Groser Tim: ASEAN-Australia-New Zealand Free Trade Area Bill — First Reading 
Groser Tim: ASEAN-Australia-New Zealand Free Trade Area Bill — First Reading 
[Volume:653;Page:2632] 
Hon TIM GROSER (Minister of Trade) 
: 
 I move  
That the ASEAN-Australia-New Zealand Free Trade Area Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be referred to the Foreign Affairs Defence and Trade Committee with an instruction to the committee that it present its report to the House on or before 25 May 2009. A report presented by the committee on or before 25 May will enable New Zealand to remain on course to complete its domestic procedures for the purposes of the agreement’s entry into force by 1 July 2009. That is the target date set by the parties to the agreement for its entry into force. For that to occur New Zealand Australia and at least four members of the Association of South-east Asian Nations (ASEAN) must have notified the parties that they have completed their domestic procedures. 
This 12-country region-to-region free-trade agreement is of both commercial and strategic significance. It opens new commercial opportunities for New Zealand businesses and investors and it integrates our economy more closely with South-east Asia—a region of critical importance. I think the strategic significance to New Zealand’s future prosperity from access to the 10-country ASEAN market should not be underestimated. In terms of political leadership I acknowledge a number of people who have contributed to this initiative over a very long period of time. The first is the Hon Dr Lockwood Smith a former Minister of International Trade who was responsible for initiating the Singapore - New Zealand free-trade agreement. That spawned a thinktank expert group for this very agreement chaired by the then Deputy Prime Minister of Australia Tim Fischer with New Zealand being represented by the Rt Hon Bill Birch. Second I acknowledge the further work done by my two predecessors in the previous Government the Hon Jim Sutton and the Hon Phil Goff for their political leadership of this initiative. It has had widespread support over a very long period of time and I think there are some very important and obvious lessons that arise about the importance of continuity of policy in this area of interest to New Zealand. 
The ASEAN market of more than 566 million people is already New Zealand’s third-largest export market for merchandise goods. It was worth approximately NZ$4.6 billion in the year to June 2008 and New Zealand exports to the ASEAN region have grown at an astonishing compound average rate of growth of 24 percent over each of the past 3 years. Incidentally that rate of growth was faster than our rate of exports to China. It is clear that the ASEAN region is a critical one for New Zealand exports not only for outward investment but also for our wider economy and our future. We are a small export-driven and trade-dependent economy though it is my strong view that we have a great deal of work to do to increase the trade orientation of the New Zealand economy. Trading prosperity provides the basis for much of the current employment in this country and the continuing economic viability of this country. Improving market access for New Zealand firms through a progressive trade agenda including through this particular agreement that we are examining for the first time today will stimulate economic growth and will help create and safeguard New Zealand jobs. Let me emphasise that not just in this country but also around the world most research indicates that in the export sector we get higher-quality and higher-paid jobs. 
The ASEAN free-trade agreement like all of our free-trade agreements helps to create an environment that makes it easier more profitable and more predictable for New Zealand businesses to enter markets and to do business in those markets. Now as we find ourselves in the greatest period of economic downturn since the Great Depression of the 1930s securing new market access is more critical than ever. New Zealand stands to lose from protectionist measures which have a severe impact on trade and investment flows. I think that is well understood up and down the country. This agreement provides some considerable assurance against that long-term threat. It ensures that New Zealand businesses remain at the cutting and competitive edge benefiting from tariff reductions and a greater certainty of access. In the face of global pressures towards economic protectionism this agreement is a welcome sign that the ASEAN nations and New Zealand’s CER partner Australia are committed to staying open for business. 
In the area of goods exports the outcome secured by the agreement is an excellent one. Over time New Zealand will benefit from the elimination of 99 percent of tariffs on exports to the four key markets in ASEAN—Indonesia Malaysia the Philippines and Viet Nam. On day one of the entry into force of this agreement 70 percent of New Zealand’s current exports to these key ASEAN markets will be duty-free. In a sense a very large part of the job will happen immediately once the agreement enters into force. We do not have to wait the full 10-year period or 12-year period for this to start having substantial benefits for New Zealand goods and services and for the people whose employment is sustained by those companies. That figure on day one—70 percent—will rise to nearly 85 percent by 2016 which is not too far away. On full implementation under current levels of trade this will equate to an annual duty saving of approximately $50 million. Whether or not that is a gross underestimate—which I suspect it is—depends on the future growth of New Zealand exports to the ASEAN region. 
The ASEAN free-trade agreement does more than simply address tariff lines for merchandise trade. As we all know services are becoming an increasingly important part of our export economy. Our growth rate and services is actually somewhat better than the average OECD growth rate. It is not just the old story about agriculture—important though agriculture will be to our future. For New Zealand exporters of services the ASEAN free-trade agreement represents some real gains. For example the ASEAN countries have gone further for New Zealand than they have currently undertaken in respect of their World Trade Organization services commitments under the General Agreement on Trade in Services (GATS). This includes taking on commitments made in New Zealand’s priority service sectors which include education services and engineering. 
The free-trade agreement also helps New Zealanders investing in the region. They benefit from new and additional protections including the potential for recourse to binding investor-State arbitration procedures. New Zealand business people will also benefit from new provisions and disciplines that facilitate their movement across and within the region. The agreement includes robust and transparent dispute settlement procedures in order to resolve any trade-related disputes that may arise. It is a commonplace but correct observation that as countries increase their trade inevitably the number of disputes will rise. In addition to this aspect of the agreement New Zealand has also concluded legally binding agreements on trade and labour and trade and environment with the Philippines. These build on existing instruments in other areas of the ASEAN grouping—Thailand Brunei and Singapore—and we have ongoing processes to try to advance these objectives in respect of Indonesia and Malaysia. So it is an iterative process. These agreements enhance communication and cooperation on these issues and aid the objectives of raising working standards and improving environmental protection. 
This agreement has a direct bearing on New Zealand’s future in the Asia-Pacific region. The ASEAN free-trade agreement represents an important building block in the wider east Asia region and underscores New Zealand’s strategic commitment to greater regional integration. It is also strongly in our interests to do what we can to ensure that any moves in the Asia-Pacific region towards closer regional economic integration remain open and outward looking. By concluding this agreement New Zealand remains very well positioned to retain and play a proactive role in further regional initiatives such as the potential closer economic partnership with east Asia. This is a potential free-trade area that would encompass the 10 members of ASEAN New Zealand and Australia—that is the same countries we are talking about today—plus India South Korea China and Japan. The bill amends New Zealand law to comply with the ASEAN free-trade agreement thereby enabling New Zealand to bring the agreement into force. This requires certain amendments to the Tariff Act 1988 and some other consequential changes to legislation. 
The Government would like to commend this bill to the House and to see the bill enacted by 4 June 2009 to meet the target date of 1 July 2009 for entry into force. I commend this bill to the House.