Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — Second Reading In Committee Third Reading 
Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — Second Reading In Committee Third Reading 
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Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill 
Second Reading 
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. 
Hon MARYAN STREET (Labour) 
: 
 I rise to speak on the second reading of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill which will put in place the free-trade agreement with Hong Kong. The Minister of Trade has elsewhere noted that the benefits of this free-trade agreement with Hong Kong—or closer economic partnership as we are calling it—have many aspects to them. He has said previously that this closer economic partnership complements our free-trade agreement with China and there is no doubt that it does. In fact when I finished my speech on the first reading of this bill I was at the point of saying that this closer economic partnership agreement rationalises and allows businesses to springboard between Hong Kong and China. New Zealand businesses will be better able to move seamlessly between Hong Kong and China with their trade and business arrangements. 
The Minister who presented the first speech on the second reading the Hon John Carter referred to the fact that this closer economic partnership breaks new ground for Hong Kong. It is the first agreement of this type outside its agreement with Mainland China. For New Zealand it adds to a growing list of free-trade agreements that are both high-quality and comprehensive. But it is worth noting that the novelty of this closer economic partnership was the item that took the media’s attention when at the time of signing at the end of March earlier this year the media reported this new free-trade deal. They said that New Zealand and Hong Kong signed a free-trade deal—the city’s first outside China. Clearly Hong Kong is looking at it as a model and as a template for other such agreements and that is good. Hopefully it is of benefit to them. For us there is a whole panoply of new high-quality free-trade agreements that we have achieved over the years between successive Governments I might add as I do not think there is yet one free-trade agreement that has been signed by this National Government that began with it; they all began with the Labour Government. 
I draw attention to a couple of points and one that is particularly apposite is the trade in services. Usually we are accustomed to looking at tariff reductions and trade in commodities but the trade in services is of real benefit to New Zealand. The securing of access should allow a whole range of services to maximise trade with Hong Kong. First the closer economic partnership protects existing access for services. It is good to have that cemented in but it is simply the status quo. The agreement goes on to talk quite comprehensively about the range of services now covered by this closer economic partnership such as professional services business services education construction and engineering logistics air services environmental services computer and related services tourism sporting and other recreational services and so on. The list is expansive. 
One of the most exciting things about this closer economic partnership is the ability of New Zealand to trade on its strengths not just in commodities but in the provision of high-quality services. It is something that will become increasingly important if we are to improve the economic status and wealth of this country. We need to look further to the exporting of services and look past the exporting of commodities alone. So trade in services is significant. 
The second point I draw attention to is noted in the national interest analysis. We have labour and environment agreements as part of this closer economic partnership. For a long time—certainly for the last 10 years anyway—we have insisted on labour and environment clauses first of all being attached to our free-trade agreements but more latterly becoming integral parts of our free-trade agreements and that is a good thing. The national interest analysis states that the New Zealand study on the benefits of a closer economic partnership between New Zealand and Hong Kong identified sustainable development as a core national objective for both economies. I think we are getting to the stage with trade agreements where they cannot be seen in isolation. Trade agreements impact upon and are impacted by labour standards. They impact upon and are impacted by climate change agreements and by emissions trading schemes and global efforts to reduce the carbon footprints of industry in particular. The fact that this agreement identifies sustainable development as a core national objective for both economies may come as news to some members of the National Party but it is an important and forward-looking element inside this closer economic partnership. 
The labour memorandum of understanding and the environment agreement provide an opportunity for New Zealand to seek input from non-governmental sectors in identifying and developing potential areas for cooperation. If there are areas where we can cooperate with Hong Kong over labour standards—they may be health and safety standards they may be more than that they may be to do with income levels—or if we can assist with environmental protections and production of goods and delivery of services in a way that minimises the emissions impact of those commodities and services then both economies and even in a very small way the world the global environment are enhanced. These things are now no longer simply clip-on elements. An agreement about labour standards and an agreement about environmental standards have become an integral part not only of this closer economic partnership but of other free-trade agreements. This is the way for the world to move forward. Free-trade agreements can be used for more than simply free trade. Thank you Mr Deputy Speaker. 
JOHN HAYES (National—Wairarapa) 
: 
 I suggest that we on this side of the House did not find it surprising at all that this bill referred to sustainable development and the importance of having sustainable economies. In fact this bill had its gestation in 2001 but it hit the wall in 2002 when the Government of the day—I think they might have been people from the other side of the House—decided to abort the dialogue between New Zealand and Hong Kong. It was only in 2009 when we had a new Prime Minister the very active non-bogged-down-in-process John Key who engaged in dialogue with his counterpart in Hong Kong David Tsang that at a meeting in Singapore effectively this agreement was concluded. It will bring huge benefit to every New Zealander and particularly to all the exporters in the Wairarapa electorate that I represent. For 9 years we sat here—9 years of frustration—while that Government took no action at all. But—hello—John Key our very excellent Prime Minister has been given the opportunity to drive this country ahead and that is what he has done. If we look at the record of that previous Labour Government through 9 long years we see that it lifted our wages in this country by a magnificent 3 percent in real terms— 
Todd McClay 
: Is that all? 
JOHN HAYES 
: —3 percent in real terms. 
Hon Phil Heatley 
: Each year—it must be? 
JOHN HAYES 
: No no not each year—3 percent in 9 years. There was a 3 percent increase in GDP in 9 long years. 
Hon Phil Heatley 
: That’s a third a year. 
JOHN HAYES 
: That is dead right. But I draw this country’s attention and particularly the attention of that party to the activities of John Key in 18 months. He has lifted real wages in this economy by 8.7 percent in the last 18 months. How has he done that? He has done it by refusing to get bogged down in process and arguments and he has driven this country forward in a very practical way. This bill is a part of that process. This bill will boost innovation and it will improve export access to world markets which is one of the National Government’s six policy drivers for a step change in our economic performance. 
The agreement with Hong Kong a market of 7 million people is an important part of our focus on free trade and the improvement of access for our exporters to world markets. That is very important in my electorate. The agreement is a priority and it was included in the Prime Minister’s statement to this Parliament in February. Our Prime Minister has made it very clear that it is only by lifting our economic performance that we can create jobs boost incomes improve living standards and provide the world-class Public Service that Kiwi families deserve. I am fully in support of this bill and will support it through its second reading stage. Thank you. 
STUART NASH (Labour) 
: 
 There is a saying that most people will know. It goes along the lines of “lies damned lies and statistics”. The economy grew by 25 percent under Labour so when the previous speaker John Hayes talked about John Key increasing wage growth I can tell that member that in the 9 years before the previous Labour Government came into office National had increased the minimum wage by $1—$1—over 9 years. Labour took the minimum wage from $7.50 an hour to $12.75— 
Mr DEPUTY SPEAKER 
: This is a second reading of a bill. I refer the member to Speakers’ rulings 105/5 106/1 and 106/2. Although one can mention what the Opposition has said in terms of the debate one cannot dwell on that at length. 
STUART NASH 
: When we look at New Zealand wages in comparison with those of Hong Kong we see that we are in fact quite a low-wage economy. The reason why we are when compared with Hong Kong and our other Asian neighbours is that the former National Government increased the minimum wage by only $1 over 9 years. 
If people had been living in Hong Kong there would have been a revolt—even in a country like Hong Kong. And there was; New Zealand elected a Labour Government that took the minimum wage from $7.50 an hour to $12.75 an hour. When National members talk about Mr Key and his active agenda in terms of going to Hong Kong I say that he has increased the minimum wage by only 50c an hour. If people are earning a million dollars a year—and about 350 people in New Zealand earn a million dollars a year—they are about to get another $1000 a week. But if people are on the median wage in Hawke’s Bay they will get only about $3 a week. That is a travesty. 
I stand in support of this Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill because bilateral trade agreements are vital to the country’s sustained economic development and growth. The previous speaker knows because he was involved in the trade game for a long time that every single free-trade agreement and closer economic partnership that has come before this House was negotiated by either Phil Goff or Jim Sutton. Labour started every single negotiation that has come through this House that we have passed into law. Mr Groser has taken the ball and dotted it down. He has received the final pass and crossed the try line just as that great Hawke’s Bay player Israel Dagg—great Magpie man that he is—did in the recent test against the Springboks. That is all that Mr Groser has done. Phil Goff and the previous Labour Government were the team that actually took the ball and ran with it. 
I will outline just two points. The first is the necessity of negotiating sound free-trade agreements. The second is the fact that this National Government is simply not doing enough to ensure that New Zealand companies can take advantage of new opportunities like the one we are passing into law tonight. Closer economic partnerships or CEPs as they are known are a vital part of New Zealand’s economic development policy. They break down tariff quotas and custom duties that restrict access and profitability for New Zealand exporters and importers. They will hopefully lead to increased imports and exports and to potential added wealth for both countries. New Zealand signed the closer economic partnership with Hong Kong on 29 March 2010 and this bill will implement that agreement. 
Hong Kong is currently our ninth-largest export destination accounting for $823 million last year in exports. New Zealand imported $199 million worth of merchandise goods from Hong Kong last year making Hong Kong the 31st largest source of imported goods. However let us put that into perspective. Hong Kong accounts for only 1.9 percent of New Zealand’s total exported goods and only 0.4 percent of our total imported goods. Therein lies the challenge to this economy going forward. New Zealand’s ninth-largest export destination accounts for only 1.9 percent of our total exported goods. If there were ever a case for global diversification those figures are it. There is a very strong argument for this type of free-trade agreement. It puts potential trading partners on the map and on the radar of New Zealand Trade and Enterprise as well as of potential exporters. Despite Hong Kong’s small size it is a market that is already rapidly expanding. Last year’s total exports increased by 33.6 percent compared with the figure for 2008. However total imports declined by 2.5 percent compared with the figure for 2008. 
The largest area of export growth by percentage was actually that of apples the value of which increased by 122 percent. It is good for the people of Hawke’s Bay considering that that province is “the fruit bowl of New Zealand”. Members can believe it or not but the product registering the second-highest percentage growth is offal which was up by 66 percent over that 2-year period. However the product of the largest value by far—by almost four times that of the next largest—is crustaceans. The value in 2009 was about NZ$200 million free on board. To put that into context sheepmeat exports were worth about $42 million. In terms of imports the largest area of imports is machinery parts which account for about $16 million worth but that dropped by about 15 percent. 
I note that the closer economic partnership does not provide Hong Kong investors with an exemption from New Zealand’s investment screening regime as set out in the Overseas Investment Act 2005. The Act requires overseas investors to apply to the Overseas Investment Office for consent to invest in New Zealand fishing quota sensitive land or business assets over $100 million. The screening threshold for Hong Kong however is $20 million which is well below the threshold of $100 million applicable to other overseas investors. New Zealand service exporters as was mentioned by my colleague the Hon Maryan Street have also secured strong future-proofing of their position in the Hong Kong market through the most favoured nation treatment and a ratchet clause. The most favoured nation treatment means that New Zealand exporters will automatically benefit from any preferential treatment that Hong Kong provides to future free-trade agreement partners subject to certain reservations and exceptions. The ratchet clause means that any future unilateral liberalisation undertaken by Hong Kong in certain sectors will be bound in and committed to New Zealand. 
My second point is the fact that this Government is simply not doing enough to ensure that New Zealand companies can take advantage of any new opportunities generated by this and other free-trade agreements and closer economic partnerships. Prime Minister Key came away from China and said that he wanted trade to that country doubled in 4 years’ time. Well the vast majority of us want the same. Increased sustainable trade is a necessity for New Zealand’s future economic growth and development but the difference between National’s approach to trade and Labour’s approach to trade is quite stark. Under trade Ministers the Hon Phil Goff and the Hon Jim Sutton Labour increased the budget for market development and access opportunities by millions in the knowledge that operating in a foreign environment like China requires very specific skills knowledge and support. 
I ask members to imagine going into a country like Hong Kong where the language the customs the laws the business practice etc. are completely different then take into account that 97 percent of New Zealand’s businesses are small to medium sized enterprises. This means that 97 percent of New Zealand businesses employ 19 people or fewer. They simply do not have the skills competencies or resources to employ a full-time international marketing or market development manager. Labour recognised this and built a support network around key markets to help businesses optimise their opportunities. National under Tim Groser and Gerry Brownlee has instead cut the budget. When questioned about this Mr Groser said: “Our plan is to do more with less.” That is not even a decent slogan—“more with less”—let alone a goal or a plan and it is certainly not a strategy. That is why I say that this Government is not doing enough to help the country and its companies to take advantage of this type of free-trade agreement. 
In conclusion I say that I support this bill. It is a Labour bill of course; it was negotiated by Phil Goff. It is another important step in the process of growing opportunities for New Zealand companies. However as I said that Government over there is simply not doing enough to allow New Zealand companies New Zealand businessmen and businesswomen to take advantage of this. One cannot do anything with a “more with less” strategy. This Government needs to engage more with the business community in terms of allowing these companies to take advantage of the opportunities generated by this agreement which was negotiated by the next Prime Minister of New Zealand the Hon Phil Goff. Thank you. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I stand to speak on behalf of the Green Party on the latest round of preferential trade agreements that National and Labour have been signing us up to. This is not a free-trade agreement as the previous speaker Stuart Nash and other speakers have said; it is actually a preferential trade agreement—that is it is a preferential trade agreement between two countries or rather in the case of Hong Kong a kind of subset of a country. This is a preferential trade agreement. Like all of the preferential trade agreements that have been signed up to by Labour and National it has some real problems for New Zealand. I will talk in general terms about some of the problems with these preferential trade agreements and then talk specifically about why signing a trade agreement with the Chinese Communist Party is a particularly stupid thing to do as if all the others were not stupid enough. 
One of the issues with these preferential trade agreements is the investment clauses within them. In this particular preferential trade agreement with Hong Kong the investment clauses are to be negotiated by an exchange of letters rather than be included in the agreement itself but I think that the best way to understand the framework within which this agreement is operating is to look at the parallel agreement that goes alongside this which is between China and New Zealand. Chapter 11 of the New Zealand - China preferential trade agreement looks at issues to do with investment clauses. Basically it says that investments in each country have to be given national treatment—that is under article 138 we need to treat Chinese investors in New Zealand the same as we treat New Zealand investors in New Zealand except where we have non-conforming measures as they are called. Non-conforming measures are addressed under article 141 of the New Zealand - China free-trade agreement which is the parallel agreement to this one. 
Basically as is the case with most of these preferential trade agreements it operates as a ratchet. It says that whatever non-conforming measures we have on investment at the time that the treaty was signed we can keep them. We cannot make them any tighter but we can weaken them. Our overseas investment laws as they currently exist place certain constraints on incoming investment from foreign countries. Those laws can remain in place but they cannot be tightened. They can be weakened and that acts as a ratchet. The overseas investment laws as they currently stand whether they are to do with sensitive land—that is blocks of rural land over 5 hectares—or business investments of over $100 million can be weakened as if they are not weak enough already but they cannot be strengthened. 
These trade deals try to freeze the existing overseas investment laws in place. They say that we can weaken those laws further but we cannot strengthen them. Labour and National are signing up to what should really be called “sell the family farm trade agreements” because that is what they are designed to do. The way that these agreements are negotiated say that our current investment laws cannot be strengthened. We know that under the current investment laws we have sold off maybe 150000 hectares of farmland into foreign ownership over the last 5 years although the figures on it are a little unclear because it is not all recorded. Under Labour’s watch we sold large chunks of the country into foreign ownership. These agreements say that we cannot tighten the laws any further so that the laws currently in place which enable very large amounts of New Zealand land to be sold into overseas ownership cannot be tightened. That is exactly what is explicitly stated in these agreements. 
In the Hong Kong agreement it is to be done by an exchange of letters which operates in parallel with the agreement and is currently being negotiated. In the agreement with the Chinese Communist Party it is in chapter 11. I invite members to look seriously at chapter 11 of the New Zealand - China free-trade agreement—or preferential trade agreement as it actually is—and they will see the provisions that prevent us from exercising our democratic rights as a sovereign Parliament to change the rules on foreign investment. Goodness knows it would take quite some doing but if this Parliament were to find the courage within itself to strengthen the rules around overseas investment to stop family farms being sold off—because this Parliament has overseen a massive sell-off in family farms and is planning to continue doing that—and if it were to find the moral courage to say that we do not want all of our family farms to go into overseas ownership in Hong Kong China or any other country then we would find ourselves in breach of the investment treaties that Labour and National are so intent on signing the Government up to. 
Article 141 of the New Zealand - China free-trade deal which will be paralleled by the exchange of letters in the Hong Kong deal says that the national treatment does not apply to any existing non-conforming measure. Our overseas investment laws are a non-conforming measure. It says that we can continue with that but we cannot increase the non-conformity of the measure. Article 141(3) of the New Zealand - China free-trade agreement which will be paralleled in the Hong Kong agreement very clearly states that we cannot increase the non-conformity of these measures. That means that if we want to increase the restrictions on foreign ownership of New Zealand land then we will be breaching the agreements that National and Labour are so intent on signing us up to. 
Over and over again National and Labour are tying us into that situation. With China and Hong Kong that means making a deal with the Chinese Communist Party an authoritarian capitalist regime that imprisons people who disagree with it that locks up people if they do not agree with it. That is the deal we have signed in this particular case with the Chinese Communist Party. China is a one-party State and that party controls the Chinese Government. The President of China Hu Jintao is not the President because he was elected; he is the President because he is the Secretary-General of the Chinese Communist Party which of course appoints the President of China. 
By signing up to these agreements we have locked in place the current overseas investment regime. If we wanted to tighten the overseas investment regime we would be breaching the terms of the agreements that Labour and National have locked us into. We have heard a lot recently from Labour and National about how they have somehow decided that they do not like the sale of family farms to foreign owners even though they have both been overseeing it for a very long time. In particular Labour as the previous Government was very keen on selling off the family farm; that is why it sold literally hundreds of thousands of hectares into overseas ownership. It has locked us into an agreement that means that we cannot tighten the rules on overseas investment. Chapter 11 of the New Zealand - China free-trade agreement which parallels the exchange of letters that is to come in the Hong Kong free-trade agreement says that we can have measures that treat overseas investors differently like our overseas investment laws do now but we cannot tighten them. We can weaken them but we cannot tighten them. If we decided that we did not want any further family farms over say 500 hectares to go into overseas ownership we would be breaching the terms of the New Zealand - China free-trade agreement and no doubt the terms that will be in the exchange of letters with the Hong Kong - New Zealand free-trade agreement. 
When National and Labour members sit in this House as they do day after day and pretend that they are worried about the sale of foreign land we have to wonder why they are signing us up to agreements that lock in the current rules that enable the sale of land to foreign owners. I think that that is something that is unexamined. In these debates about free-trade agreements anything called a free-trade agreement immediately gets support from National and Labour. They just vote for it. They have a reflex reaction. If it is called a free-trade agreement they vote for it. They do not think about it or read the treaties. They do not read chapter 11 of this treaty which covers all the investment clauses. They think “Oh free-trade agreements! We must vote for them.” regardless of the fact that they are constraining the ability of this Parliament and future Parliaments to regulate in the democratic interests of people in this country. If we democratically decided that we wanted to tighten overseas investment laws beyond those that currently exist we would be breaching chapter 11 of the New Zealand - China free-trade agreement and no doubt the exchange of letters required by the Hong Kong - New Zealand free-trade agreement. 
That is why the Green Party will not be voting for this. Unlike National and Labour we are not happy with the sale of New Zealand land being completely unregulated and we think that we need to tighten the laws around investment in New Zealand in order to do what is in the best interests of this country rather than being bound up by some kind of ideological position in favour of anything called a free-trade agreement whatever the content of that agreement is. 
JACQUI DEAN (National—Waitaki) 
: 
 In my contribution on the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill I speak strongly in favour of it. I was interested in the contribution from the co-leader of the Green Party Dr Russel Norman. I think it is a shame that the permanent Green member on the Foreign Affairs Defence and Trade Committee Keith Locke has not had an opportunity to speak on this bill because at least he has gone through the select committee process and scrutinised the bill along with the Labour and National members on that committee. Although I accept that he will not vote in favour of this bill at least he has taken the time unlike the co-leader of the Greens to scrutinise the bill and its impact on New Zealand. 
Rather than playing the blame game about who first started the process of this bill—which Minister started the negotiations and who signed it—apart from congratulating the Hon Tim Groser on signing the deal I want to focus on the benefits for New Zealand and in particular on the benefits for the agricultural sector. I want to zero right down to a paddock of lambs that are being born in—well it is a bit early for Central Otago—the North Island where we now see lambs being born in the Bay of Plenty. We know that in little over a year a good proportion of those lambs will be on their way to the wet markets and supermarkets of Hong Kong courtesy of this closer economic partnership agreement the endeavours of the farmer and the processing and marketing industry in New Zealand. New Zealand lamb and sheep meat is highly valued in Hong Kong. We could probably supply more of it but with flock numbers falling unfortunately we seem to have a bit of a crisis in the sheepmeat industry in New Zealand. Things like this free-trade agreement can only do benefit to the health of the New Zealand agricultural sector. For that reason for those paddocks in the North Island and in Central Otago and for the farmers in that industry I believe that the closer economic partnership agreements with Hong Kong and China can only bring benefit to New Zealand. Thank you. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 The Government is indeed to be congratulated on the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. It is very much in line with the Government’s aim to expand our trade. After all we are an exporting nation. That is something that has escaped previous speakers. We are absolutely dependent on our exports and we need to take every advantage we can. This partnership agreement with Hong Kong enables us to do so. It is part of a network that has been established over the years that includes our free-trade agreements with Thailand Singapore China Malaysia and Brunei and of course the ASEAN-Australia-New Zealand Free Trade Agreement. 
It was interesting to hear the previous speaker the excellent Jacqui Dean from Otago talk about how vitally important this partnership agreement is to our primary products. I can say that the spring lambs are frolicking in the fields around Pukekohe Franklin and Karaka where I live. They along with the great produce that comes from the vegetable basket of New Zealand from the rich fertile soils of Franklin are the sorts of things that will benefit from this partnership agreement with Hong Kong. 
I want to make two particular points. First this closer economic partnership will ensure that New Zealand’s exports to Hong Kong are locked in for exporters. Only 14 percent of New Zealand’s current exports to Hong Kong are in tariff lines that are unbound. This means that Hong Kong is currently free to increase tariffs to any level without breaching its World Trade Organization commitments. Locking in New Zealand’s duty-free access will provide New Zealand exporters with certainty on tariffs that their competitors do not enjoy. Second the closer economic partnership contains phasing of the elimination of tariffs that exactly mirrors that in the New Zealand - China free-trade agreement in order to avoid creating any incentive for Chinese manufacturers to route their products through Hong Kong in order to take advantage of the more favourable access enjoyed by Hong Kong. This of course is crucially important. Although Hong Kong has a population of only 7 million people by about 2050 China will have a population of 1.5 billion people with a much higher per capita income than they have today. Naturally they will be hugely important for New Zealand exports. 
I too commend this bill to the House. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 Without wanting to derogate from the importance of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership) Amendment Bill one iota it is probably worth recording that there is a certain sameness about debates on trade agreements. It is a good thing but there is a certain sameness because after the arguments of the 1970s and more particularly the 1980s this country seems to have embraced free international competitive trade as a hallmark without any hesitation. It has been quite open to it. As a result the two big blobs of the political spectrum Labour and National go around saying how good it is and what potential— 
Jacqui Dean 
: Who are you calling a blob? 
Hon PETE HODGSON 
: Well it is the two-big-blob theory of politics unlike the model in Scandinavia for example or wherever. 
Jacqui Dean 
: Unfortunate. 
Hon PETE HODGSON 
: If the member does not want to be called a blob I withdraw and apologise. It was not meant as a nasty comment; it was just a way of describing the political landscape. We go around talking about the importance of trade the rules of origin how we are very pleased about it and the ratchet clause. Then we say that this trade Minister that trade Minister and the one before him—because I think they have always been “hims”—were very good trade Ministers and no doubt trade Ministers yet to be born will be very good trade Ministers too. Then we say that in respect of the Greens we understand and respect their differentiated position but we notice that first of all they are in a minority and secondly they are not exactly against trade. The Greens then get up to say that verily they are not against trade but they are just against trade in this or that circumstance. That is what I mean about the sameness of trade debates. It is something to be celebrated because little enough in politics is agreed across the House and it is better that instead of fighting over everything we fight only over stuff where there is genuine disagreement. This is one area where there is not disagreement. 
However I will make two points which are slightly unrelated. The first is that the Holy Grail of Doha appears to me to be not making so much progress. We are always talking about another trade agreement with a country in South-east Asia North Asia East Asia or wherever it might be or we might go across to South America and fold in the Chileans and so on—and so too with this agreement in Hong Kong which is an advance on an earlier agreement we had with that part of the world. But we notice that the agreement relates to Asia. We notice that it is not to do with Europe or North America. 
I do not want to name-drop but I had dinner on the Saturday before last with a woman called Ann Veneman who was Secretary of Agriculture under President Bush. I do not want to quote her at length because it was a private meeting but she knew trade Ministers from long ago in New Zealand and had met one or two them; she met Jim Sutton for example. That former Secretary of Agriculture was much more interested in trying to get free trade running than was the populace she represented. Deep within those nations is a resistance to trade and it will cost those countries sooner or later. That is my first point. By a mistake of geography we do not sit where Iceland or Cyprus are we sit where Asia roughly begins or ends and therefore we are caught up in the maelstrom of trading activity that is reshaping global economics and where the new hegemonies are rising. 
The second thing I want to say—I will be critical of the Government and its members will no doubt get up to say I have been unfair and unreasonable—is about the support being given to our exporters. Notwithstanding the fact that they are doing famously well at the moment—we have had trade surpluses for the last 6 or 7 months in a row which is excellent news—over the decades our export performance has been less than it might have been. That is why we are facing things such as the Crafar farms debate which we will always face as long as we have a current account deficit. If we cannot pay our way in the world we will start selling parts of our country to the world—there is nothing surer in economics than that. 
With that in mind I wonder whether the Government would consider recommitting to some more effort in this area both through Trade and Enterprise and through other means as well. Notwithstanding the great work done by Tim Groser and no doubt other Ministers from time to time I do not see great effort in many of the great South-east Asian nations. I do not see us moving in a very determined way towards Thailand for example or Viet Nam yet those are parts of the world where the emergence of the middle class is startling. I do not think we are doing enough even in China where under the previous Government plane-loads of business people went before during and after the signing of the free-trade agreement with China. Despite the fact that there are beachheads and offices for New Zealand Trade and Enterprise in various cities around China and despite a great improvement I still do not think it is enough. 
Of course many private sector companies do not need New Zealand Trade and Enterprise or some Cabinet Minister to go there to give the Government imprimatur and to open the door. I understand that but for those who can be assisted and who need the assistance that assistance is not always timely or on the mark. I think we should adopt a different approach to exporters. Let us not tell them but rather quietly treat them as heroic people. They often spend 100 days a year off-shore with their heads on someone else’s pillow not their own and that needs to be rewarded. Exporters are different especially small or medium sized exporters that are going through a growth phase moving into new markets or “kicking butt” basically. They really need a good deal of support. I do not think the current Government provides it. The wind-down of some of the New Zealand Trade and Enterprise stuff in the last 2 years has not been a good thing and on that matter I am critical of the Government. That said I think this legislation is great. The people who negotiated it are great. I pay my respects to the officials who led it and I hope it has speedy passage. 
TODD McCLAY (National—Rotorua) 
: 
 It gives me pleasure to rise to speak on the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. I believe this is a very important bill before the House. A number of previous speakers have raised the issue of the work the previous Labour Government did in trade. I think it is very important to clarify for a moment that with the exception of one all parties in this Parliament have generally been in favour of trade free-trade agreements and the promotion of New Zealand businesses and their interests overseas. It is important we recognise at the forefront that the previous Government held trade as a priority. Where that priority fell down for our exporters in New Zealand was the speed with which the previous Government was able to get results from the rhetoric of Cabinet where somebody would say in a very deep voice that it would be a very good idea to have more trade with countries overseas and a trade Minister would say in a squeaky voice that he or she would go overseas to have a look and see whether he or she could do some trade-agreement deals. Of course 9 years later very few agreements were in place but the system was started by at least one or two of the members opposite. 
Who has delivered on this legislation? We have heard some analogies of rugby and I would suggest that in some years to come when we think of that wonderful game of rugby that happened in South Africa the other day it will be the last 3 minutes that will be remembered. Of course there was a lot of very hard work in the lead-up to the half-hour before that but the last 3 minutes were when the tries were scored and it was our hard-working Minister of Trade Tim Groser who earlier this year on 29 March was able to make sure this agreement was signed. Five short months later this agreement is about to enter into law in New Zealand. 
It will be good for our exporters for the people in forestry and certainly for farmers. In my electorate the kiwifruit producers and orchardists think it is a wonderful thing. People in my electorate and in other members’ electorates who like to buy goods that are imported from overseas will enjoy the benefits that this agreement will deliver to them. 
I support this bill fully and look forward to diving into it in greater depth in the Committee of the whole House. Thank you. 
RAYMOND HUO (Labour) 
: 
 I rise to speak in the second reading of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. Labour supports this bill as it will lead to increased opportunities for New Zealand exporters in the Hong Kong market as well as strengthening our relationship with the Greater China and Asian regions. There are three issues that I wish to talk about as part of my contribution. 
First of all as the Labour spokesperson on trade the Hon Maryan Street said earlier in her first reading speech this initiative is really interesting and quite exciting because it will help to herald a significant move in the export of both goods and services to the Hong Kong market. Secondly for a small economy like New Zealand’s growing a sustainable and export-led economy is vital. This bill is however a timely reminder that an export-led recovery has not eventuated and it is a missed opportunity to address one of the critical economic issues that face New Zealand which is our monetary policy setting. Labour believes that that policy is in need of reform and that it has been one of the underlining limits on economic reforms versus other OECD or wealthier developed countries. Thirdly labour rights and environmental sustainability are core New Zealand values that should not be sacrificed for the sake of increased trade. When undertaking negotiations they need to be held high on the agenda. Reading the speech notes of the Council of Trade Unions president Helen Kelly in July this year on the relevant issues has reinforced my position on that. 
I have recently posted an article on the Labour MPs’ blog Red Alert. I said that on our regular weekly radio show the Minister for Ethnic Affairs and I receive questions and messages from the Chinese constituency. In answer to some of the questions the Hon Pansy Wong stated that exports had decreased under Labour and have increased since National came into office. She neglected to mention that it was the then Minister of Trade Phil Goff who signed the free-trade agreement with China. This opened up the floodgates to trade with China making China our second-largest trading partner. In the first year of the free-trade agreement trade with China increased by 62 percent and National was in office for less than 4 months of that period. On the issue of the spiralling Asian unemployment rate which has just hit a record high of 10.5 percent Minister Wong said “although unemployment is increasing so is the rate of employment although the speed of job creation is slower than that of the number of people who are losing their jobs.” I am not sure whether that statement even makes sense but it shows that the Minister has no answer to the now more than 23000 Asian New Zealanders who are unemployed. 
Minister Wong’s answer also ignored the fact that bilateral or multilateral agreements on trade are often the product of joint efforts and collaboration. For instance the origins of the New Zealand - Hong Kong China closer economic partnership go back to as early as 2001. The idea was first mooted by the Hon Jim Sutton who was the Minister for Trade Negotiations at that time. In 2002 the talks were suspended when New Zealand and Hong Kong became bogged down in discussions around rules of origin and problems with labelling regulations. The talks were subsequently revitalised under the Hon Phil Goff as Minister of Trade and were pursued by the current Minister the Hon Tim Groser. 
Hong Kong is our ninth-largest export destination accounting for $823 million last year. Just as important it is our eighth-largest source of foreign direct investment. New Zealand imported $199 million of merchandise goods from Hong Kong last year making it the 31st-largest source of imported goods. Hong Kong accounts for 1.9 percent of New Zealand’s total exported goods and 0.4 percent of total imported goods. This market is already rapidly expanding with last year’s total exports increasing by 33.6 percent compared with 2008. However total imported goods declined by 2.5 percent last year compared with 2008. 
To summarise closer economic partnership agreements are a vital part of New Zealand’s economic development policy. Closer economic partnerships break down tariffs quotas and customs duties which restrict access and profitability for New Zealand exporters and importers. Closer economic partnerships lead to increased exports and imports and have the potential to add to the wealth of both markets. I acknowledge that New Zealand signed a closer economic partnership with Hong Kong in March 2010 and this bill implements that agreement. 
The latest release from the New Zealand Manufacturers and Exporters Association shows that an export-led economic recovery has not eventuated. While domestic sales increased by 19 percent in April 2010 export sales decreased by 5 percent. The signing of free-trade agreements and closer economic partnerships is important and this particular closer economic partnership will boost the economy but that is only part of the solution. The Government needs to support New Zealand businesses to best exploit the opportunities that free-trade agreements present. Sadly the National Government has failed to assist New Zealand exporters. Its refusal to even consider examining monetary policy highlights that. 
In 2009 the Labour Party withdrew from the cross-party consensus on monetary policy. Labour believes that the policy is in need of reform. Back in March 2004 Labour introduced an important change to enable the banks to pursue a more active role in the foreign exchange markets. This assisted the economy by tempering exchange rate volatility and by moving New Zealand’s monetary management closer to Australian practices. Another important change would be the idea of amending the Reserve Bank of New Zealand Act in order to broaden the Reserve Bank’s objectives. The objectives of the Reserve Bank of Australia are not only to maintain the stability of the currency of Australia but also the maintenance of full employment in Australia and of the economic prosperity and welfare of the people of Australia. In contrast our Reserve Bank is tasked solely with maintaining stability in the general level of prices and that is not helpful to our tradable economy. 
Although free-trade agreements and closer economic partnerships come with undoubted benefits we must not ignore the reality that for some businesses and sectors they can cause harm. This closer economic partnership has been evaluated as having a low negative impact on New Zealand business largely because Hong Kong specialises in services rather than in cheap manufactured goods that could undercut local businesses. New Zealand manufacturers of footwear textiles etc. are most at risk from free-trade agreements and closer economic partnerships and I am very glad that this closer economic partnership has given those sectors the longest phase-out period for tariffs in order to allow them time to adjust. 
I reiterate that labour rights and environmental sustainability are core New Zealand values that should not be sacrificed for the sake of increased trade. When undertaking negotiations they need to be held high on the agenda. Thank you very much. 
A party vote was called for on the question  
That the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill be now read a second time. 
Ayes 110 
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Maori Party 3 (Flavell Sharples Turia); Progressive 1; United Future 1. 
Noes 11 
Green Party 9 Maori Party 2 (Harawira Katene). 
Bill read a second time. 
In Committee 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I seek leave for the Committee stage of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill to be taken as one question with a wide-ranging debate. 
The CHAIRPERSON (Lindsay Tisch) 
: Leave is sought for clauses 1 to 4 to be taken as one question. Is there any objection? There is no objection. 
Clauses 1 to 4 
JOHN HAYES (National—Wairarapa) 
: 
 It is good to be able to support the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill in the Committee stage and I will do it fairly briefly. One of the things I draw the Committee’s attention to is the constant negativism and opposition of a misled Green Party which has a minority view in the Foreign Affairs Defence and Trade Committee’s report. I simply say to the Green Party that as a specific result of our free-trade agreement with China New Zealand increased its exports to China by $860 million in the last 12 months. I ask members to think about the number of jobs that that is creating but the Green Party would like us to shut that down. A new market of $860 million is roughly the equivalent of finding a new market like Indonesia because our total exports to Indonesia are about $860 million. I say to this Parliament and to this country that when it comes time to tick the box for the party we want to vote for in the next election we should remember that the Green Party would like to close this down and close job creation down. When the select committee considered that issue we said it made no sense in our heads. 
This is a very brief bill. I draw the Committee’s attention to two points. First the bill includes a ratchet clause. This means that should there be any future trade unilateral trade liberalisation by Hong Kong in certain sectors such as education the Hong Kong Government will automatically be obliged to pass those benefits on to us. We believe that the most-favoured nation status and the ratchet clause will future-proof access for New Zealand for the service sector particularly to the Hong Kong market. 
Second over the last few months voters in my Wairarapa electorate have felt considerable concern about people coming into this country and buying up land. Two of the Crafar farms are located near Norsewood in my electorate. This agreement does not allow Hong Kong investors any exemption from the screening process and the regime set out in the Overseas Investment Act 2005. The Act requires overseas investors to apply to the Overseas Investment Office for consent to invest in New Zealand in respect of fishing quotas sensitive land or business assets over $100 million. However I stress to the Committee that the screening threshold for Hong Kong is $20 million. It is well below the threshold of the $100 million that is applicable to other overseas investors. With those few words I stress our total support for this bill. Thank you. 
STUART NASH (Labour) 
: 
 I find myself agreeing with the previous speaker John Hayes because free trade is one of those things where one has to be in the game if one wants to be part of the new world era. This day and age of globalisation is very real and it will affect New Zealand. It can be seen either as an opportunity or a threat. If we see it as an opportunity and grab it with both hands as this bill has done then there is a real chance for New Zealand to go out to the world and be a world leader. In this day and age not just companies but countries are striving for competitive advantage. We suffer from the tyranny of distance; it is difficult for us to go out there and find our way in new markets. We need these sorts of free-trade agreements if we are to achieve sustainable economic growth. 
This bill is most important as are all free-trade agreements that come before the House. It is a short bill as the previous speaker alluded to although there is a national interest analysis that runs to about 58 pages. 
I must admit that I took slight offence when the speaker from the Green Party Russel Norman stood up and said that Labour passes any legislation that has “free-trade agreement” on the front of it without understanding national interest analyses. We understand national interest analyses. Labour members sit on the Foreign Affairs Defence and Trade Committee which deliberates on these sorts of bills. Labour understands free-trade agreements. We understand the ramifications the risks and the benefits. This bill is important and we very much support it because it gives our exporters an opportunity to get into markets that were closed to us or were limited due to unrestricted tariff barriers. We already know that Hong Kong offers duty-free imports for all countries but this closer economic partnership will ensure that New Zealand’s existing duty-free access is locked in for our exporters which will give our exporters an added certainty that competitors other than Mainland China do not enjoy. 
This bill is important for the future of New Zealand trade. We are an exporting nation. Exporting is the only way that we will grow our economy. We have a small population of about 4.5 million and if we want to rise up the OECD rankings which seem to be most important to some politicians then we really need to engage our export markets. 
We have the most favoured nation treatment which means that New Zealand service exporters have also secured strong future-proofing of our position in the Hong Kong market through the most favoured nation treatment and a ratchet clause which actually is not that bad. Most favoured nation treatment means that New Zealand exporters will automatically benefit from any preferential treatment that Hong Kong provides to future free-trade agreement partners subject to certain reservations and exceptions. The ratchet clause means that any future unilateral liberalisation undertaken by Hong Kong in certain sectors will be bound and committed to New Zealand. 
This bill is about New Zealand going out into the world and developing agreements and relationships with countries that it otherwise would not have. As my colleague Pete Hodgson mentioned this bill takes the lead. We can wait until all those multinational World Trade Organization agreements come into place but if we wait for them we could be waiting for a long time. This bill is a proactive response to what is happening around us at this point in time. 
We have a long tariff phase-out. New Zealand will be using the same tariff reduction schedule as the New Zealand - China free-trade agreement for imported products from Hong Kong. In order to help mitigate the potential for any negative adjustment effects associated with the phase-out of these tariffs the longest tariff phase-out periods apply to industry sectors in New Zealand that are particularly sensitive to imports from Hong Kong. So when a Green member stands and berates Labour for not understanding this free-trade agreement I take exception. 
As I mentioned in my second reading speech I do not think the National Government is taking this issue seriously enough. It is cutting the budget to New Zealand Trade and Enterprise initiatives that the previous Labour Government ramped up. I do not think that New Zealand is resourced enough to take full advantage of the effects of this and other free-trade agreements or closer economic partnerships or whatever you want to call them that are before the House. If we are to really take advantage of them the Government needs to fund them. The Government needs to understand that this is the future of the New Zealand economy. Thank you. 
KEITH LOCKE (Green) 
: 
 The previous speakers have talked essentially about the upside of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill—that is the expansion of particular dairy products in Hong Kong and related to that in China. They talked very little about the downside in terms of the effect on New Zealand manufacturing which continues to be undermined by cheaper products from China. It is not a level playing field for New Zealand manufacturers. 
I will address the question that John Hayes raised. His concern—and I am glad that he has the concern—was about the sale of the Crafar farms and perhaps other dairy farms to overseas interests. In this case we are talking about Chinese or Hong Kong interests. We are left with the problem in the dairy sector of perhaps expanding the exports to China and Hong Kong but perhaps losing the land to foreign ownership—to China or Hong Kong—that those dairy products come from. Let us look at the investment provisions—and they have been described by many speakers—the $100 million limit and under this agreement the $20 million limit. Unless a dairy farm is sold for more than $100 million it just goes through the system and a high proportion of our land can be onsold to overseas interests. We end up with our dairy farmers being tenant farmers on land owned by Chinese Hong Kong or other overseas owners. 
The Government and Labour should take note of the campaign started up by some very prominent Auckland business people to try to deal with this and to essentially say that we should not sell our farmland in this way. Other countries do not do it. China does not do it; it allows only leasehold. I think the very fact that quite prominent members of the business community are promoting this campaign and are getting some momentum should wake up both Labour and National. One of the problems is how under the ratchet clauses in this agreement as was explained by Russel Norman we can legally get the result that these Auckland business people want under what we have committed to in terms of the two agreements and other free-trade and investment agreements. It is very hard to legislate without violating what is written in the free-trade agreements. That is a quandary that I wish Labour and National would address. 
Hon MARYAN STREET (Labour) 
: 
 The very few clauses that exist in the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill belie the expansiveness and the potential of this closer economic partnership. 
I listened with great care to the Green Party members’ speeches about this. There was an earlier occasion when we were debating the Malaysian free-trade agreement I think when there was very useful dialogue amongst the parties in the House about what potential pitfalls there might be and how the whole trade process might be improved. It seems to me that the Green Party contributions have misfired in respect of the New Zealand - Hong Kong China Closer Economic Partnership. When I look at the national interest analysis particularly the bits that relate to the clauses on investment I find that the only disadvantage that is noted about the clause relating to investment and the exchange of letters on investment is that at the moment there will be no investment chapter in the closer economic partnership because that issue is being resolved by an exchange of letters over a 2-year period. So within 2 years of the entry into force of the closer economic partnership a comprehensive investment protocol will be agreed by an exchange of letters and added to this closer economic partnership. What remains in place is the current New Zealand - Hong Kong Agreement for the Promotion and Protection of Investments. That investment protocol does exist. It provides some minimum protections for investors including national treatment fair and equitable treatment and also some disciplines on expropriation. I think the Green Party’s objections to the clauses on investment are somewhat overstated. 
Labour welcomes this bill and the closer economic partnership because they develop what is already a very close relationship with Hong Kong and they give us and our businesses the opportunity to maximise not only opportunities within Hong Kong but opportunities in China as well. As I alluded to earlier this very short amendment bill is deceptive in its brevity because it encompasses an extraordinary range of things particularly services that we will be able to trade in and benefit from as we go forward with this closer economic partnership. 
It is the services component of this legislation that I celebrate the most because I think it is the thing that will have the most vitality for New Zealand businesses. But I would ask that New Zealand businesses in their efforts to maximise the opportunities that this closer economic partnership provides are not hampered by a lack of resources being appropriated by this Government to allow encourage and facilitate businesses to take advantage of business opportunities in Hong Kong. It is one thing to have a closer economic partnership in place and all the tariff reductions in place such as they are—and all gone by 2016. It is all very well to have greater trade in services. But if the Government is not prepared to assist businesses to maximise those opportunities then this bill is hardly worth the paper it is written on. There are wonderful opportunities but not all of our services and our manufacturers are geared up to take advantage of those opportunities. Thank you. 
JACQUI DEAN (National—Waitaki) 
: 
 I will explore a bit further the opportunities that will arise for New Zealand and particularly the agricultural sector as an outcome of the New Zealand - Hong Kong China Closer Economic Partnership Agreement. I note the stress that New Zealand sheep and beef farmers have been under for a number of years. Although this agreement provides an opportunity for that sector I believe that it is up to companies such as Silver Fern Farms and the Alliance Group to make sure that they maximise the opportunities and the returns for their shareholding farmers. Maybe that goes a little bit beyond having market access to Hong Kong and China; maybe it goes as far as branding New Zealand sheepmeat and beef which are highly regarded in that market. Making sure that they are fully signed up for things like— 
The CHAIRPERSON (Eric Roy) 
: I am sorry to interrupt the member; it is time for dinner. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
JACQUI DEAN 
: I will just finish off because I was mid-sentence. If I recall 1½ hours ago I was talking about the opportunities and the challenges for the New Zealand primary production sector and I was talking in terms of the sheep and beef industry capturing the value of their product. It is not good enough merely to grow it and ship it; it is about capturing the value. There are a number of Government initiatives and one of them is National Animal Identification and Tracing or NATE which tags an animal from pasture to market which is becoming increasingly valued in overseas markets. It is opportunities like that that the agricultural industry would do well to buy into in order to maximise the opportunities presented by things such as this free-trade agreement. Having finished that train of thought I will leave it at that. Thank you. 
Hon DAVID PARKER (Labour) 
: 
 I rise to take a call in respect of the Committee stage of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. As prior speakers have said Labour supports this bill. Of course Hong Kong is increasingly integrated into the China Hong Kong having been returned as a colony from the British Government to China in—someone else can help me here when did Hong Kong go back to China? 
Hon Dr Jonathan Coleman 
: 1997. 
Hon DAVID PARKER 
: It was 1997 so in the last 13 years we have seen the relationship between Hong Kong and China become stronger and given the importance of China to the trading relationship with New Zealand things that improve the gateway that Hong Kong provides into China for our goods and services are also in the interests of the New Zealand economy. The closer economic partnership agreement that we have here is another example of bilateral deals that are in the interests of New Zealand notwithstanding the fact that New Zealand believes in multilateral agreements under the framework of the World Trade Organization (WTO) as perhaps being the more ambitious and desirable outcome of international trade talks. But given that the Doha round of the WTO seems to have stalled or at least is at serious risk of stalling the importance of bilateral agreements heightens as a replacement for multilateral agreements. So although multilateral agreements would be better bilateral agreements have to do if the world cannot come to some agreement under the WTO talks. 
In terms of the benefits to New Zealand it is worthwhile that the $4 million of tariffs currently paid by New Zealanders exporting goods to Hong Kong can be avoided through this agreement but I am advised by my colleague Maryan Street that perhaps the greater potential lies in relation to service industries. Service industries providing services through Hong Kong stand to benefit more from the liberalisation of rules that apply to their conduct when trading in Hong Kong. The benefit of that is probably greater than that that accrues from the reduction in tariffs. 
I know that in terms of some of the more populous provinces of China adjacent to Hong Kong Hong Kong is indeed the point of entry into a lot of trade with China nearby. Increasing integration of Hong Kong and China in their commercial affairs means that if we are to have closer economic relations with China—truly one of the world’s superpowers now—facilitating that through the linkages we have through Hong Kong also seems to be a very good idea. It is already on record that the most significant free-trade agreement that New Zealand has entered into in decades is the free-trade agreement with China which was negotiated by Phil Goff when he was the relevant Minister under the previous Labour Government. The statistics in respect of the outcome of the Chinese free-trade agreement show what the economic potential can be for a country like New Zealand to improve our economy with the free-trade agreement. Trade with China has boomed and the profitability of that trade has increased as a consequence of the reductions in tariffs that New Zealand exporters to China have benefited from as a consequence of the free-trade agreement with China. The Hong Kong agreement will bring similar benefit but will be of a scale that is far far smaller given the relative size of the Hong Kong economy compared with the Chinese economy. 
None the less Hong Kong is not a small destination for goods; it is our 10th-largest export market worth $783 million in the 2009-10 year. It is the world’s second-largest service economy and acts as a hub for the provision of services in the region adjacent to Hong Kong as well as Hong Kong itself. If we look at that part of the world as a tapestry of areas where we have different sorts of trading relationships we will see that there are various countries in the Asian region where we have free-trade agreements. There are other countries where we have more restrictive trade arrangements. 
Hon MARYAN STREET (Labour) 
: 
 There are two areas of the closer economic partnership with Hong Kong that I am particularly interested in exploring in the Committee stage of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. They are the labour memorandum of understanding and the environment cooperation agreement which are outlined in the national interest analysis that accompanies this closer economic partnership. In fact the national interest analysis effectively does the job of a regulatory impact statement so there is no regulatory impact statement on this legislation. This is one of the few occasions when we forgive the Government for not attaching a regulatory impact statement to one of its pieces of legislation. The reason is that the purpose of a regulatory impact statement has been covered in the national interest analysis. 
The first point I want to make about the labour memorandum of understanding with Hong Kong is that it commits New Zealand to cooperating on labour issues including participating in a cooperation programme and to holding meetings on a regular basis with senior Hong Kong officials on the area of labour and also the environment. The labour memorandum of understanding contains generally understood or recognised core trade and labour principles and is consistent with the policy framework for integrating labour into free-trade agreements. These principles include explicit recognition by both Hong Kong and New Zealand that labour laws regulations policies and practices should not be used for trade protectionist purposes nor should they be weakened or reduced in order to secure trade advantage. In other words a country cannot deliberately beat down its labour costs in order to undercut goods that are being imported or exported. So there can be no contrived trade advantage by the repression of labour standards. 
The specific reciprocal obligations for New Zealand under the memorandum of understanding on cooperation and related matters are first to maintain close dialogue with the stakeholders in the formulation of labour policies and practices. The second is to promote public awareness of labour laws and regulations that apply domestically. The third is to cooperate with Hong Kong on labour matters of mutual interest and benefit. The fourth is to designate a national contact point for labour matters to facilitate communication between the parties and to establish the cooperation programme that I alluded to earlier. The fifth one is to seek to provide funding to support mutually agreed cooperative activities and the sixth is to meet within the first year of the labour memorandum of understanding’s operation and thereafter as mutually decided by the parties. The final obligation is to consult the other party in the event of an issue arising over the memorandum of understanding’s interpretation or application. 
So it is quite an active memorandum of understanding. It is not simply about having a talkfest; it is about making sure that there is a programme of meetings that these meetings are held regularly and that there is in effect a dispute resolution process in terms of differences in the way in which each party interprets or applies the memorandum of understanding on labour issues. Any differences or issues between the two parties Hong Kong and New Zealand should be settled by mutual consultation and negotiation. The memorandum of understanding does not allow for any differences to be referred to any third party or international tribunal. So we have here a concrete example of an agreement being examined on a programmed basis to confirm that labour practices are not being used for protectionism or to undermine or confer any trade advantage on either party. So there is a dispute resolution process which I have alluded to already. 
That this closer economic partnership with Hong Kong and the free-trade agreement with China have labour and environment clauses built into them is an advance. The Committee will recall that the free-trade agreement with Malaysia that was recently debated in the House represented the very first time that Malaysia had had a labour clause inside a free-trade agreement which is an improvement. 
The second point is the environment cooperation agreement. The environment cooperation agreement between Hong Kong and New Zealand is consistent with the policy framework of integrating environment objectives into free-trade agreements and includes the core principles that establish a foundation for the bilateral relationship. These include explicit recognition by both parties that environmental laws regulations policies and practices should not be used for trade protectionist purposes nor should they be weakened or reduced in order to secure a trade advantage. This takes on very significant meaning when one applies it to such things as the fishing industry. It can be used to ensure that there is no cutting of corners within practices in the fishing industry in order to undercut a trade advantage or to secure an extra trade advantage. Again there are some specific reciprocal obligations for New Zealand under the environment cooperation agreement such as cooperating with Hong Kong on mutually determined environmental issues of common interest providing a list of areas of New Zealand’s interest and expertise encouraging and facilitating information and cooperation activities between relevant experts which is significant and again designating a national contact point so that there can be free-flowing conversation between the two parties and the ability for the parties to meet to establish oversee and evaluate cooperation activities. 
There are some other points in the environment cooperation agreement. I think it is a suitable addition to the closer economic partnership with Hong Kong. I look forward to such agreements becoming standard practice—and only being strengthened—in our trade relationships and our trade agreements with other nations as we proceed. Thank you. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak in the Committee stage of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill which deals with the Hong Kong preferential trade agreement. What is interesting about this deal is that aside from the purely voluntary environmental and labour side agreements which are not binding there has been much talk in this discussion about the tremendous advantage that New Zealand has received as a result of the free-trade agreement between New Zealand and China. It is used as a kind of model in some ways to justify this. It is a very common and convenient rhetoric but it is worth looking at the details of how the trade relationships between China and New Zealand have changed after the New Zealand - China free-trade agreement. 
If we look at the detail and try to use this as an argument for all the different preferential trade deals the Government is signing including the one before us we see that the big increase in New Zealand exports has been in dairy produce and in wood and articles of wood. There is a very simple reason for that. What China really wants from New Zealand are these basic commodities: dairy produce and wood. China wants wood for its booming commodity sector. As Tim Groser described it there is a giant sucking sound from China because China is sucking in completely unprocessed wood from New Zealand. It is a very cheap commodity. It had nothing to do with the New Zealand - China free-trade agreement whatsoever. The reason why we are sending a lot of wood to China is China wants wood not because we have some piece of paper that some people happened to have signed and think is significant. 
The second big increase has been in dairy produce. The reason that there has been a big increase in dairy produce is the San Lu disaster with the contaminated milk which was a catastrophe for many millions of Chinese parents and families. As a result they wanted clean green produce. The place they went to get clean green dairy produce was New Zealand. They perceived New Zealand’s food products to be environmentally sound which in turn means they are safe for their children. 
So the two great increases in exports from New Zealand to China have absolutely nothing whatsoever to do with the New Zealand - China free-trade agreement. Even though it is used constantly by those who support an ideological position in favour of free trade the truth is that the two big increases in commodity exports to China from New Zealand have nothing whatsoever to do with the free-trade agreement; it is simply used to justify the ideology of it. In understanding our relationship with China we must not take a naive position. I think that a lot of the debate in this House is extremely naive in its attitude towards China. 
The San Lu disaster is a very good example of that. We saw that the head of San Lu Tian Wenhua was both the chairwoman of San Lu and the head of San Lu’s Communist Party of China branch and the reasons for that were intimately connected. The Communist Party of China is the puppet master that runs all of the large corporations in China including San Lu. In the lead-up to the Olympics in Beijing there was an edict from the propaganda department. It said that people could not discuss food safety issues in the lead-up to the Olympics. It was produced by the propaganda department. Each week in China the propaganda department of the Communist Party of China sends out a list of topics that will not be discussed in the media that week and one of the issues that were not allowed to be discussed in the weeks leading up to the Olympics was food safety issues. So Tian Wenhua who was the chairwoman of San Lu— 
John Hayes 
: What’s this got to do with the bill? 
Dr RUSSEL NORMAN 
: I can tell Mr Hayes that it has everything to do with the bill. This is about the effectiveness of these free-trade agreements. I am trying to explain to the Committee that this particular free-trade agreement with Hong Kong like the one with China is not very effective. If we look at the increase in dairy exports to China we see it had nothing to do with the free-trade agreement and everything to do with San Lu. We can only understand San Lu if we understand the way in which the Communist Party of China controlled the company. In the lead-up to the Olympics the Communist Party said “Do not discuss food safety issues.” so the chairwoman of San Lu had a choice. She could either obey the Communist Party of China which said “Do not discuss food safety issues in the lead-up to the Olympics”— 
JACINDA ARDERN (Labour) 
: 
 I was willing to listen to Dr Norman continue his speech so I hope that he takes another call. It was not my intention to thieve the call from him. 
In beginning my address I acknowledge that a lot of cooperation generally sits around trade matters within this House and I think it is worth noting that for the wider public. When all the politicians from this House are out and about we consistently hear people asking why we do not agree more often on various issues. Trade negotiations are an area where we tend to see a certain level of cooperation for the benefit of New Zealand ultimately and I want to acknowledge that first up. However I do also point out that even though this is an area in which we probably have some broad agreement cross-party John Hayes can still find several areas where he would like to chip in with interjections and I am sure that I will not be safe from that either during my address. 
I also acknowledge that this trade agreement is unlike I believe one of our last agreements where we had a significant amount of debate and discussion within this place and in the media. That was in relation to New Zealand’s free-trade agreement with China. Obviously there are significant differences between that agreement and what we are looking at here. In particular Hong Kong already has very liberal trading laws that offer duty-free imports for all countries. But the closer economic partnership we are discussing today still offers additional benefits for New Zealand. However I will highlight a little later on those areas that were identified as being of some risk to us and acknowledge those areas. 
It is also important to note that Hong Kong is our ninth-largest export destination—at least it was in 2009. I think we frequently tend to home in on large Asian export destinations for New Zealand but it is important to acknowledge that there are particular industries that benefit from our arrangements with places like Hong Kong despite it being much smaller in comparison with the Chinese market. 
A significant amount of time goes into these negotiations. Although in this Chamber we might be presented with a relatively small bill at the end of the work this particular trade agreement held its roots as far back as I believe Jim Sutton originally. That alone points out— 
John Hayes 
: Yes he sat on it and did nothing. 
JACINDA ARDERN 
: —it did not take John Hayes long—the amount of work that goes into these agreements. Of course Phil Goff who has his stamp on a number of these agreements from when he was the trade Minister put a lot of work into this agreement and I want to recognise that at this point. 
Although we have already acknowledged the benefits of this particular closer economic partnership it is important to note the challenges that such partnerships can pose for our own internal markets. This one is different in that it has been acknowledged up front that Hong Kong as a market is more heavily focused on services rather than on the cheap manufacture of goods which has in the past been an area where we have seen our local manufacturers undercut. Very early on in the piece New Zealand acknowledged that in order to survive in an increasingly globalised world we were going to have to accept that that was going to happen and not only try to cushion that as much as possible but also identify those niche markets where we could continue to carve out a space for New Zealand as a value-added economy and one that can focus in on those areas where we have real strengths. I believe that research and development is emerging as one of those areas for this country. I would touch on the dairy industry but perhaps I will wait for Dr Norman to continue his contribution on that area instead. 
We must acknowledge that New Zealand manufacturers of footwear and textiles are probably the ones that will be facing the greatest risk from this closer economic partnership. Some of those manufacturers have already fallen on hard times during the recession. Some local members of Parliament would have seen the pressures that those companies are facing. Historically those pressures have been accumulating through various other trade agreements and I do not think we could say that any one of those agreements in particular triggered them but they do have a cumulative effect on some of our manufacturers. [ 
Interruption 
] 
Dr Russel Norman 
: I’m not rude like that member; I let people finish. I have manners. 
JACINDA ARDERN 
: And very soon I will give the member a nod when I am handing back the baton to the Greens. I have one final point that I want to draw further on which was a point made by my colleague Maryan Street in relation to an aspect of this closer economic partnership. The partnership has an environment agreement with shared objectives between New Zealand and Hong Kong that are aimed at improving the environment and enhancing the capacity and capability of each country’s Government agencies research organisations academic institutions and businesses in order to address trade and environment matters. I would like to hear a little more discussion within the Committee of what in practical terms that will mean for New Zealand but as a starting point I think it is incredibly important to acknowledge that we need to negotiate and entrench in these agreements those areas of most value and worth to us not just in economic terms but in terms of our country’s ideology. Environmental issues are some of those but also our labour laws and practices and our values in that area must be entrenched in these agreements. 
That is why I am particularly pleased that the closer economic partnership contains a labour memorandum of understanding. It states that although labour laws should not be used for protectionist measures—obviously there are a number of reasons why that cannot be the case—they should also not be weakened or reduced in order to increase trade and investment. Obviously that refers to the undercutting or loosening of labour laws or a race to the bottom as it were. It also provides a framework for New Zealand in which to raise concerns on labour issues with Hong Kong. 
I am particularly pleased to see this because whilst spending some time doing work with an international non-governmental organisation in a voluntary capacity over the years I saw numerous cases of very loose arrangements by corporates in the US in particular. For example corporates that had significant contracts with companies operating in the Philippines stated within their own internal organisation that their expectation was that labour laws be upheld within the company they were contracting in and that the labour laws of that country be upheld but we frequently saw that that was not the case. Yet who has the greatest lever to ensure that even the Philippines’ labour laws are upheld other than the company that is holding that contract in its hands? Who has the power to say that if labour laws and minimum wage terms and conditions for workers are not upheld it will not continue to maintain the contract? Obviously it is the company and if it is not the company it must be the country that maintains that level of responsibility. 
I am loath to burden or load too much weight on to the notion of corporate responsibility because I think there is a fine line between corporate responsibility and State neglect so I think it is important that we have equal measures of both and I think this closer economic partnership proves that it is possible to insert a country’s values around labour laws as a whole into one of these agreements. On that note I am pleased to make a contribution to this debate. I look forward to hearing the remainder of the contribution from my colleague Dr Norman. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 We were talking about the role of free-trade agreements and the increase of the sale of dairy into China—via Hong Kong but also directly into China—and the fact that the New Zealand - China Free Trade Agreement has nothing whatsoever to do with the fact that we have had an increase in dairy being sent to China. In fact it is all to do with the San Lu disaster. One of the things that people do not realise is that San Lu was working jointly with Fonterra when basically it was directed by the Chinese Communist Party not to talk about the fact that it was killing children with the melamine-infected milk products it was selling to Chinese parents. The products were killing children across China and making many children in China very very sick. But the Chinese Communist Party directed that the company was not to discuss anything to do with food safety in the lead-up to the Olympics because the party did not want any disturbance of the positive propaganda it was getting around the world with the Olympics. So the Chinese Communist Party committee that controlled San Lu decided that it would not do a full recall. There was then a board meeting of San Lu where there was a Fonterra representative. At that board meeting which was the legal formal structure that controlled San Lu a decision was made that there would be a full recall—or at least that is what the Fonterra representative said. The Fonterra representative was on the phone at the board meeting. 
At that point the Chinese Communist Party then overruled the board and in fact decided not to have a full recall. That is the reality that stands behind our dealing with China. Many people look at the formal legal structure such as of the board of San Lu but in fact if we want to have a proper understanding of what kind of relationship we have with China then we need to look at the fact that it is the Chinese Communist Party— 
The CHAIRPERSON (Eric Roy) 
: Leave was sought for a wide-ranging debate over the four clauses within this bill but I am struggling a wee bit to see the relevance of the member’s point. 
Todd McClay 
: So’s everyone on TV. 
The CHAIRPERSON (Eric Roy) 
: The member will take a walk if he is not careful. I am being as lenient as I can but I ask the member to make the speech relevant to the four clauses. 
Dr RUSSEL NORMAN 
: The relevance for those who are struggling to see it is that there has been much discussion in this debate—which Mr Chairperson has allowed—that these free-trade agreements increase trade with China. That has been the argument made. In fact that is not true; it is just what people argue. If we look at the facts of the matter we discover that the increase in trade to which people have been referring in the debate that Mr Chairperson has been allowing is due to the fact of the San Lu disaster and it has nothing whatsoever to do with the argument that people have been making—which is that it is because of the free-trade agreement. 
We can understand the San Lu disaster only if we understand the role of the Chinese Communist Party within that company. The disaster had nothing to do with the formal legal structures that people imagine they are working with in China such as the board of San Lu—and those are the kinds of legal structures we are dealing with—because in fact the real people who controlled San Lu were the Chinese Communist Party. 
It may be of interest to people in trying to understand the kind of relationship we are developing with China through these free-trade agreements and other kinds of relationships to know that in fact San Lu then paid an organisation called Baidu to censor all of the Internet searches for San Lu and milk powder. So all of the searches by parents inside China who were trying to understand what was going on were censored because San Lu paid for them to be censored. If that is the basis on which people became poisoned and if that then resulted in a big increase in New Zealand’s sales of milk products to China it had nothing whatsoever to do with the free-trade agreement. People think that it had something to do with it but Chinese parents were desperate for safe food to give to their children because of the San Lu disaster. The San Lu disaster happened because of the control of the Chinese Communist Party over the board of San Lu. Even though formally speaking the board was in control in fact the Chinese Communist Party branch within San Lu controlled that organisation. 
If members do not believe me then I suggest they read something about it. A very good book called  
The Party 
 by Richard McGregor explains the role of the Chinese Communist Party. He was a journalist for the  
Financial Times 
 and spent many years living in China. If members read that book they will see that it mentions San Lu at some length and explains why the New Zealand Government was duped into believing that the board of San Lu controlled that organisation when in fact the Chinese Communist Party controlled it. 
Labour and National do deals with what they think is the Government: the President the Prime Minister and all the rest. Of course the people who control what happens in China are the Chinese Communist Party; Government officials are merely the front. So the people with whom Labour and National are doing deals when they go to develop free-trade agreements or think they are doing a deal with—say Hu Jintao the President of China—are not the real powers. In fact Hu Jintao has his power because he is the Secretary-General of the Chinese Communist Party. 
Dr Paul Hutchison 
: I raise a point of order Mr Chairperson. I just note that the member persists in talking of a free-trade agreement with China. The bill we are on is about the New Zealand - Hong Kong economic partnership agreement. He is out of order. 
The CHAIRPERSON (Eric Roy) 
: Yes— 
Dr RUSSEL NORMAN 
: Speaking to the point of order— 
The CHAIRPERSON (Eric Roy) 
: I will hear the member. 
Dr RUSSEL NORMAN 
: The Hong Kong free-trade agreement will be brought into force as a result of this bill; this is one part of bringing it into force. It is the parallel agreement to the China agreement so all of us have been discussing both together because they are intimately connected. 
The CHAIRPERSON (Eric Roy) 
: The member is entitled to discuss other things for comparative purposes but the whole thrust of the member’s speech is not relevant really to the bill. Unless he comes back to the bill I will terminate his speech. 
Dr RUSSEL NORMAN 
: This bill by changing the tariff regime in New Zealand implements the content of the Hong Kong deal—the so-called free-trade deal. But it is not actually a free-trade deal. Anyone who knows anything about trade policy knows that this is a preferential trade deal but that is kind of irrelevant because most people voting on this do not know anything about trade policy. It is actually a preferential deal—that is it creates a preferential treatment of goods and services between New Zealand and Hong Kong and this bill implements that preferential trade deal. 
The parallel agreement that goes alongside that is the New Zealand - China free-trade agreement which is also a preferential trade deal between New Zealand and China. Those two agreements sit side by side and this bill implements some components—only a small element—of the Hong Kong - New Zealand preferential trade deal because only a small element requires legislation to be changed. The large bulk of the Hong Kong - New Zealand preferential trade deal does not require legislation. It is only the parts about tariffs in particular that need changing. Of course we already send our goods into Hong Kong tariff-free so although we are reducing our tariffs they are not reducing theirs. They do not need to because we do not need any of this agreement to be able to get our goods into Hong Kong tariff-free. But let us put that to one side because we all like to believe in the myth that we do. 
The problem we have when we are signing up to these agreements with China is that we imagine that with this deal we are signing up with something that looks like our Government. So we think that our Government is signing an agreement with the Hong Kong Government or with the Chinese Government as the case may be but in fact in China things do not work like that. The Governments there are actually the puppets if you like of the Chinese Communist Party. The leaders of the Chinese Communist Party are the puppet masters and anyone who knows anything about the way China works will know that in fact it is the Chinese Communist Party that determines what happens. When we look at the parallel structures that look like New Zealand Government structures we think they are very similar on the face of it. But they are not; they are quite different structures which are secretly and entirely under the control of the Chinese Communist Party. 
I will just give members one example just in case there are some doubters about this. Luo Gan who was on the Politburo Standing Committee—the body that controls the Chinese Communist Party—until 2007 said: “There is no question where legal departments should stand. The correct stand is where the party stands.” That means that courts in China are required to give verdicts that the Chinese Communist Party directs them to give. The courts are entirely under the control of the party. If we do not understand that the nature of China is different from the nature of New Zealand and that all of the institutions—the media the courts—are all under the control of the party and not separate institutions then we do not understand what we are dealing with when negotiating deals like this one. That is what happened to Fonterra with San Lu. Fonterra did not understand that that is what they were dealing with. In negotiating this deal some do not understand that we are not negotiating with a Government that works in the same way as the New Zealand Government does. 
So when we sign up to this deal we are not getting what we think we are getting; the way China works is very different from the way in which New Zealand works. That is why New Zealand has made so many mistakes in dealing with China and San Lu was simply the worst of them. That is why we will continue to make mistakes until we understand exactly what we are dealing with when we sign up to treaties like this one. 
A party vote was called for on the question  
That clauses 1 to 4 be agreed to. 
Ayes 110 
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Maori Party 3 (Flavell Sharples Turia); Progressive 1; United Future 1. 
Noes 8 
Green Party 6; Maori Party 2 (Harawira Katene). 
Clauses 1 to 4 agreed to. 
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon Dr JONATHAN COLEMAN (Minister of Immigration)  
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 third time 
. On behalf of the Minister of Trade I am pleased to move this third reading. The bill received its second reading and underwent its Committee of the whole House stage earlier today. It amends New Zealand’s domestic legislation so that the New Zealand - Hong Kong closer economic partnership is ready to enter into force as soon as the Hong Kong Government has completed its internal processes on it. 
The closer economic partnership agreement with Hong Kong is a further achievement in New Zealand’s trade agenda. It stands to deliver real benefits to New Zealand businesses by guaranteeing tariff-free entry into the Hong Kong market securing more certainty of access for our services suppliers and providing a framework for regulatory cooperation and consultation. It is the first free-trade agreement that Hong Kong has signed outside mainland China. 
New Zealand has been striving to secure a trading agreement with Hong Kong for a number of years including under previous administrations for several reasons. Firstly Hong Kong is an important business hub in Asia. Asia is increasingly important to New Zealand as a partner for regional trade integration and it is a growing market for our exports. New Zealand’s trade with the Asian region grew by 5 percent in the last 12 months and it represents a massive $15 billion in annual export earnings for this country. Secondly Hong Kong is strategically important as a platform from which New Zealand companies and products enter mainland China. This closer economic partnership complements our free-trade agreement with China which was signed in April 2008 and is already delivering substantial benefits. Together these two agreements deliver a golden opportunity for New Zealand businesses to launch or continue to expand into the growing and dynamic Chinese market. New Zealand will be the only country in the world to have free-trade agreements with both mainland China and Hong Kong. 
Hong Kong’s wealth of experience in doing business with China and its connections to the Chinese and other Asian markets are unrivalled. At the same time it has a legal system very similar to that of New Zealand and an open transparent business environment. This makes Hong Kong an excellent location for New Zealand businesses that are looking to launch into a complex and sometimes daunting Asian market. Hong Kong is a significant market in its own right. It is currently New Zealand’s ninth-largest export destination. Merchandise trade between our two economies has been growing at an average of 7.5 percent per year for the past 5 years and last year it was worth almost NZ$1 billion. 
The closer economic partnership locks in duty-free access for all New Zealand exports to Hong Kong. This is a significant advantage over other countries with which Hong Kong is able to raise tariffs on 14 percent of import lines at any time. In return New Zealand is committed to phase out tariffs on imports from Hong Kong according to a schedule that is identical to the phasing under our free-trade agreement with China. The closer economic partnership is not just about goods; it also creates improved access for New Zealand service providers to Hong Kong. New Zealand providers will benefit from greater certainty of access into the Hong Kong services market including private education business services environmental services and logistics. This access is also future-proofed under the most favoured nation clause. Any preferential treatment that Hong Kong accords to other trading partners in future agreements in particular sectors will automatically be extended to New Zealand services suppliers. The closer economic partnership also extends the benefit of any liberalisation that Hong Kong makes domestically to New Zealand services suppliers in some currently reserved sectors. 
Under the closer economic partnership New Zealand business people will benefit from the faster processing of applications for business visas and short-term business visitors will be able to get a 90-day visa. Other aspects of the trading environment such as customs procedures sanitary and phytosanitary measures technical barriers to trade intellectual property competition and e-commerce receive comprehensive coverage in the closer economic partnership. 
Alongside the closer economic partnership New Zealand and Hong Kong have also entered into a memorandum of understanding on labour cooperation and an environmental cooperation agreement. I would also note that contrary to Mr Russel Norman’s assertion that the side agreements on labour and the environment are not legally binding I can confirm that these agreements are in fact legally binding. These agreements complement the content of the trade agreement and reinforce issues of importance to both countries. 
As part of the negotiations New Zealand and Hong Kong have also agreed to negotiate a comprehensive investment protocol within 2 years of the closer economic partnership’s entry into force. Although it is envisaged that the investment protocol will provide strengthened disciplines and protections for investors there is no intention that the protocol will alter the categories of investment that are subject to screening under the Overseas Investment Act. 
In summary this closer economic partnership with Hong Kong brings about significant advantages for New Zealand. It establishes a clear certain and effective framework for New Zealand companies to operate in a dynamic and rewarding market. It also complements our ground-breaking free-trade agreement with China. In other words we now have an unparalleled opportunity to increase our exports to a region that will continue to be of central importance to our economy in both the short and long term. I acknowledge the efforts of the officials of former Ministers of Trade and also of the stakeholders who contributed to this excellent outcome. I also acknowledge and thank the members of the Foreign Affairs Defence and Trade Committee for their consideration of the Hong Kong closer economic partnership bill. 
This bill will amend the Tariff Act 1988 by inserting “Hong Kong China” into the list of preferential countries in note 3 of the Tariff. This is the only statutory amendment that is required to give effect to the closer economic partnership. Following this amendment other amendments by regulation will also be required in order to enable the application of preferential tariff rates under the closer economic partnership. 
Our prosperity as a nation depends on our ability to trade and invest on the world market. We also depend on there being robust rules to govern trade and remove barriers so that our traders can compete fairly. These goals are embodied in this closer economic partnership which will benefit New Zealanders and which is supported by the majority of members in this House. I commend the bill to the House. 
Hon MARYAN STREET (Labour) 
: 
 I rise to speak to the third reading of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. I suppose that one of the dangers of taking an agreement like this and a bill of this nature through the House under urgency is the temptation to simply repeat what one has said in one’s first reading speech or in the case of today one’s second reading speech. So I will try to say some different things from what I said in my previous speeches. 
First of all I acknowledge all of the trade Ministers who have had a hand in this matter from Jim Sutton through to Phil Goff and now Tim Groser. Each of these trade Ministers has served New Zealand interests well and has got this closer economic partnership to the point where we can now pass its third reading this evening. I commend all of those Ministers for the assiduousness with which they pursued New Zealand’s interests. 
I also recognise officials who have provided a lot of the backbone to the negotiations. I particularly mention Julian Ludbrook as an official who has been intimately involved for many years in the development of this closer economic partnership. His expertise and his knowledge are both legendary and encyclopaedic. It is fitting that this House acknowledge his efforts on our behalf. 
The critical points of this closer economic partnership go to the relationship between New Zealand and Hong Kong. A school of thought abroad that is often given witness to by this Government is that foreign affairs equals trade and trade is foreign affairs. This party begs to differ. Foreign affairs is about relationships. It is about developing the kinds of trusting and constructive relationships that allow trade agreements to be struck. Those trade agreements are never struck in a vacuum; they are always agreed on in the context of ongoing relationships. 
New Zealand has had a relationship with Hong Kong for a very long time. I think it is currently our ninth or 10th largest export destination; it accounted for something in the order of $800 million worth of trade last year. New Zealand imported $199 million of merchandised goods from Hong Kong last year making it the 31st largest source of imported goods. 
Hong Kong is important because of not only the volume of trade that is conducted which has been increasing over time but also its geopolitical significance. This closer economic partnership hopes and intends to capitalise on Hong Kong’s regional and geographical presence in order to smooth the way of businesses into trade in China. More than that Hong Kong has for a long time been a very significant regional presence because it is a hub. It works as a shipping hub a financial transactions hub and a gateway to China. It has a deal of significance on many levels but each of them that I am describing at the moment are particularly practical. They are about facilitating trade not only into China through Hong Kong but also elsewhere in the Asia-Pacific region for New Zealand producers and manufacturers. It has regional geographical and facilitating significance which should not be ignored. 
One of our largest exports to Hong Kong is live crayfish. I think that that industry will benefit from the conditions that are contained in this closer economic partnership. As the tariffs reduce to 2016 it will signify a considerable improvement in profit and effectively productivity for our exporters. A small but extremely efficient export business in South Auckland is busy putting out as many crayfish as it legally can to Hong Kong. The crayfish are in a very good state which makes them a highly desirable commodity for Hong Kong. 
Amongst the top 20 imports from Hong Kong into New Zealand are of course machinery parts telephone equipment and computers. That will come as no surprise to anybody who picks up a mobile phone in New Zealand. This closer economic partnership will enhance mutual benefits not only by the reduction in tariffs which align with the free-trade agreement with China and its regime of tariff reduction but also—in the case of this closer economic partnership—with trade in services. We are able to trade a vast array of services with Hong Kong on a regular and an improved basis that will enhance New Zealand’s profitability and wealth and will serve to exchange knowledge and services in a way that can do both parties only good. 
I welcome this closer economic partnership. I pay tribute to those who have contributed to it and I thank the chair of the Foreign Affairs Defence and Trade Committee John Hayes for his part in shepherding this closer economic partnership through the select committee process. 
We are a trading nation. We have for decades traded in commodities. We are good at it and we need to consider how to add value to our commodities in order to improve the wealth that we can gain from trade. With this closer economic partnership we are seeing a new opportunity something quite expansive in terms of business services communications services and all kinds of services apart from education which already exists in Hong Kong as a substantial service from New Zealand. That makes this closer economic partnership something that I think can be a model or a template for future trade agreements. The concentration on services gives me great heart for the future of our country. There is a limit to how much we can produce in the way of agricultural produce and we should be getting smarter about the goods and services that we export. 
I join with the Minister of Immigration who is acting on behalf of the Minister of Trade tonight and commend this closer economic partnership agreement to the House in its third reading. 
JOHN HAYES (National—Wairarapa) 
: 
 It gives me considerable pleasure to stand in the House now in the third reading of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. I join with those who have already congratulated the Prime Minister and Tim Groser on their work in activating this bill after 8 years of stagnation following Jim Sutton’s intervention in 2001. We are doing this because it is really important that innovation provides access to world markets. Many of those crayfish that Maryan Street talked about actually begin in Ngawi or somewhere off the Wairarapa coast so this is immensely important to my electorate. It is also immensely important because the comparative advantage of this country is in exporting food whether it is dairy products meat vegetables horticultural products or even wine. That is really fundamentally important to people living in provincial New Zealand. 
This agreement is incredibly important because it is part of the Government’s focus on free trade and on improving access for our exporters to world markets. As I said earlier today that is a priority of the Prime Minister’s. He mentioned it in this Parliament in February in his Prime Minister’s statement. He knows and we on this side of the House know that it is only by lifting our economic performance that we can create jobs boost incomes improve living standards and provide the world-class services that Kiwi families deserve. 
I must say that the Green Party has got it wrong. The Green Party may have got it right in Australia but the Greens are seriously wrong here. The reason is that Green members do not seem to understand that these agreements lead to jobs employment and to the buying of things like Herceptin and other expensive drugs for use in our communities. We have to accept and the Green Party must accept that there is a huge change in the world’s geopolitical tectonic plates. China is on a growth curve and we need to understand that by 2050 China’s average standard of living will be half that of America’s. We need to understand that even in the period of the next 12 years if China’s average growth is only half what it is today there will be hundreds of millions in the middle class and tens of millions in its upper class. The purpose of this agreement is to give our producers access to those people. Even now—and I accept some of the Greens’ assertions about the difficulties of dealing with China—the Communist Party of China will have to deal with issues such as providing retirement benefits health insurance and access to health care. It will have to build infrastructure deal with a lack of drinking water and sewerage systems fight corruption and find work for hundreds of millions of people. It is fundamentally important that New Zealand stays linked to those processes and that is why I support this agreement and the Government supports it. We look forward to passing this bill at its third reading. Thank you. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 It is with some pleasure that I rise to speak on the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. Like some of the speakers before me I acknowledge those Ministers who have contributed to this bill over a number of years starting with Jim Sutton and including Phil Goff and Tim Groser. I also acknowledge Julian Ludbrook who as my colleague Maryan Street said has been in many ways a font of knowledge and an extremely wise asset to the Ministry of Foreign Affairs and Trade in being able to shepherd this sort of negotiation through quite a complex phase. I do not forget the Foreign Affairs Defence and Trade Committee or John Hayes’ ability to take on some of these issues to question rigorously the ministry and to ensure that we have a very good agreement. 
As other speakers before me have said this is an important bill because it will enable an application of preferential tariff rates under the closer economic partnership. Hong Kong already has as many of us know very liberal trading laws that offer duty-free imports for many countries and this closer economic partnership will add additional benefits. Not only is Hong Kong an important market in its own right as our ninth-largest export destination in 2009 but also it provides strategically—and I think John Hayes touched on this—a vital foothold for New Zealand businesses in gaining access to an expanding greater Chinese market. As has been said we are the only country in the world to hold an agreement of this nature with both China and Hong Kong. It amplifies the important position the two countries occupy in terms of what our economy will face in the future. Building economic relationships with Asia in general but specifically Hong Kong is vital to New Zealand’s future economic prosperity. Those are the major developing and expanding markets and as New Zealand depends so much on our exports the closer economic partnership is another step in that direction. 
The agreement has been evaluated both positively and negatively by the Ministry of Foreign Affairs and Trade. One of the negative impacts it could have is an impact on manufacturers of footwear and some textiles. That is something that has come up in other free-trade agreements before it. I think that with the degree of phase-out period for the tariffs in this particular case it will allow those businesses in New Zealand to be able to adjust and hopefully maintain and develop into a higher-niche occupation in terms of our manufacturing. In terms of both labour rights and environmental sustainability again they are most important values to New Zealand and to New Zealanders. They are core values that should not be sacrificed in the pursuit of increased trade. Under the closer economic partnership from what we can see much of that issue is contained in the environmental agreement with shared objectives and the labour memorandum of understanding which states that labour laws should not be used for protectionist measures and that they should also not be weakened or reduced to increase trade and investment. That too is locked into this agreement. 
There are a range of advantages for New Zealand. Many of them have been traversed earlier but they include better access and service in the key sectors of business communications and environmental services. We will achieve through this agreement favoured nation status enabling New Zealand exporters to benefit from the preferential treatment that Hong Kong provides to its future free-trade agreement partners. That will certainly ensure that we have a much better more sustainable and stronger relationship as we go into the future. The closer economic partnership as others have mentioned is future-proofed to a large degree by the ratchet clause which states that any future unilateral liberalisation in Hong Kong such as in education will apply under this agreement. Although not included in the closer economic partnership New Zealand and Hong Kong have agreed in a legally binding exchange of letters to negotiate an investment protocol within 2 years of the partnership coming into force. In a sense we are gaining advantages ensuring safeguards and ensuring that the agreement is robust enough to be able to be taken forward into the future. 
New Zealand has been at the vanguard of many of the free-trade agreements throughout the world. As many people know we were the first to make such an agreement with China and under this bill we now have a free-trade agreement with Hong Kong. Our exports to China have increased by 65 percent in the short time since 2008 when Phil Goff negotiated that agreement with China. It was historic and it has meant that China is now our second-largest export market. It is likely to become even more important into the future. If we look back it is a long way from 1972 when New Zealand shipped practically two-thirds or three-quarters of its exports to the UK. When the UK joined the European Economic Community we were suddenly faced with the reality that we needed to find other markets. In under 5 years the proportion of exports that we were sending to the UK was under 20 percent. That in a sense is a remarkable achievement when we look back in history. It shows that when New Zealand faces adversity like that we are able to respond and be flexible. I think those were the historic antecedents that formed the basis for our looking outward and our capacity to look at other countries in terms of free-trade agreements. 
We are very good at diversifying our trading partners but I would argue that we are not so good in terms of diversifying our economy. Our economy has largely stayed reliant on those same products that we once exported to the UK back in 1972. If there is one weakness and one underlying factor of the way in which our economy has been declining over the last few years it is the fact that the relative wealth we are achieving from our exported commodities in particular is not keeping pace with the imported manufactured goods that we need for our economy. I will give just a small anecdote. A couple of weeks ago I was visiting Scion the Crown research institute in Rotorua that does research into forestry and our forest products. It has developed amazing products such as plastics made out of wood biofuels made from wood products etc. The biggest failing of course is that right now most of our forests are effectively owned by foreigners. Although much of that technology could not increase our value-added exports it is not even able to be applied. Instead as Russel Norman mentioned we are shipping logs offshore to China in an untreated unfinished and unprocessed way and we are not achieving what we could be from our primary products. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I stand to speak on the third reading of the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill which implements some parts of the Hong Kong - New Zealand preferential trade agreement. 
I will touch on a couple of issues raised in the last speech on this bill which was from David Shearer. The first is some of the broader problems with these kinds of treaties particularly the investment clauses. Secondly why doing a deal with the Communist Party of China is particularly naive and stupid. 
In terms of the investment clauses in these treaties currently there is an exchange of letters developing the investment parts of this treaty but no doubt it will be very similar to the New Zealand - China free-trade agreement and will be modelled along the same lines. Effectively the investment clauses in these treaties lock in existing overseas investment rules so we cannot tighten the overseas investment rules beyond what they currently are without breaching the terms of the investment clauses within these treaties. So if we as a democratically elected Parliament were to decide that we want stronger rules around overseas investment than we currently have and we changed those rules we would be breaching the terms of the treaty we have signed with China and the terms of the treaty through the exchange of letters that is very likely to be signed with Hong Kong. In spite of all the rhetoric from Labour and National that they are concerned about the sell-off of farms tonight they are supporting a bill that locks in the current investment rules and means that we cannot tighten them. If we look at article 138 or article 141 of the New Zealand - China free-trade agreement we will see that that is exactly what that agreement says. We cannot tighten those rules without breaching the terms of the agreement. 
Secondly I would like to draw attention to the clauses on expropriation. In the New Zealand - China free-trade deal and there are parallels with the Hong Kong deal there are clauses about expropriation particularly indirect expropriation. That means that if we tighten the rules on environmental regulation with the result that a foreign investor in New Zealand loses money then New Zealand is required to compensate that person for the loss of the value of his or her business. These cases go to an international tribunal and the case is decided on by a three-person panel. That panel can decide that in fact the New Zealand Government has indirectly expropriated from a particular business by changing for example environmental rules or by tightening environmental rules. 
These treaties are set up to tie the hands of democratically elected Governments to make it harder for those Governments to regulate capital and business activities. I have no idea why Labour and National wish to restrict the ability of democratically elected Governments to regulate to protect the environment or to protect labour standards but there we have it. Why we would want to sign up to a treaty that means we cannot tighten overseas investment rules to stop the sell-off of farms to overseas owners is beyond me but that is what Labour and National want to do. Well if people vote for Labour or National then that is exactly what they will get. 
The other issues are labour and the environment. Much has been made of the side agreements on labour and environmental issues. We have seen side agreements with lots of these free-trade deals and they mean nothing. These side agreements mean absolutely nothing. Let us remember that the Chinese Communist Party is right now locking up trade unionists who are independent of the All-China Federation Trade Unions. There is an organisation called the All-China Federation Trade Unions which is the union controlled by the Chinese Communist Party. If people step outside of that union and become independent unionists they are locked up and put in jail—literally. These side agreements about labour mean absolutely nothing because the Chinese Communist Party has made it very clear that it is extremely hostile towards independent trade unionists. People whom we would consider legitimate like members of the New Zealand Council of Trade Unions would all be in jail if they lived in China. That kind of independent trade union activity is absolutely illegal in China; people cannot do it. So let us stop pretending that somehow there is some kind of independent trade union movement in China. Well there are people trying to have an independent trade union movement but they are the ones who are locked up and put in jail. So side agreements around labour and environmental standards mean very little. 
What really stands behind this kind of negotiation between Labour and National in New Zealand and the Chinese Communist Party is an incredible naivety and maybe a wilful ignorance about the nature of the Chinese Communist Party that Labour and National are negotiating with. Let us remind ourselves of the nature of the Chinese Communist Party that we are negotiating this treaty with. 
The Chinese Communist Party has eradicated all political rivals. There are no political rivals in China; it is a one-party State—try to do something different! It has eliminated the autonomy of the courts. The courts must implement the decisions of the Chinese Communist Party. China does not have an independent judiciary. That is what we are dealing with. It has eliminated the autonomy of the press. Every week the propaganda department of the Chinese Communist Party literally puts out instructions as to what can and cannot be covered in the media in China. The Chinese Communist Party which Labour and National are so intent on negotiating this treaty with has restricted religion. Of course it has locked out the Falun Gong. Civil society is extremely restricted. It has centralised all political power it has extensive networks of security police and dissidents are routinely sent to labour camps. But Labour and National are very happy to negotiate with the Chinese Communist Party— 
Mr DEPUTY SPEAKER 
: I am sorry to interrupt the member but I am having difficulty hearing him. Can I ask that the other discussions that are going on be held at a lower level or out in the lobbies please. I want to hear what the member has to say. 
Dr RUSSEL NORMAN 
: It is very important when negotiating this treaty that we understand the kind of organisation we have been negotiating with. We also need to understand what the Chinese Communist Party wants from New Zealand. What the Chinese Communist Party wants from New Zealand is raw commodities. That is actually what this treaty is about. The treaty is about getting access to raw commodities coming out of New Zealand. What China particularly wants access to is dairy and lumber—timber products—and other kinds of commodities. The whole purpose of negotiating this treaty from the side of the Chinese Communist Party—both the Hong Kong one and the Chinese one which work in parallel—is to get access to New Zealand’s primary commodities. People say that the treaty is about something else but from the Chinese Communist Party’s side that is what it is all about. 
The strategy of the Chinese Communist Party has been incredibly intelligent. China has had extremely low wages it has built up enormous reserves and now with those enormous reserves it is going out and buying up commodity producers and natural resources all around the planet. That is why we see the current interest from Natural Dairy in dairy farms in New Zealand. China is trying to buy up farms in New Zealand so that it can send commodities back to Hong Kong. The treaty that Labour and National are so very keen on negotiating will facilitate the ability of Natural Dairy to buy dairy farms in New Zealand and export the dairy produce back to Hong Kong. Natural Dairy is a company listed on the Hong Kong Stock Exchange and this treaty that Labour and National have signed with the Chinese Communist Party will facilitate the ability of Natural Dairy to buy dairy farms in New Zealand because we will not be able to tighten the overseas investment rules. This treaty puts a ratchet clause on the overseas investment rules. According to this treaty we cannot tighten the overseas investment rules. So Natural Dairy will have increased ability to buy up dairy farms. The treaty also makes sure that the goods coming out of those dairy farms that Natural Dairy buys in New Zealand are exported back to Hong Kong and ultimately China. 
From the point of view of China and Hong Kong—Hong Kong is part of China—they want access to these kinds of commodities. They are in a process of buying up farmland all around the planet—not just in New Zealand but all around the planet—and buying up mineral reserves in order to get access to them. 
People may remember the controversy about Rio Tinto and the fact that Chinalco the big Chinese aluminium company tried to prevent the amalgamation of BHP Billiton and Rio Tinto. That was part of the same strategy. The Chinese Communist Party wants to get access to natural resources all around the planet in order to get them back to China which makes perfect sense. This treaty is part of that strategy. Why would the Chinese Communist Party not sign it? Of course it will sign up if New Zealand is silly enough to sign a treaty that makes it easier for the Chinese to buy farmland in New Zealand and get access to dairy products. Of course it would sign it; it makes sense for the Chinese Communist Party to sign it. The question is whether it makes sense for New Zealand. Of course the answer is that it does not. 
That is why the Green Party will not be voting for this bill. It is a silly treaty and we should not be part of it. It is bad for New Zealand. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Deputy Speaker. Kia ora tatou katoa i tenei po. The mere fact that we have a split vote in the Maori Party obviously indicates that there is a degree of support but also that an opportunity has arisen through our vote to register some serious issues we had raised. I cannot say that they align with Dr Norman’s too much but certainly there are some concerns nevertheless. 
The Maori Party is on record as having a range of concerns about the impact of free-trade agreements. Our major concern is the long-term prosperity of workers and businesses. We are concerned also about the protection of New Zealand’s markets tariff rates biosecurity environmental issues including climate change and overseas investment. 
As has been spoken about this bill implements a bilateral trade agreement—namely the New Zealand - Hong Kong China Closer Economic Partnership Agreement. The amendment to the tariff will enable the application of preferential tariff rates to be applied to goods imported from Hong Kong. The New Zealand - Hong Kong China Closer Economic Partnership Agreement largely mirrors as Dr Norman talked about New Zealand’s prior free-trade agreement with China. 
Due to liberalising our laws we have a concern about businesses and workers including Maori that may be forced to produce their goods at the lowest cost by taking production offshore. Of course the logical consequences of taking production offshore are both job losses at home while also willingly providing New Zealanders with an opportunity—as if they needed it—to buy overseas goods rather than those made in New Zealand. 
So where will the impact be most profound? Well the free-trade agreement’s greatest negative impact has been on the manufacturing sector which has a high Maori and Pacific Island workforce. Although there has been some comment passed that Maori businesses may stand to be disadvantaged by this approach the impact is felt more by Maori workers in the manufacturing sector regardless of who owns the businesses. From what we can work out the loss of the manufacturing base has had an impact only on Maori businesses in the manufacturing sector. Two examples I can cite are those located in Opotiki owned by Te Whakatohea and in South Auckland. The name of the firm is KT Footwear and the person who led the company was Karroll Brent-Edmondson. Both firms manufactured footwear and both closed as a result of cheap imports. 
By far the most enduring legacy of the free-trade agreement will be on the Maori workforce. As at June 2008 12000 Maori were employed in the agriculture forestry and fishing primary production area; and 29000 Maori were employed in the manufacturing area. Maori laid off from a factory in New Zealand did not get jobs in New Zealand - owned factories that relocated to low-wage Asian economies. 
We know full well that the huge appetite the world has for primary produce in emerging super-power Asian countries like China will not change as a result of some of the Maori Party voting against this bill. We also know that many Maori businesses are looking to advance the promise of prosperity. This is a key objective of our policy manifesto  
He Aha Te Mea Nui? He Tangata He Tangata He Tangata 
; we will incentivise whanau and family businesses to grow. We want to see Maori businesses develop and also to increase employment but we cannot ignore the fact that in the latest household labour force survey Maori unemployment went up from 14.2 percent to 16.4 percent. That means 26400 Maori are now without jobs—an increase of 3600 since the previous quarter. 
I need to say that another part of our  
He Aha Te Mea Nui? He Tangata He Tangata He Tangata 
 manifesto was to invest in development programmes that will forecast the long-term opportunities and skills required to increase productivity and economic growth. This is where we get caught between a rock and a hard place. Maori concerns in regard to manaakitanga and how workers in both countries are being treated in regard to workers’ rights and minimum standards on labour issues have long been an issue for our party. The lack of recognition of tangata whenua in free-trade agreements and in incidental tariffs with overseas partners undermines the Treaty of Waitangi but on the other hand we will never stand in the way of allowing Maori businesses to thrive. That is why we obviously have arrived at a position of voting: two members opposed and three members in favour. 
JACQUI DEAN (National—Waitaki) 
: 
 The Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill is an excellent bill and represents a huge opportunity for New Zealand exporting business. My speeches in this debate have focused on the agricultural sector because that is the nature of the electorate I am proud to represent. I conclude my contribution to this debate by saying once again that this free-trade agreement with Hong Kong and China presents New Zealand with an opportunity and it is now up to the agricultural sector to take advantage of that opportunity. I have talked about sheep and beef farmers and I quickly mention our dairy industry which takes up a third of the world’s dairy trade. We are a significant international player in the dairy sector and this free-trade agreement presents a further opportunity for Fonterra in New Zealand. Food is valued by the world. We in New Zealand tend to take that for granted but our food our milk products our sheep and beef products and all the other products we produce are a valued commodity. I say again in commending this bill to the House that this represents an excellent opportunity and builds on the excellent work of the Minister of Trade Tim Groser and the Prime Minister John Key. I commend this bill to the House. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 It is indeed a pleasure to speak on the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. It is an excellent piece of work and it is clearly supported by both the major parties. I was particularly interested in hearing the Hon Pete Hodgson wax philosophical for a moment pointing out that the two major parties agree and have agreed for a long time on the huge value of expediting and ensuring greater trade and greater exports because they are the lifeblood of our country. But I was concerned to hear the Hon Peter Hodgson in some respect excuse the Greens for the stance that they take. I must say that it is some concern to read the Green Party minority view which suggests that the Government theory on trade is flawed. It has been a pleasure from time to time to hear the sonorous if not soporific speeches of Dr Kennedy Graham. But tonight unfortunately we had to listen to the nasal narrative of Dr Russel Norman and that is simply another matter. 
There is no doubt that as time goes on China’s exports to New Zealand will increase in both quality and in price. In fact the other day when I was down in Newmarket one of the furniture manufacturers told me that some of the more expensive Chinese products are actually more expensive than the New Zealand - made ones. So there is no doubt that as time goes on it is very important to have this continual ability to improve our products to have the constant need to keep on our toes to constantly innovate so that we improve our products and to improve our trade. I commend this bill in its third reading to the House. 
A party vote was called for on the question  
That the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill be now read a third time. 
Ayes 110 
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Maori Party 3 (Flavell Sharples Turia); Progressive 1; United Future 1. 
Noes 7 
Green Party 7; Maori Party 2 (Harawira Katene). 
Bill read a third time.