Parker DavidHon DAVID PARKER (Labour): I join other members in promoting this bill for its passage and its third reading. I want to make a number of comments as to its contents and then also share with the House and perhaps listeners another matter of negotiating strategy that related to our desire in the Labour administration to achieve an artist resale royalty which we couldn't get agreement for in this House except as an adjunct to a trade agreement which is an interesting bit of history.Can I acknowledge the Minister Todd McClay for bringing this bill to the House and for the comments he made acknowledging the role of earlier Ministers particularly the Hon Damien O'Connor. I played a small role earlier when we tried to launch negotiations with the European Union. It's long been a source of disquiet in New Zealand that we haven't been able to reach free-trade agreements with some of our closest like-minded partners. We still face prejudice on a trade sense in the United States. Not so long ago under the Trump administration they whacked New Zealand exporters with tariffs on steel and aluminium which still stand there unfairly prejudicing the New Zealand economy because the Americans won't walk the talk when it comes to a fair trading relationship with New Zealand.We've had a similar concern for a long long time with the European Union but in recent years the European Union reached the view that they needed to actually have a look at political economy matters not just economic matters in determining who they should have free-trade agreements with. This came to a head under the leadership of Cecilia Malmström as the European Union Trade Commissioner and we saw a gap we saw an opportunity to get agreement within the European Commission to actually launch negotiations. And we tried to do it while she was still in that position. Unfortunately she couldn't quite get it across the line at that time and we had to wait a little bit longer to launch negotiations.None the less New Zealand saw the opportunity to take the gap and took a quite strategic approach to what would be within the ambit of that negotiation so that if agreement could be reached in principle it didn't run into a complicated endorsement process requiring the approval of individual countries or parliaments of individual countries within the European Union. So the scope of this was designed to be within the remit of the European Commission rather than requiring ratification by individual countries.There are a lot of very good points to this agreement that have been covered by other speakers. Obviously there are some very meaningful reductions in tariffs. In addition to that there is the security of the free-trade agreement preventing rules being changed to our disadvantage related to the status quo. So there's not just an improvement from the status quo there is the prevention or it makes it much less likely that the status quo could be changed to the disadvantage of New Zealand which it could have been more easily before this free-trade agreement was entered into. That's a very very important level of security for New Zealand exporters.New Zealand does have a strategy of diversifying our export markets. The benefit of this won't be just in the tariff reductions which save for existing exports about $100 million a year on coming into force. They will increase the volume of exports in addition to those existing exports on which we will save $100 million. There will be more exports as a consequence of this and the benefits to the New Zealand economy will be greater than that.Some of the non-tariff - related benefits include cooperation around matters that are very important to New Zealand. The world has a problem with many countries in the world subsidising fisheries in a way that actually makes it harder to attain the sustainability of those fish stocks in the ocean. And if countries are subsidising their fishers to go out there and plunder fisheries it's more likely that those fisheries will be fished in an unsustainable manner. We've had great difficulty in New Zealand getting progress on that issue despite New Zealand leading on that particular issue for many decades so long in fact that the original proposal that was taken into the World Trade Organization (WTO) was taken into a World Trade Organization meeting in Geneva by a then very young trade official in his first official job in Geneva. He's now the head of the trade Vangelis Vitalis and he's only just got it across the line in the WTO setting recently but it's reinforced through the provisions in this agreement.The Hon James Shaw made reference to the fact that the investor-State dispute (ISDS) clauses that were one of the causes of dissatisfaction in society not just in New Zealand but around the world with trade agreements are absent from this. And when we were in Government we reversed the position of the Ministry of Foreign Affairs and Trade and told them to oppose ISDS clauses rather than support them and that's been carried forward into this agreement. There is no ability for corporates to enforce this agreement by suing the New Zealand Government alleging breaches of the agreement. It has to be Government-to-Government enforcement. That at times is necessary as we have found recently in respect of the New Zealand Government action against the Canadian Government for their failure to properly bring into force the provisions relating to dairy access into Canada under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.I won't repeat my disagreements with the Māori Party in respect of the Treaty clause in this legislation which I covered in an earlier reading on the legislation. Suffice it to say that our Treaty clause protecting the Government's right to do what's necessary in the name of the Treaty in New Zealand is the best in the world. It cannot be improved upon in practice because if we reopen it in those negotiations we won't get it. So it's very good. It may be imperfect but it's very very good.One of the last points I was going to make was on the artist resale royalty. Since the Helen Clark - led Labour Government we have wanted to have a resale royalty where artists—and in New Zealand because we've got a very small art market there aren't many people who manage to make a living from their art that is comfortable even though they work hard at it. None the less when the occasional ones succeeds it's generally years after they've sold their artwork. The commission agent or the art house that's auctioning the artwork takes a margin or 40 or 50 percent and the artist gets nothing on the resale. So we've always thought that was unfair and that there should be a resale royalty paid back to the original artist. We've never been able to get it through in a policy sense until we actually acceded to it in the UK agreement and in this agreement and on the back of both of those agreements we actually achieved the approval of Parliament to the passage of legislation to impose an artist resale royalty. So on that issue I would say that I actually had a political strategy that that was the way to achieve it and it worked. I'm quite pleased to record that.Our political strategy on the other side of those negotiations was that if we gave way on that—and I wanted us to give way on that because I wanted to achieve it at home—it meant that we didn't have to give way on things like extending the term of patent rights which would have meant a delay to the date on which you can use generics in substitute for patent-protected medicines. Because if we had given way on that we would have increased the cost of medicines to New Zealanders including in the public health system as well as for people who acquire those things privately.The last point I'll make is that free-trade agreements aren't the be-all and end-all—well second to last point—of economic policy. The misallocation of capital in New Zealand is a more pressing problem in my opinion than imperfect trade access abroad and it does pain me to see that once again we're lurching backwards in respect of interest deductibility rules. In my opinion whilst there can be a legitimate economic argument as to whether the real component of interest ought to be deductible the non-real the inflationary compensation part of an interest payment ought not to be tax deductible because it is compensating the lender of the money for inflation. At the end of the year the borrower owns in real terms a lower amount by virtue of the inflationary discount that they effectively get a tax deduction for. That's unfair to both the person who makes a bank deposit and is overtaxed and it's not right that the borrower gets an excessive deduction. This is one of the things that leads to the misallocation of capital in New Zealand. It's one of the reasons why our housing prices are so high relative to income and addressing that would be a very good thing in order to direct investment into the productive sector which drives the sorts of exports that we then get access to overseas markets through free-trade agreements.We have taken the gap as a country. It's good that we've pushed this through. One final point: it does though put up the price of our export products to New Zealanders who face export price parity. It's something we don't talk about but you can't fix that through trade policy.