Goff Phil: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeGoff Phil: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — Second Reading[Sitting date: 10 September 2015. Volume:708;Page:6571. Text is incorporated into the Bound Volume.]Hon PHIL GOFF (Labour—Mt Roskill): I would like to support the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. The bill is necessary in order to bring into effect the free-trade agreement negotiated between New Zealand and Korea. I want to set out the reasons why I think it is important. It is not a perfect free-trade agreement by any extent. There are some major omissions in this free-trade agreement but the conclusion that I come to is that New Zealand is better off for having it than not having it—and by a significant margin.We did not spend a lot of time in the Foreign Affairs Defence and Trade Committee looking at this particular bill because we had previously examined the national interest analysis on the free-trade agreement when we reported to the House on the free-trade agreement. What interested me was that every party represented in the select committee agreed that on balance we need to have this free-trade agreement which is why I do not understand why two parties in the House are going to oppose it. I hope that when New Zealand First and the Greens get to their feet they will explain why they would vote against this agreement when there are clear and worthwhile benefits for New Zealand in supporting it which they acknowledged I think quite fairly because they were conscientious in the work that they did looking at the national interest analysis. I think that when it comes to trade we try to make sure that we do what is right for the country first and foremost. Over a long period of time there has been an endeavour to have a bipartisan policy in this House on trade agreements.Why does Labour support this agreement? Well first of all we have a long track record of being a free-trade party. I remember that under my predecessor Jim Sutton we negotiated the P5 agreement which is a high-quality and comprehensive agreement. I was the Minister responsible for the New Zealand-China Free Trade Agreement and the ASEAN free-trade agreement. Both of those agreements met the highest standards in terms of eliminating tariff barriers on all of our major products and of being comprehensive. I am proud of both of them. I am particularly proud of the China free-trade agreement which helped alleviate what would have been a much more severe recession for New Zealand if we had not had that free entry into China and if we had not had the track record that we had in building up that relationship.I also take some responsibility for the initiation of the New Zealand - Korea free-trade agreement and I say that on the basis of a study that we initiated between the New Zealand Institute of International Research and the Korea Institute for International Economic Policy. In 2007 we got a report from that study group and that report said that New Zealand and Korea had a strong and complementary relationship that a free-trade agreement was feasible and that there were mutual benefits for both countries in negotiating a deal. That was in 2007. Well we are now in 2015. So the negotiation took some time. I am not casting aspersions on the Minister of Trade. I think that Tim Groser did the very best he could. He has worked on itconscientiously and the agreement that we have got is worthwhile. But it is also fair to say as Russell McVeagh has said in its analysis of the free-trade agreement that those expecting similar results to China are going to be disappointed. There were some disappointing results in that analysis.First let us talk about why this agreement is important. It is important because we were not first in line. We were first in line with China; we were not first in line with Korea. Korea already had free-trade agreements with the United States Australia Canada China the European Union India ASEAN Chile and some others. What that meant for us was that our inability to get the agreement meant that our exporters were disadvantaged. The clearest example of that was with our kiwifruit exporters. We were paying a 45 percent tariff to get into the Korean market while Chile our major competitor in this area had tariff-free entry. Our people were placed in an impossible position. So this free-trade agreement was a catch-upin many respects. It does not give us advantages over those who have already negotiated free-trade agreements but it removes the competitive disadvantage that we could not possibly have tolerated our exporters continuing to face. For those who oppose this agreement explain to the beef industry how it could have competed with the United States when the United States was going in tariff-free or to the Zespri people who are having to pay the 45 percent tariff.Obviously there are some good aspects to this agreement. Wine—15 percent tariffs gone overnight. We have kiwifruit which I have mentioned already. Those tariffs will be phased out over 6 years. We will still have a disadvantage for the next 6 years but if we get this bill in we will get the first cut by the end of this year. Butter—89 percent tariffs; they will go over 10 years. Cheese—36 percent tariffs; they will go over 12 years. Wood—10 percent tariffs; they will go over 10 years. And salmon—20 percent tariffs; they will go over 4 years. There are some winners. Let us acknowledge the good things in this bill.There are also losers. Milk powder is one of our critical exports. The 176 percent—176 percent—tariff on milk powder remains. We get an expanding tariff-free quota but we are still faced indefinitely with that huge tariff on milk powder. Seventy-five percent of our deer velvet exports are frozen. They will have an ongoing 15 percent tariff barrier. For pāua and frozen squid there is a 22 percent barrier. So we did not get comprehensive tariff reductions and I am disappointed in that. I know that the Government will be disappointed in that. I still say that what we did get is worth having and we should not walk away from it.Why is it important to have the deal? Well Korea is our fifth-biggest export market. Up to the point of the free-trade agreement it has been growing by about 10 percent a year. The purchasing power of 51 million Koreans has been going up. They are the thirteenth-biggest economy in the world. They are the eighth-largest trading nation in the world. We needed a free-trade agreement with Korea and again I say to my colleagues who share the Opposition benches with us: with such an important trading partner you cannot walk away from having a free-trade agreement that is so important. The trade agreement eventually eliminates $229 million worth of tariffs. It helps not only in the agricultural areas but also in areas like medical devices like aviation like marine and like precision engineering. There are benefits for us in those areas and in services like education legal and professional. My key point is that the benefits outweigh the disappointments in this agreement and we should do it.So why were people opposed to it? Well most of the submissions came on the national interest analysis of the free-trade agreement and they were using Korea as a surrogate for the Trans-Pacific Partnership agreement. In particular they were opposed to investor-State dispute settlement. Personally I would not have cared if we had not had the investor-State dispute settlement with Korea. Korea is a country with the rule of law. We did not need an outside disputes procedure if there was a fight over some investment deal. But the fact was as officials advised us the Koreans insisted on it. We would not have had the deal the officials said without the investor-State dispute settlement and we were not going to walk away from this deal. The fact is that the wording in the investor-State disputes procedure is pretty much the same as what I put into the China deal and it protects our sovereign right to legislate for the public good. So I am not blaming the Government for having it there except for one thing. I will make excuses for the Government for the things that it could not get in to it but one thing that the Government could have kept out of it was the automatic right for Korean investors to invest in our residential property.I want to talk about the dishonesty of the Prime Minister. He said: “We’ve put this in there and because Labour has the most favoured nation clause in its free-trade agreement with China China will get it too.” John Key knew that. He knew it at the start. He knew that the most favoured nation clause goes into every trade agreement which is why you do not set a precedent like this Government has set a precedent on the sale of residential property. In Auckland we know that foreign investment is driving up house prices. We know that it is making it impossible for Kiwi first-home buyers of whatever ethnicity to get their own homes. So my question to the next National speaker is: did you allow that to go through deliberately instead of carving it out like the Aussies did or was it incompetence? Those are the only two explanations that you can have. Was it deliberate to allow that in which would extend to everybody that we have ever had a free-trade agreement withthe right to buy residential property or were you incompetent and just not noticing it when it went through?By and large this is a good deal. I give credit to the Minister of Trade for working hard on it. It is not perfect but it is as good as he could have got. But he should have dealt with maintaining our sovereign right to protect residential housing against overseas investors who are pushing prices up.