Norman Russel: Questions for Oral Answer — Questions to Ministers 
Text is incorporated into the Bound Volume 
Norman Russel: Questions for Oral Answer — Questions to Ministers 
[Sitting date: 06 December 2012. Volume:686;Page:7270. Text is incorporated into the Bound Volume.] 
5. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
 to the  
Minister of Finance 
: Does he agree with the Prime Minister that the Trans-Pacific Partnership agreement is worth about US$2.9 billion to the New Zealand economy; if so has he or the Treasury seen this forecasting? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Yes I have seen the forecast and I agree with the Prime Minister that it suggests that New Zealand’s membership of the Trans-Pacific Partnership could be worth US$2.9 billion or 1.4 percent of GDP I think by 2025. I also agree with both the Prime Minister and the Minister of Trade Tim Groser that economic models are not perfect. Sometimes they undershoot the benefits and sometimes they overshoot them. They undershot the benefits in calculating the value of Closer Economic Relations with Australia back in the 1980s. We believe that the negotiations reflect the importance of the Trans-Pacific Partnership. If economies come together in a trade deal that represents around $21 trillion of GDP then we are likely to be better off inside it than outside it. 
Dr Russel Norman 
: What is the name of the report that the Prime Minister and the Minister of Finance were referencing with regard to this forecast? 
Hon BILL ENGLISH 
: I can refer to a report I have here completed I think by the East-West Center. I cannot give the member the name of a report. It sets out a range of scenarios and the one that the Prime Minister referred to was what you would regard as a medium scenario not one of the more optimistic ones. 
Dr Russel Norman 
: If indeed the report was from the East-West Center and was called  
The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment 
 has he read the results of the report which show that the baseline case—that is New Zealand without a Trans-Pacific Partnership—still results in a US$2.2 billion gain to the New Zealand economy compared with the claimed gain of around US$2.8 billion or US$2.9 billion inside the Trans-Pacific Partnership? 
Hon BILL ENGLISH 
: No I have not read the report myself and I would have to check with the Prime Minister whether he has. We are following a policy where we believe that getting better access for our exporters to large markets is going to be better for New Zealand because in the long run we have to earn an income and it is one of those things that the Government can do to support businesses. I understand that the Greens have a different view and if the member became a Minister of Finance he would probably pull us out of free-trade agreements. I doubt that anyone— 
Mr SPEAKER 
: Order! The Minister should not be speculating on that. 
Rt Hon Winston Peters 
: Does he agree with the demands of American drug companies involved in the Trans-Pacific Partnership negotiations that there needs to be a “fairer process and more transparency” around Pharmac? 
Hon BILL ENGLISH 
: If the Government agreed completely with the demands of American pharmaceutical companies the negotiation would probably be over. It is not. It is a long complex negotiation and the New Zealand Government’s position is to preserve the role and effectiveness of Pharmac. 
Dr Russel Norman 
: In light of the East-West Center report showing relatively small gains from being inside the Trans-Pacific Partnership has he read the Australian Productivity Commission report that found that this kind of economic modelling was used to oversell the benefits of these kinds of agreements? It was produced by the Australian Productivity Commission with regard to bilateral and regional trade agreements. 
Hon BILL ENGLISH 
: Well it is not unusual for us to disagree actually with Australian views about modelling. We have been going through one of those over having a common investment market between Australia and New Zealand. Regardless of the contest of spreadsheets we believe free trade is a good idea. It has served our exporters well and we want to continue with it because it provides jobs and incomes. We understand the member’s position. He is opposed to more jobs and more incomes from free trade and would pull New Zealand out of free-trade agreements. 
Rt Hon Winston Peters 
: Given the Minister’s answer to my first supplementary question if concessions are agreed to and the American drug companies are given a legal right to attack Pharmac processes and be part of those processes will the Government be able to claim that it has defended Pharmac rather than having sold Pharmac down the river? 
Hon Steven Joyce 
: Pretty hypothetical. 
Hon BILL ENGLISH 
: Yes that is a bit hypothetical. I mean if you do not do something you cannot claim you have not done it. The fact is we are protecting Pharmac’s role. Any trade negotiation amounts to weighing up compromises you might have to make of your own direct interests with the larger benefits in the long term of our exporters in a small economy at the end of the world being able to access large markets where it is easier to sell our products for higher prices because that flows back to jobs and incomes in New Zealand. I own up to the fact that in this negotiation we are focused on more jobs and higher incomes. We accept that the Opposition parties are not. 
Dr Russel Norman 
: Has the Minister given consideration that these kinds of agreements may involve benefits but they may also involve risks and one of those risks is the risk that was alluded to in the previous question—the attack on Pharmac—which could cost the New Zealand Government many hundreds of millions of dollars if it loses the ability to use Pharmac to drive down the price of pharmaceuticals? 
Hon BILL ENGLISH 
: Yes. 
Dr Russel Norman 
: Has the Minister looked at the costs and risks around Pharmac with regard to the costs that may come from investor-State dispute actions and in that light is he aware of the recent decision to award costs against the Government of Ecuador of US$2.4 billion as a result of a case that was brought by an oil company? 
Hon BILL ENGLISH 
: Yes and yes. 
Dr Russel Norman 
: I seek leave to table the working paper from the East-West Center about the potential benefits of the Trans-Pacific Partnership. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 









Document by leave laid on the Table of the House. 
Dr Russel Norman 
: In the Government’s analysis of the benefits and costs of the Trans-Pacific Partnership what consideration did it give to the decision by the Australian Federal Government to refuse to sign up to investor-State dispute provisions because that Government took the view that the risks to the Australian economy are too great to sign up to investor-State dispute provisions? 
Hon BILL ENGLISH 
: The member can be assured that the risks have been studied extensively. The whole business of negotiating these agreements is precisely to weigh up the benefits with the costs but I have to say a New Zealand Government has not yet signed a free-trade agreement that was not beneficial to New Zealand. Given our objectives of more jobs and higher incomes we will continue to negotiate through this agreement bearing in mind the risks. It is hard to understand why the Greens-Labour Opposition seems to be moving to a position of opposing free-trade agreements when they have such a track record of success for New Zealand. 
Dr Russel Norman 
: I seek leave to table a document from the International Centre for Settlement of Investment Disputes dated 5 October 2012 regarding the decision in the case against Ecuador where Ecuador lost a case of US$2.4 billion. 
Mr SPEAKER 
: Leave is sought to table that document. Is there any objection? There is no objection. 









Document by leave laid on the Table of the House.