Carter John: Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — Second Reading In Committee Third Reading 
Carter John: Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — Second Reading In Committee Third Reading 
[Volume:666;Page:13375] 
Hon JOHN CARTER (Minister of Civil Defence)  
on behalf of the Minister of Trade 
: 
 I move  
That the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill be now read a second time 
. I thank the Foreign Affairs Defence and Trade Committee for its consideration of the bill and for reporting the bill back to the House. The committee’s recommendation is that the bill be passed with no amendments. 
As the committee noted in its report the closer economic partnership—CEP—with Hong Kong will provide an important trading platform for building trade with the wider China market and indeed throughout the Asian region. New Zealand’s economic future points increasingly towards this vibrant region. The linkages through our high-quality trade agreements are increasing the opportunities for business. In the first year following entry into force of the China free-trade agreement the increase in New Zealand exports to China was NZ$1.1 billion. China is now our second-largest export market and our second-largest overall trading partner. Through the closer economic partnership with Hong Kong we are hopeful that this growth will continue and that the closer economic partnership will also facilitate the growing provision of New Zealand goods and services throughout the wider region. 
Unlike New Zealand’s other concluded trade agreements the closer economic partnership that we have negotiated with Hong Kong is not primarily about tariff barriers. The fact is that New Zealand and Hong Kong already have two of the most open economies in the world. Given the relatively low levels of tariff barriers between our economies—at zero in the case of Hong Kong—this agreement will secure New Zealand’s position in the Hong Kong market and underpin Hong Kong as a trading platform for our exporters into the wider region. We want to make it easier for New Zealand companies to do business in and through Hong Kong. This closer economic partnership will encourage New Zealand companies to integrate into global supply chains because that is crucial to our future prosperity as a trading nation. Hong Kong’s location its knowledge of China and its links into the mainland position it perfectly for New Zealand’s rapidly expanding trade with China and the wider North Asia region. 
Increasingly New Zealand’s trade agreements acknowledge the importance of global supply chains. As with previous free-trade agreements that New Zealand has entered into the rules of origin negotiated in the closer economic partnership will allow Hong Kong and New Zealand companies to make greater use of each other’s products in manufacturing. The closer economic partnership will also help to secure access into Hong Kong for New Zealand’s service suppliers into the future. As identified by the select committee report the ratchet clause means that any future unilateral liberalisation by Hong Kong in certain sectors will be applied for the benefit of New Zealand services exporters. A most favoured nation clause will future-proof the access into Hong Kong of our services exporters by enabling them to benefit from the same treatment that other countries negotiate with Hong Kong in the future in key sectors of interest to New Zealand. It is a significant commitment that this is the first free-trade agreement that Hong Kong has signed outside mainland China. 
Consistent with our existing approach to free-trade agreements New Zealand has been careful to ensure that the removal of our remaining tariffs is phased out over time to allow for the affected industries to adapt to the new settings. For the closer economic partnership this phasing has been deliberately matched to the phase-out delivered under the China free-trade agreement which means that there is unlikely to be any additional material impact on New Zealand companies. 
The Green Party in its minority view included in the select committee report on the bill has questioned the balance of consultation around the free-trade agreement commenting that there is bias towards exporting interests. The opportunity to make submissions request meetings and attend briefing sessions was open to all businesses sectors and stakeholders. The national interest analysis also cites specific consultations about tariff reduction and rules of origin. These were conducted by Ministry of Foreign Affairs and Trade and Ministry of Economic Development officials to assess industry views on tariff reduction in respect of potential free-trade agreements including that with Hong Kong. There was in addition a series of consultations with Textiles New Zealand and a range of clothing manufacturers specifically in relation to Hong Kong. Consultations were also held with the Employers and Manufacturers Association which is the key representative body for the manufacturing sector and it included the Hong Kong negotiations. 
In respect of investment the select committee report acknowledges that the investment screening regime in New Zealand will continue to apply to prospective investors from Hong Kong. Quite simply the outcome of the closer economic partnership will not materially alter the way in which the overseas investment screening regime applies to investors from Hong Kong or exempt them from any aspect of it. 
The minority view in the report of the select committee expressed by the Green Party questioned the basis upon which the Government rests its commitment to trade liberalisation. That commitment rests on a conviction that export growth is critical to New Zealand’s overall economic performance. The Government’s full agenda of trade negotiations in the Asia-Pacific region is central to this strategy and places us at the heart of the world’s economic growth engine. 
This bill will amend the Tariff of New Zealand by inserting Hong Kong China and a 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 in order to enable the application of preferential tariff rates under the closer economic partnership. The Government would like to see the bill enacted by October so that New Zealand can be ready to bring the closer economic partnership into force therefore ensuring that New Zealand business can benefit from this agreement as soon as Hong Kong has also completed all of its internal procedures. I commend this bill to the House.