Norman Russel William: Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — Second Reading In Committee Third Reading 
Norman Russel William: Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — Second Reading In Committee Third Reading 
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Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 We were talking about the role of free-trade agreements and the increase of the sale of dairy into China—via Hong Kong but also directly into China—and the fact that the New Zealand - China Free Trade Agreement has nothing whatsoever to do with the fact that we have had an increase in dairy being sent to China. In fact it is all to do with the San Lu disaster. One of the things that people do not realise is that San Lu was working jointly with Fonterra when basically it was directed by the Chinese Communist Party not to talk about the fact that it was killing children with the melamine-infected milk products it was selling to Chinese parents. The products were killing children across China and making many children in China very very sick. But the Chinese Communist Party directed that the company was not to discuss anything to do with food safety in the lead-up to the Olympics because the party did not want any disturbance of the positive propaganda it was getting around the world with the Olympics. So the Chinese Communist Party committee that controlled San Lu decided that it would not do a full recall. There was then a board meeting of San Lu where there was a Fonterra representative. At that board meeting which was the legal formal structure that controlled San Lu a decision was made that there would be a full recall—or at least that is what the Fonterra representative said. The Fonterra representative was on the phone at the board meeting. 
At that point the Chinese Communist Party then overruled the board and in fact decided not to have a full recall. That is the reality that stands behind our dealing with China. Many people look at the formal legal structure such as of the board of San Lu but in fact if we want to have a proper understanding of what kind of relationship we have with China then we need to look at the fact that it is the Chinese Communist Party— 
The CHAIRPERSON (Eric Roy) 
: Leave was sought for a wide-ranging debate over the four clauses within this bill but I am struggling a wee bit to see the relevance of the member’s point. 
Todd McClay 
: So’s everyone on TV. 
The CHAIRPERSON (Eric Roy) 
: The member will take a walk if he is not careful. I am being as lenient as I can but I ask the member to make the speech relevant to the four clauses. 
Dr RUSSEL NORMAN 
: The relevance for those who are struggling to see it is that there has been much discussion in this debate—which Mr Chairperson has allowed—that these free-trade agreements increase trade with China. That has been the argument made. In fact that is not true; it is just what people argue. If we look at the facts of the matter we discover that the increase in trade to which people have been referring in the debate that Mr Chairperson has been allowing is due to the fact of the San Lu disaster and it has nothing whatsoever to do with the argument that people have been making—which is that it is because of the free-trade agreement. 
We can understand the San Lu disaster only if we understand the role of the Chinese Communist Party within that company. The disaster had nothing to do with the formal legal structures that people imagine they are working with in China such as the board of San Lu—and those are the kinds of legal structures we are dealing with—because in fact the real people who controlled San Lu were the Chinese Communist Party. 
It may be of interest to people in trying to understand the kind of relationship we are developing with China through these free-trade agreements and other kinds of relationships to know that in fact San Lu then paid an organisation called Baidu to censor all of the Internet searches for San Lu and milk powder. So all of the searches by parents inside China who were trying to understand what was going on were censored because San Lu paid for them to be censored. If that is the basis on which people became poisoned and if that then resulted in a big increase in New Zealand’s sales of milk products to China it had nothing whatsoever to do with the free-trade agreement. People think that it had something to do with it but Chinese parents were desperate for safe food to give to their children because of the San Lu disaster. The San Lu disaster happened because of the control of the Chinese Communist Party over the board of San Lu. Even though formally speaking the board was in control in fact the Chinese Communist Party branch within San Lu controlled that organisation. 
If members do not believe me then I suggest they read something about it. A very good book called  
The Party 
 by Richard McGregor explains the role of the Chinese Communist Party. He was a journalist for the  
Financial Times 
 and spent many years living in China. If members read that book they will see that it mentions San Lu at some length and explains why the New Zealand Government was duped into believing that the board of San Lu controlled that organisation when in fact the Chinese Communist Party controlled it. 
Labour and National do deals with what they think is the Government: the President the Prime Minister and all the rest. Of course the people who control what happens in China are the Chinese Communist Party; Government officials are merely the front. So the people with whom Labour and National are doing deals when they go to develop free-trade agreements or think they are doing a deal with—say Hu Jintao the President of China—are not the real powers. In fact Hu Jintao has his power because he is the Secretary-General of the Chinese Communist Party. 
Dr Paul Hutchison 
: I raise a point of order Mr Chairperson. I just note that the member persists in talking of a free-trade agreement with China. The bill we are on is about the New Zealand - Hong Kong economic partnership agreement. He is out of order. 
The CHAIRPERSON (Eric Roy) 
: Yes— 
Dr RUSSEL NORMAN 
: Speaking to the point of order— 
The CHAIRPERSON (Eric Roy) 
: I will hear the member. 
Dr RUSSEL NORMAN 
: The Hong Kong free-trade agreement will be brought into force as a result of this bill; this is one part of bringing it into force. It is the parallel agreement to the China agreement so all of us have been discussing both together because they are intimately connected. 
The CHAIRPERSON (Eric Roy) 
: The member is entitled to discuss other things for comparative purposes but the whole thrust of the member’s speech is not relevant really to the bill. Unless he comes back to the bill I will terminate his speech. 
Dr RUSSEL NORMAN 
: This bill by changing the tariff regime in New Zealand implements the content of the Hong Kong deal—the so-called free-trade deal. But it is not actually a free-trade deal. Anyone who knows anything about trade policy knows that this is a preferential trade deal but that is kind of irrelevant because most people voting on this do not know anything about trade policy. It is actually a preferential deal—that is it creates a preferential treatment of goods and services between New Zealand and Hong Kong and this bill implements that preferential trade deal. 
The parallel agreement that goes alongside that is the New Zealand - China free-trade agreement which is also a preferential trade deal between New Zealand and China. Those two agreements sit side by side and this bill implements some components—only a small element—of the Hong Kong - New Zealand preferential trade deal because only a small element requires legislation to be changed. The large bulk of the Hong Kong - New Zealand preferential trade deal does not require legislation. It is only the parts about tariffs in particular that need changing. Of course we already send our goods into Hong Kong tariff-free so although we are reducing our tariffs they are not reducing theirs. They do not need to because we do not need any of this agreement to be able to get our goods into Hong Kong tariff-free. But let us put that to one side because we all like to believe in the myth that we do. 
The problem we have when we are signing up to these agreements with China is that we imagine that with this deal we are signing up with something that looks like our Government. So we think that our Government is signing an agreement with the Hong Kong Government or with the Chinese Government as the case may be but in fact in China things do not work like that. The Governments there are actually the puppets if you like of the Chinese Communist Party. The leaders of the Chinese Communist Party are the puppet masters and anyone who knows anything about the way China works will know that in fact it is the Chinese Communist Party that determines what happens. When we look at the parallel structures that look like New Zealand Government structures we think they are very similar on the face of it. But they are not; they are quite different structures which are secretly and entirely under the control of the Chinese Communist Party. 
I will just give members one example just in case there are some doubters about this. Luo Gan who was on the Politburo Standing Committee—the body that controls the Chinese Communist Party—until 2007 said: “There is no question where legal departments should stand. The correct stand is where the party stands.” That means that courts in China are required to give verdicts that the Chinese Communist Party directs them to give. The courts are entirely under the control of the party. If we do not understand that the nature of China is different from the nature of New Zealand and that all of the institutions—the media the courts—are all under the control of the party and not separate institutions then we do not understand what we are dealing with when negotiating deals like this one. That is what happened to Fonterra with San Lu. Fonterra did not understand that that is what they were dealing with. In negotiating this deal some do not understand that we are not negotiating with a Government that works in the same way as the New Zealand Government does. 
So when we sign up to this deal we are not getting what we think we are getting; the way China works is very different from the way in which New Zealand works. That is why New Zealand has made so many mistakes in dealing with China and San Lu was simply the worst of them. That is why we will continue to make mistakes until we understand exactly what we are dealing with when we sign up to treaties like this one.