McClay ToddHon TODD McCLAY (Minister of Trade): Can I thank colleagues for their contribution to the debate so far. I think it is a respectful debate and a very very useful one and I think anybody listening in will be enjoying it because this is very much the way that this House should conduct discussions about trade more directly.I want to go through a few of the points that have been raised by colleagues around this but before I do I very much want to speak in favour and in support of the Trans-Pacific Partnership agreement as negotiated and signed and certainly pay a very big compliment to the previous trade Minister Tim Groser for over 7 years having negotiated what many people said would not be possible and actually reaching agreement with 11 other countries that represent 800 million consumers—almost 40 percent of the world's economy—spending $27 trillion of GDP every year. It gives unprecedented access for New Zealanders New Zealand goods and New Zealand services to these very important markets to us. I guess I would argue that the only country for which we have better access to through a comprehensive free-trade agreement would be Australia through Closer Economic Relations (CER) something that has been in place for so very very many years.It is pleasing to hear from members that they do support trade and recognise the importance of trade to New Zealand. You know we are a country of 4.5 million people that can produce in an area of food—food alone—to feed 40 million people. I wonder if it were not for our ability to sell internationally whether or not generally we would run out of things to do after about March in the year. If without preferential access—or in many cases just fairer access—to countries because of free-trade agreements (FTAs) whether or not around about February—about the time this Parliament comes back to start work—the economy would run out of things to do.I do want to pay credit to the previous Government in starting the negotiations and Phil Goff actually for starting the negotiation of the Chinese free-trade agreement because that has been exceptionally important to New Zealand over the last 8 years since it has been in place. And the China free-trade agreement is very similar to the Trans-Pacific Partnership agreement (TPPA) in as far as it is a comprehensive free-trade agreement.Mr Robertson mentioned that this is more than just around the liberalisation of tariff schedules and he is correct—it is. But actually it has been quite some period of time since New Zealand—or any other country really—has gone out and negotiated a trade agreement based just on tariff lines and tariff schedules. Actually it is very important for our economy that we are more ambitious than that. The reason for this is we are not only a country that produces goods and sells them overseas; we are a country that also now provides services increasingly significantly around the world. We are also a country now that invests overseas and so on and so forth. So it is important I think that our agreements are comprehensive. It is also important that they deliver for all parts of our economy.I do want to say that when it comes to consultation and engagement—it has been said before; I will repeat it—this was a widely consulted-on free-trade agreement. Some of the people who were consulted in the very early days—I accept it was 7 or 8 years ago and it is a very long period of time. But I asked the Ministry of Foreign Affairs and Trade to have a look for me to make sure—when I stood up in public in one of the more than 50 meetings I did around the country as part of the 18 roadshows and hui that we did up and down New Zealand including more when people asked us to do them; to talk about the agreement to explain it and to go through it with them—that it had been widely consulted on. I was informed it was and I accepted it was.But what I would say is since becoming Minister and since having signed this agreement I do believe and accept there is a difference between consultation and engagement. I think that is quite important. So I have been talking a lot about a trade policy strategy refresh that we are working through now and that is very much about trying to engage as well as consult. With members of this House I would be very keen to find better ways to do this going forward. But I do believe that even if we had engaged differently consulted differently—it would have been hard to consult more but if we had done that—I do not think we would have had a different outcome or would have come to this House with a different agreement than the TPPA because I do believe it delivers for us.We heard Ms Woods say that dairy was a big loser in this and yes it is fair to say—Dr Megan Woods: I said it wasn't a big winner. Not a big winner.Hon TODD McCLAY: Well if it was not a big winner that is almost the same I guess as saying it is a big loser as others have. However all right. I will accept therefore that the All Blacks were not big winners the other day when they played rugby but in this instance I think dairy did do very well.Yes it is correct that we did not get full liberalisation of dairy access to other countries. It is also correct that we got lower tariff rates and new quotas into a number of those countries which means that we do have better access now than we did in the past and we do have the ability in the future to keep challenging and looking for more from this at some stage in the future with our trading partners. However dairy is one of the most heavily protected industries in the world—it is certainly very heavily subsidised—and New Zealand always goes to argue for a fairer deal for our farmers into these markets.Of current trade volumes or flows by value into Trans-Pacific Partnership (TPP) nations when fully enforced there will be a $274 million tariff saving. Dairy is almost $100 million of that and actually to our dairy farmers that will be quite welcome. Is that enough? Do we think people should continue to liberalise? Do we actually want to see less protection of dairy around the world? Absolutely we do. Do we believe there should be less—if not no—subsidy in dairy and other agricultural products around the world? Absolutely we do and we go and argue that in our free-trade agreement negotiations we argue that in the World Trade Organization. But an almost $100 million saving for dairy on current trade values is I think significant.But what we also see in the TPP are some areas where there was full liberalisation around dairy—not as a commodity but as a product where we add value. So into the US for instance if you want to sell cheese or add value to milk products here—a little bit of sugar some flavour or maybe some kiwifruit and you want to sell it to the US as ice cream—in many areas there is full liberalisation and so there are opportunities for New Zealand to add value to products here and export them overseas creating and protecting more jobs in New Zealand and actually growing our share of trade. A total of $274 million of tariff savings on our current trade values not taking into account any extra trade that we will do as a result of this—that is a win for New Zealand and it is a big win. I think those tariff savings will be greater because in many cases we will end up selling much much more.I will take a call later in this discussion to go into more detail but I just want to address something that Mrs King said. I think it is very important—and we have paid a lot of attention to patent term extensions. She is correct that if we had to extend patents automatically or just because other countries wanted us to there would be a cost to New Zealand. But in the text from the regulatory impact statement that she read—she was probably a touch selective in that because if she went on a bit further it does show that the Government has been consistently clear that the patent term extension provisions of the TPP are likely to have a very limited impact in New Zealand. This is because the Intellectual Property Office of New Zealand and Medsafe are already very efficient—among the most efficient regulators in the TPP. So what this means is if there is an unreasonable delay then that period of delay that is unreasonable can be tagged on to the end by way of an extension and—Grant Robertson: How do you define that?Hon TODD McCLAY: —the analysis says that is not likely to happen very much at all. So how that will be defined is that Pharmac can go away do some work and it will set some regulations around this. But ultimately we have agreed that because it was important to some of our other partners. But there will be TPP countries where the delays are very very long—many many years long. So for reasons of transparency and fairness this was agreed but the impact upon New Zealand will be negligible and indeed I think Pharmac has said it will be about a million dollars a year including some of the work it has to do to comply.A final part in this is what Mr Tabuteau said around other parts of Pharmac and what it would do. Well Pharmac has said that in as far as—there are only two changes to Pharmac. There will have to be a review process for any declined application. There is not a problem with that because actually just as people took a case to the Waitangi Tribunal to make sure that the Government was meeting its obligations to iwi to Māori under the TPP exclusion it is right that if something is declined there is the opportunity for judicial review. The only other change is that Pharmac can set the time frame in which it will make a decision and it is currently consulting on this and proposing 3 years; so it can make a decision over 3 years. If it is turned down somebody can appeal the decline but there is no need for it—