Robertson Grant: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading In Committee Third Reading 
Robertson Grant: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading In Committee Third Reading 
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GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I want to make a couple of contributions to this wide-ranging debate on the Tariff (Malaysia Free Trade Agreement) Amendment Bill. The first is to talk in a bit more depth about the tariff changes that are being brought in to force. Perhaps later in another call I will talk about some of the issues around services. 
It is important to acknowledge again the quality of this agreement. This is a high-quality free-trade agreement. We see a lot of free-trade agreements coming before this House and this one makes advances on previous agreements. Mr Hayes and others on the opposite side of the Chamber who have experience in these matters know that the optimal agreement for all of us is a comprehensive World Trade Organization or WTO agreement that gives us global rules that are fair and take into account the special and unique circumstances of particular countries. I see Dr Graham nodding in agreement. I think it is important to say at the outset that from a Labour Party point of view we are aiming for a global agreement. The Doha development round is in difficulty and it would be good to see it make more progress. It should still be New Zealand’s highest priority in trade negotiations. But in its absence regional and bilateral agreements remain important and this bilateral agreement demonstrably will lead to benefits for New Zealand. 
To go back to the tariff elimination process on entry into force as well as confirming the outcomes from the ASEAN deal the agreement binds in Malaysia’s level of openness on $821 million worth of exports—that is today before the agreement is even signed. Those exports encompass butter milk powder cheese wool kiwifruit apples and some manufactured products. It is a significant achievement on day one on the agreement’s entry into force. To eliminate tariffs on those key export areas for New Zealand is extremely significant for those exporters and extremely significant for the New Zealand economy. As a number of other speakers have already stated it amounts to 95.1 percent of our current total exports to Malaysia. For a bilateral agreement that is a very significant amount on its entry into force and once again I pay tribute to the officials and the Ministers involved for getting such a good outcome on day one. 
In the 2011-12 period tariffs will be removed from $27.9 million of current exports. They include electrical parts fibreboard chocolate and some other manufactured products. A further 3.2 percent of our exports to Malaysia will be covered. That means that by the end of 2012 98.3 percent of our current total exports will be duty-free. So there is another step forward in the next 2 years. Finally in the period 2013-16 tariffs will be removed from a further $10.2 million of current exports. They include paper products plastics paints whiteware iron and steel. That will bring us as has been previously stated by 2016 to 99.5 percent of current exports being duty-free. That is an achievement worth celebrating and it is in advance of the ASEAN deal. 
It is worth dwelling briefly on the fact that this deal brings things into force ahead of the ASEAN deal. It is difficult when we make a trade agreement at a regional level to then go back to a bilateral partner and say that we would like to make further progress to make faster progress. To be able to do that on so many fronts in this bill is excellent. I mentioned in my second reading speech some areas where that will happen. In terms of paints varnishes and plastic products this agreement is well in advance of the deal with the ASEAN countries. In 2016 they will be duty-free for New Zealand; under the ASEAN deal they will be duty-free in 2020. It is significant that under this particular deal those tariffs will be removed more quickly. It means that this agreement is a high-quality agreement. 
I am sure that some people in the Ministry of Foreign Affairs and Trade—some of Mr Hayes’ Mr Groser’s and my former colleagues—will be deeply concerned that the 0.05 percent of tariffs remaining were not removed. As Mr Nash has already said they are mainly tariffs on alcoholic products but also on tobacco firearms and tyres. My personal view is we need to respect the fact that there will be countries we negotiate with that have reasons why they do not want to go there. One of the nuances of free trade that I think is important to highlight is that being an absolutist in free trade does not take into account the experiences and the different cultures of other countries. We need to respect that when we sign these agreements. We need to negotiate hard and we need to ensure that we get the best possible benefit for our exporters but we also need to remember the overall context of the relationships that we have with those countries. Alcoholic products are the obvious ones that we can highlight and say that they have to do with religious practices and we should be prepared to be somewhat flexible on that issue. 
I certainly come from the school of thought that holds that for a long period of time New Zealand’s free-trade policy although delivering considerable benefit to New Zealand was a little bit like playing a lay-down misère hand in a game of five hundred. We said to the rest of the world: “Here we are. We are prepared to give you absolutely everything we have and hopefully you will give us a little bit back.” That approach to free trade did not work as well for us as it could have and perhaps it left us with fewer cards to play in later trade agreements. My having said that this agreement is a high-quality agreement but it gives us some pause to reflect that from time to time we need to be flexible that we do not need to be absolutist and that we have the ability to take into account the circumstances of other countries. 
I want to refer to services which my colleague Stuart Nash has already dwelt on. I note that the services sector will benefit significantly from this agreement not only in the area of education but also in the area of environmental services. As I said in my second reading contribution this issue relates to the so-called side agreement on environmental cooperation. It is not actually a side agreement and I am very pleased that a lot of the literature that the Ministry of Foreign Affairs and Trade has produced recognises that those environmental and labour cooperation agreements are treaty-level agreements. In the parlance of diplomats that is significant. It gives status to those agreements and it means that the free-trade agreement and the two cooperation agreements can be seen as part of a single entity in terms of our relationship and can be worked on together. The services area is where it comes together because environmental services such as waste-water management air quality management noise abatement services and nature and landscape protection are areas where New Zealand has expertise areas where there is a lot that we can take to other countries and indeed receive in return. In the services sector there is the chance for leverage off the environmental cooperation agreement so that we can maximise the benefit to all New Zealanders. 
The area of education has been discussed at some length but export education is a vitally important part of what we are doing. We have a good history with Malaysia in that area. I know that the university I attended the University of Otago had a significant number of Malaysian students over the years including people who have risen to the heights of being Government Ministers which obviously has a flow-on beneficial effect for New Zealanders as we go ahead in the education area. As I said earlier the services sector is not an area that we often highlight because it is easier to highlight the actual products that we are exporting but this agreement delivers a number of important opportunities for New Zealand exporters. 
Another services area that has not been talked about much today is information and communications technology services—ICT services. Here in Wellington we have a number of newer start-up software companies that I know have been developing their markets in Asia and Malaysia is a huge opportunity for them. As Mr Nash said that is an example of our exporting some of the fantastic ideas that New Zealanders come up with but we need to continue to generate those ideas and to support the people who generate them. 
The services sector is vital to New Zealand because it builds on the comparative advantage we have of a strong schooling system and a tradition of innovation but we put that tradition at risk if we are not prepared to invest in the innovators if we are not prepared to put money into tertiary education and into assisting researchers to commercialise their opportunities and develop export markets. Information and communications technology is another services sector that under this agreement can offer great potential for New Zealand. 
It is important to be able to see the balance within this agreement of goods and services. It is a high-quality agreement but as Mr Boscawen picked up earlier I do not believe that free-trade agreements are the be-all and end-all and there is further opportunity for development.