Smith Lockwood: Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill — Second Reading 
Smith Lockwood: Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill — Second Reading 
[Volume:630;Page:1995] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Let me be very clear from the outset that National supports the Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill which is very important for New Zealand’s future. It saddens me a little that the Hon Jim Sutton did not speak first to the second reading of this bill. Although I have nothing against the Hon Annette King—apart from the fact that she is a Labour Minister—Jim Sutton deserved to be speaking first on the bill because he did most of the work to get the negotiating behind the legislation in place and I want to acknowledge his work in that area. 
Although National supports the bill because it is so important for New Zealand—not just in our trade with the particular countries involved but because of its strategic value for New Zealand and I will come back to that later—I want to raise an issue that I think is unfortunate and sad. The Minister in moving the second reading of the bill just now mentioned that the phase-out of New Zealand’s tariffs on products coming into New Zealand from both Chile and Brunei will extend through to 2015 in some sectors—notably the clothing textile footwear and carpet sectors. 
The reason that is unfortunate is that the development of this strategic trade agreement just like the original Singapore agreement that preceded it was designed to galvanise APEC development. When New Zealand was chairing APEC in 1999 and even in the time leading up to that it was clear then that a huge challenge for APEC—the Asia Pacific Economic Cooperation group which covers half of global trade—was to meet the 1994 Bogor goals of free and open trade among the developed members of APEC by 2010 and among the developing members by 2020. One of the reasons that the National Government initiated negotiations like that when I was the Minister for International Trade was to try to bring some leadership to APEC because we could see the real challenge to meet those Bogor goals that were so important to liberalising trade globally. 
With this agreement just like with the free-trade agreement with Thailand that the Labour Government agreed to the New Zealand Government is itself breaching New Zealand’s commitment to APEC because it has made a commitment to APEC that we will have free and open trade that we will liberalise trade by 2010 as a developed member of APEC—unless the Labour Government considers that under its stewardship New Zealand has slipped from being a developed member to being a developing member of APEC. We have made a commitment to free and open trade by 2010 yet this strategic trade agreement and this legislation breaches that commitment because our tariffs will continue beyond 2010 for certain imports from Chile and Brunei. 
That is unfortunate but it is not without precedent—Labour agreed to that in the free-trade agreement with Thailand. It is unfortunate that New Zealand has failed to show leadership in sticking to our APEC commitments since those trade negotiations were originally all about galvanising the APEC process. 
I want to come back to that. All of that started back in the late 1990s when New Zealand was planning for its chairmanship of APEC in 1999. I mentioned a moment ago that we were concerned about the challenges of progress so when George Yeo was the Trade Minister for Singapore we initiated that free-trade agreement negotiation with Singapore the whole idea being to show other members of APEC that countries could get on and actually negotiate far-reaching free-trade agreements. It was not the trade between Singapore and New Zealand that was relevant; it was its strategic value and the demonstration to other APEC members that these things could be done and that we could get on with it. My goodness I think it is fair to say—and I see the Hon Jim Sutton nodding his head—that the negotiation of a free-trade agreement with Singapore had a profound impact on the thinking of other APEC members including Malaysia Australia and even Chile. 
At that time New Zealand had initiated that negotiation with Singapore. That agreement was initiated between me as New Zealand’s trade Minister and George Yeo as Singapore’s Trade Minister. In fact my good colleague here Tim Groser was our chief trade negotiator at the time and he did the real hard work on that trade negotiation. 
At the same time though we had a bigger strategic vision. There were key players in APEC involving the US Trade Representative the New Zealand trade Minister—myself—the Chilean vice-Minister of trade Alejandro Jara the Singaporean Trade Minister George Yeo and the Australians. In fact Tim Fischer was the Deputy Prime Minister and Trade Minister of Australia at the time. 
We had a bigger strategic vision that we called P5. That whole concept was to really bring some progress to APEC by linking up APEC members right across the Pacific—the United States Chile New Zealand Australia and Singapore. It would have been a magnificent trade deal. When President Clinton was in New Zealand during his State visit following the APEC leaders’ meeting in 1999 he told the Shipley Cabinet at that time that he liked the idea of P5 and that he was keen to see it pushed ahead. I know that his Trade Representative Charlene Barshefsky who remains a very good friend to this day was totally behind that trade deal. George Yeo and the Singaporean Prime Minister were totally behind P5. Chile was behind P5 as long as it did not cut across Chile’s long-promised free-trade agreement with the United States of America which Chile had been promised for many years. Finally even Australia which maybe was not quite so enthusiastic initially came to the party as well and said that it wanted to be in that. It was sad that we ran out of time. We saw the elections in the United States that changed the Government there and the elections in New Zealand that brought in the Labour administration and that changed totally the dynamics between New Zealand and the United States that had seen the concept of P5 almost advanced to fruition in late 1999. 
At the time we realised that P5 might not be as easy as that. We knew that the United States trade agenda at the time was very full with giving China permanent most favoured nation treatment in US law. Getting major trade legislation through the United States Congress is always challenging and at that same time the United States had to get that legislation through its Congress. So we knew that P5 was always going to be difficult which is why Tim Groser and I worked with some key players notably Alejandro Jara who is now a deputy director-general at the World Trade Organization and Ricardo Lagos Weber the son of a former President of Chile who I think is now Trade Minister for Chile. 
We were working at the same time on this concept of P3. P5 was the big strategic picture. If P5 could not go ahead for whatever reasons—maybe Australia was not totally enthusiastic or maybe the United States was too preoccupied with China’s accession to the World Trade Organization and making China a permanent most favoured nation—we wanted to make sure that there was a strategic concept that would advance APEC’s trade liberalisation goals. So P3 was initiated as a concept way back in late 1999. Tim Groser reminds me of the work we did on it at the Carlton Hotel as we were chairing APEC at that very time. 
So these developments do not happen in a short time. It is now almost 7 years later that we are passing this legislation. Where New Zealand is fortunate is that we have bipartisan recognition in our Parliament at least in recent years. When I was trade Minister I have to say that I did not get all the support from Labour that Labour has had from us on these trade issues but at least now that Labour is in Government it has shown that it realises the vital importance of trade liberalisation not just to New Zealand but to global economic development. I think we are fortunate in New Zealand that our major political parties do understand the importance of trade liberalisation and that these kinds of strategic agreements and legislation have the almost unanimous support of this Parliament. It puts New Zealand in a hugely strong position to lead these kinds of strategic developments internationally. It is an important role we have and it is just a shame that Labour breached that leadership role in allowing our tariff phase-outs to go beyond our APEC commitment of 2010. Despite that issue National is totally supportive of this legislation.