Sutton Jim: Tariff (New Zealand - Thailand Closer Economic Partnership) Bill — Second Reading Instruction to Committee In Committee Third Reading 
Sutton Jim: Tariff (New Zealand - Thailand Closer Economic Partnership) Bill — Second Reading Instruction to Committee In Committee Third Reading 
[Volume:626;Page:21382] 
Hon JIM SUTTON (Minister for Trade Negotiations) 
: 
 I move  
That the Tariff (New Zealand - Thailand Closer Economic Partnership) Bill be now read a second time 
. I thank the Foreign Affairs Defence and Trade Committee for its work on this bill. I note that the committee recommends by majority that the bill be passed with no amendments. The committee also noted in its report that it had previously examined the full national-interest analysis of the agreement and on that occasion the majority also supported the agreement. 
The bill amends New Zealand’s domestic legislation to enable New Zealand to become party to the New Zealand - Thailand Closer Economic Partnership Agreement thereby allowing the agreement to come into force once Thailand has also completed its domestic implementation processes. The agreement provides for all tariffs applying to goods of New Zealand or Thai origin traded between the two countries to be either eliminated immediately or phased out over a scheduled period. Most New Zealand imports from Thailand already enter duty-free under New Zealand’s existing tariff policy. The agreement provides for the remaining tariffs to reduce to zero variously on 1 July 2005 1 January 2008 1 January 2010 or January 2015. 
The agreement also provides for the use of bilateral transitional safeguards by both Thailand and New Zealand. These allow either party to address situations of serious injury or the threat of serious injury to domestic industries caused by increased imports due to tariff reductions or removal under the agreement. Part 2 provides such a mechanism by creating a new regime under the Tariff Act. This regime establishes the right for a New Zealand industry or company that considers it is suffering serious injury as a result of a surge in competing imports from Thailand to ask the Chief Executive of the Ministry of Economic Development to initiate a safeguards investigation and revert to a higher tariff level for a certain period. 
The committee addressed several issues that were specific to the content of the bill in particular. The committee considered the consistency of the bilateral safeguard mechanism with World Trade Organization rules. The committee was advised in this regard that the bilateral safeguard mechanism is fully consistent with World Trade Organization rules. The similar strict standards that are currently applied under New Zealand’s global safeguards regime and that are based on World Trade Organization rules also underpin this bilateral safeguard mechanism. 
During the first reading some members raised the issue of new food-testing regulations being proposed in Thailand and the potential effect of those regulations on New Zealand exporters. Although this issue is not directly related to the content of the bill before us and is not part of the closer economic partnership agreement I would like to take the time to confirm to the House that progress is being made towards resolving this important issue. Since the regulation was first notified late last year New Zealand along with Australia and the United States has successfully argued for a delay in implementation to allow time for our trade concerns to be taken into account. When I met the Thai Ministers of agriculture and commerce at the time of the signing of the agreement they gave a commitment to work with New Zealand on recognition of New Zealand’s food safety systems in the application of the proposed Thai regulation. New Zealand’s formal application for recognition of our system has been lodged with the Thai authorities. The New Zealand - Thailand closer economic partnership provides a new avenue to help progress this issue. A special meeting of the bilateral Committee on Sanitary and Phytosanitary Measures will be held in Thailand on 23 June so that relevant experts can put New Zealand’s case directly to the Thai authorities. That opportunity would not have been available before the agreement was negotiated. 
I should note in response to a point raised during the first reading that under the agreement’s rules of origin only goods of genuine Thai origin will benefit from the New Zealand tariff reductions. Those rules mean that Thailand will not be a back door for preferential entry of goods from other countries. 
At the select committee despite the opportunity to do so no serious evidence was presented to counter the Government assessment that the agreement will not have an adverse overall impact on New Zealand producers. The adjustment effects arising from the removal of New Zealand tariffs on goods imported from Thailand under the agreement are expected to be negligible. First some 65 percent of imports from Thailand already enter duty-free. Second the phase-out arrangements for New Zealand’s more sensitive sectors are very gradual. For sensitive products with a lower tariff such as whiteware existing tariffs will effectively be maintained at current levels before being removed in 2010. Finally adjustment assistance has been made available in the context of New Zealand’s unilateral tariff reductions to help the textiles clothing footwear and carpet sectors build skills and global competitiveness. 
Although the adjustment effects in New Zealand will be limited the opportunities being created for New Zealand exporters in the Thai market are significant. Thailand is a heavily protected market. Tariffs are levied on virtually all imports from New Zealand—many are in the 20 percent to 40 percent range. Under the agreement Thailand will eliminate tariffs immediately on over half of New Zealand’s current exports including most current manufactured exports and progressively phase out the remainder. 
In broader terms this agreement offers the most far-reaching bilateral market opening for New Zealand since CER. As noted in the select committee report the bill will deliver real benefits to many New Zealand industries and will open up opportunities for New Zealand to develop the trading relationship with Thailand to its full potential. I commend the bill to the House.