the question be now put.DAVID SHEARER (Labour—Mt Albert):I was pausing because I hoped the Minister in the chair the Minister of Commerce might be able to stand and give us the explanation that my colleague Phil Goff was actually asking for. I think those were legitimate questions and if you ask a legitimate question in the House particularly in the Committee stage I think the Minister who has taken the chair late has a responsibility to answer them. The Trade (Safeguard Measures) Bill is a bill that we are supporting for the reasons that Phil Goff just outlined. We are a trading nation. We do rely on overseas trade. We have freed up our trade significantly in the last few years. We have very little in the way of tariffs restricting the flow of goods coming into New Zealand at the moment. I think the last are around about the 5 percent mark. We have a number of free-trade agreements that have been developed principally under a Labour Government but also of course continued on by this Government as well with for example Taiwan.As Phil Goff just mentioned we have just completed a visit to China with the Foreign Affairs Defence and Trade Committee which I think was interesting on a number of levels in terms of the trade relationship we have with China. It did highlight a couple of points that I think I would like to mention in relation to the Trade (Safeguards Measures) Bill however and those are our huge dependence and growing dependence on China—that sort of dependence likens back to the 1960s and our dependence on the UK—and also the huge dependence in the area of primary products particularly milk powder. Forty-four percent of our milk powder now goes to China Taiwan or Hong Kong. We are very very dependent on that. That places us in a situation where there is considerable risk should that market not perform.It also dominates vis-à-vis other industries and it is these other industries that I think the trade safeguards legislation is really aimed at because let us face it it is unlikely that for example China or another country is going to flood our country with milk powder. It could however be able to flood some of our manufacturing markets with some of the goods that could easily swamp and put out of business some of our manufacturing industries. That is unlikely to happen but it could happen and this legislation is designed to help prevent that from going on. It does put in place some temporary restrictions around the ability for that to happen for overseas countries to flood our market with goods that are well undervalued in order to be able to suppress and eliminate some of own markets.The bill gives quite an amount of authority to not only the Minister but also the chief executive officer of the Ministry of Business Innovation and Employment to be able to mobilise measures from what used to be 35 days’ protection now up to 75 days and in exceptional circumstances up to 85 days to protect that. It gives that Minister the ability to do that. Normally that could be in the form of a duty but there is a degree of flexibility around that as well. As we have heard it replaces what is in place at the moment which has been there since 1987. In 1987 we had the Temporary Safeguard Authorities Act. That was regulating this part of our export market or our local market. That will now be replaced and instead of the safeguard authorities being in place we will have the Ministry of Business Innovation and Employment being able to do that job for us just as effectively.I want to come back to the two key questions that Phil Goff asked of the Minister and I call on the Minister before Jami-Lee Ross jumps up to take yet another closure motion to actually get around to answering this. The first question is why it is that this bill which first came up in 2008 has taken more than 6 years to get to where it is now in the Committee stage. We do not even know whether in fact this bill will get through before there is a change in Government.I can tell you one thing. When there is a change in Government we will be able to push this through and get it done—something we started in 2008 and we can finish off in 2014. This bill was first introduced by Lianne Dalziel. It was then taken up by Simon Power. Simon Power used the same speech notes as Lianne Dalziel was speaking from when she spoke on it. That was—how many years ago now—3 years. It then went to John Banks. The baton was passed to him. Well John Banks did not last for that long for all the reasons we know and all the reasons he may not last very much longer. As we speak the clock is ticking around John Banks. And now it has been passed through to Craig Foss. I think it is a legitimate question to ask why it has taken so long and why it has been put on the back-burner of back-burners in order to be able to be considered today.There is a second question that Phil Goff raised and that I would like the Minister to answer. Yes this bill is important in terms of protecting our local industries in world terms and certainly New Zealand terms where we have opened our borders substantively from dumping but I would like to know what examples the Minister can give of which industries need temporary protection and what countries he envisages us looking at in terms of being the greatest source of threat to New Zealand. I think actually we need to have a little reality here. At the moment people are probably watching this and saying “Well yeah I can kind of get my head around the idea that we need to protect our local industries.” but they want to know from whom and what sorts of industries do need protection. Why do we need this legislation as it is drawn up right now?There are the two questions. One is why it has taken 6 years for this legislation that we are supporting. We do not have a problem with the legislation as such but we do have a problem with the delays in this legislation coming through. Why has it taken so long since Lianne Dalziel in 2008? Lianne has gone now. Simon Power whom she passed it to has gone. John Banks well he is “gone-burger” as well. It is “gone-burger” all the way down the line and it will be “gone-burger” for this Government. Craig Foss does not have very much time before he can get this legislation through this Parliament before he is “gone-burger” as well. There is a long line of skittles being knocked over by this trade bill that has been lingering on our books for the last 6 years. The second question I ask is why do we need it? What industries need protection? And lastly from whom? Thank you very much.ANDREW WILLIAMS (NZ First):I take a call on behalf of New Zealand First on the Trade (Safeguard Measures) Bill. Back in March 2009 the Parliamentary Private Secretary to the Minister of Foreign Affairs John Hayes said: “The bill’s purpose is in particular to allow New Zealand to apply safeguard measures at the border in accordance with the WTO rules adopted in Marrakech back in April 1994.” Mr Hayes then went on to say that “The bill states that such measures are intended to provide temporary protection to a domestic industry from serious injury caused by increased imports.” Many of us can recall there was an instance concerning whiteware a number of years ago where Fisher and Paykel had concerns here in New Zealand because whiteware in its eyes was being dumped on the New Zealand market causing great difficulties for the domestic manufacturer here. It thought there was unfair advantage in that significant quantities were coming from a foreign source affecting the domestic market here. The Government at the time did investigate that situation. This bill is very much intended to protect in those sorts of situations.New Zealand First would ask as well the question why this was initiated under the Labour Government back in 2008 and is now here in 2014. If the purpose of this bill as Mr Hayes said is to protect our domestic industry from serious injury caused by increased imports in situations like that why has this Government taken the best part of 6 years to get it to the Committee stage in the House? This is an appalling situation and it beggars belief as to why our domestic manufacturers do not have a level of protection under the World Trade Organization (WTO) rules such as this bill brings in. The Hon Simon Power tried to put this bill through in 2009 and he hung his hat on it. As we have heard it was then passed on to the Hon John Banks and now it is with Mr Foss.New Zealand is a very small market. We have only 4½ million people. We have a very small manufacturing base. Those manufacturers that we do have come under intense pressure at times from very significant global players global suppliers and major importers into this country which could literally swamp and overpower many of our local domestic manufacturing sources. In that respect this is a very important bill that will give trade safeguards as the bill’s name puts it to ensure that we do not have unfair international conglomerates coming in and swamping such a small market. We are less than the size of Sydney in population and we have a fraction of the manufacturing of the likes of Australia yet Australia has far more in place to protect and assist its manufacturing base to ensure that its manufacturers have some safeguards.New Zealand has been very much an open market. In fact New Zealand is often used as a test case. Manufacturers around the world often use New Zealand to trial products because we are an island nation and we are somewhat isolated from the rest of the world. Our particular country is sometimes used by manufacturers out of Europe out of North America and out of Asia to test and trial products when they would not wish to do that in their own home markets or in significant markets where it would be far more costly.A result of them coming to New Zealand and perhaps using us as the test case as the guinea pig is that that can at times have serious consequences for fledgling manufacturers here in this country which can be absolutely swamped by such a venture. So it is very important that New Zealand has this bill in place and that we can then go to the WTO under the WTO rules and raise concerns if we feel that that is happening. If this Government walked the talk in terms of giving greater support to New Zealand manufacturing greater support to New Zealand business and greater support to try to grow this economy and provide more jobs then we would need the safeguards in place as provided under this bill to ensure that our companies in New Zealand can level-peg it with very very large multinationals globally.New Zealand First supports this bill but we support it on the basis that we get on with it we get it moved through the House and we put this legislation in place. We had a similar situation with the Rena off Tauranga.The CHAIRPERSON (Lindsay Tisch): Order!This issue is very close to that because legislation was not passed and had it been passed—The CHAIRPERSON (Lindsay Tisch): No no.ANDREW WILLIAMS: Well had this bill been passed already in certain instances perhaps New Zealand would have been better protected. Likewise had the legislation on the Rena been passed New Zealand would have been $30 million better off by not having to pay out to overseas interests. Tardy legislation does not help New Zealand interests. In this instance where it is in the interests of New Zealand business New Zealand First supports it and we commend it be passed by the Committee with swift promptness.PAUL GOLDSMITH (National):I move That the question be now put.A party votewas called for on the questionThat the question be now put.Ayes71New Zealand National 59; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1.Noes49New Zealand Labour 34; Green Party 14; Mana 1.Motion agreed to.Clause 1 agreed to.Clause 2 agreed to.Bill to be reported with amendment presently.House resumed.The Chairperson reported the Land Transport and Road User Charges Legislation Amendment Bill without amendment and that the Committee had divided it into the Land Transport Amendment Bill (No 2) and the Road User Charges Amendment Bill; the Industry Training and Apprenticeships Amendment Bill without amendment; the Social Security (Fraud Measures and Debt Recovery) Amendment Bill without amendment; and the Trade (Safeguard Measures) Bill with amendment.Report adopted.