Parker David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — First ReadingText is incorporated into the Bound VolumeParker David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — First Reading[Sitting date: 16 June 2015. Volume:706;Page:4403. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Labour): The Labour Party will be supporting the first reading of the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. It is well known that there is a high level of agreement across the House between the two main parties that New Zealand is a trading nation that has economic advantages from facing fewer barriers to that trade abroad. The Minister of Trade Tim Groser can tell me if I have got this wrong but I think between 2 and 3 percent is the average tariff that is faced by other countries that are selling goods to New Zealand. In contrast for a lot of our products overseas we face tariffs of over 100 percent in some of our major markets. Of course that means that the amount of money that is received by the New Zealand seller is less because they are facing that tariff barrier at the border overseas.We are proud of being a pro-trade party. We are pleased to claim some substantial credit most of which goes to the Hon Phil Goff for the Chinese free-trade agreement. At the time of the free-trade agreement with China bilateral trade was about $2 billion per annum. It peaked at about $12 billion and it is still over about $10 billion. It might drop a little bit under that with the drop in the dairy prices. But a massive increase in the two-way trade between China and New Zealand—David Shearer: Exports are $10 billion.Hon DAVID PARKER: Exports are $10 billion and imports are about the same. Yeah so bilateral trade each way is about that amount. This tariff bill is supported by us for that reason. If we do not pass this bill in Parliament not only will we not have the advantage of those tariff reductions but our exporters will face competitive disadvantage in Korea when competing against other countries that face lower tariffs—most notably Australia which already has a free-trade agreement with South Korea. That means that all other things being equal if a New Zealand exporter faces a higher tariff going in to South Korea than an Australian company then either the prices that are charged by a New Zealand seller have to be lower than the Australian price or you will not get the deal because of the differential in the two tariffs. This is overall a good free-trade agreement and for that reason we support it.I want to thank the select committee for the way in which it was willing to put up with the Opposition’s questions. We did hold a question time because we wanted to explore some of the criticisms that have been made in civil society where some very well-meaning people in society are getting very anxious about not so much the trade and goods permitted under free-trade agreements but some of the rules relating to services and in particular rules relating to investment protocols. I think one of the reasons why we are now having protest marches around the country—anti - Trans-Pacific Partnership rallies that attract thousands of people—is that we are not having an open-enough discourse with members of the public as to the concerns that they legitimately hold. They are not always right in their concerns but it is their right to hold those concerns and to express them and it is the duty of this Parliament and in particular the Government to engage with these issues so that they can shed light upon the issues at large.The common complaints that we hear are for example that New Zealand will have to change its laws in a way that accommodates the wishes of the country that we have got a free-trade agreement with. I do not think New Zealand has done a very good job of this in the last 6 years with due respect to the honourable Mr Groser. I do think we need to do better on this otherwise you are going to have this rising discontent some of which is misplaced and some of which is well-placed. I want to consider both sides of that. First of all I would record the very clear advice that we had from officials—and can I thank them for the advice they tendered the select committee—who made it absolutely clear that this agreement requires absolutely no change to New Zealand’s labour laws no change to our property laws no change to our taxation laws no change to our intellectual property laws no change to our public health laws or our environmental laws. I think if a lot of the submitters knew that or are hearing that—and I hope they do listen to that—their concerns would be at least in part addressed.In respect of the freedom of future Governments to act we drilled into this a lot at select committee. One of the concerns that submitters raised—actually before I address that I will just address the process. Normally the process for consideration of free-trade agreements under the current Government is very very truncated. We understand that once you enter into a free-trade agreement you want to take advantage of the economic advantages that flow from reduced tariffs faced by our exporters as soon as possible. That is a proper objective but it does have to be balanced with the right of the public to actually express their concerns and have their concerns heard and dealt with properly. On this occasion we had the normal 15-sitting-day requirement when the treaty came before Parliament. It was referred to select committee and the motion gave us 15 sitting days which is generally only 3 weeks. But because we had a 3-week adjournment in that period we managed to extend it effectively to 6 weeks. That meant that we could give a period of advertising to interested people. We gave them time to give us submissions and we had some very detailed and thorough submissions given to us and then we had time to consider them. As a consequence I think we left select committee with the agreement of all parties including some parties that are less pro-trade than we are in the Labour Party which cooperated to write what I thought was a very good report. And so I would congratulate all members of the select committee on all sides plus the officials who helped us to achieve that outcome.In respect of effects on the ability of future Governments to take action these generally fall into three areas of concern: constraints on the ability of a future Government to legislate for public health constraints on the ability to legislate for environmental outcomes and your inability to control your own destiny when it comes to things like land sales. Again we had very clear advice from officials that going forward there is no curb on proper legislation for public health reasons. The example that we used—and we had very clear advice from the officials—was that for example if the Government wanted to introduce plain packaging on cigarettes then that would not breach the free-trade agreement. We had submissions from some submitters saying that there is somehow a chilling effect on the way in which Governments might respond to that and saying that this was one of the reasons behind the delay for the current Government’s implementation of what Tariana Turia was pushing as Associate Minister of Health—which was plain packaging on cigarettes—but we were told by the Government that that is not correct.In respect of future restrictions or proper environmental laws like an increase in the price of carbon or other measures that you need to curb carbon emissions again we had assurances from officials that that was permitted. In respect of the third area though there is a problem. That relates to whether a future Government can limit or ban new categories of land from being sold to overseas people—in this case South Koreans. We had advice from Amokura Kawharu. Amokura Kawharu is the co-author of the leading text on commercial arbitration in New Zealand. It is called Williams and Kawharu on Arbitration. She is also an academic at the University of Auckland. She gave us advice that it was not possible to add new categories of land the sale of which can be banned to foreigners—in this case South Koreans. I think that is a problem in the drafting of this agreement and it needs to be made clear—I would hope by a side letter—and I would hope that future agreements are clearer that this is permitted by a future Government because although the current Government might not want to have a ban on overseas land sales other Governments properly might want to and their ability to do should not be constrained by free-trade agreements.In my last minute I want to say something similar in respect of stamp duty that applies only to some overseas purchasers rather than to New Zealand residents as well. Both of these practices are common overseas and indeed the Australians managed to accommodate both of those matters in its free-trade agreement with South Korea so we should have been able to achieve that also.The last thing is investor-State settlement provisions. These are very controversial. There are still some problems with the international mechanisms. Arbitrators and panels that are drawn from trade lawyers are faced with the accusation that they are really not like an independent judiciary. They do go back to being trade lawyers so they arguably are not quite as independent as a judicial officer should be expected to be. There are limited appeal rights and there is a question particularly in respect of First World countries whether you should have investors having rights to sue the State or just have country-to-country enforcement of agreements which is what has happened previously in respect of most agreements. I know we have got investor-State dispute settlement clauses in the New Zealand - China free-trade agreement and that is a good agreement but we have reached the point in the Labour Party where we would be happy to have free-trade agreements with First World countries without investor-State dispute settlement clauses. It is interesting that in countries such as in Europe Australia and indeed the United States there seems to be an appetite for that too. With those comments I note again that the Labour Party is supporting this bill.