Shearer David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — In CommitteeText is incorporated into the Bound VolumeShearer David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — In Committee[Sitting date: 22 September 2015. Volume:709;Page:6839. Text is incorporated into the Bound Volume.]DAVID SHEARER (Labour—Mt Albert): I am pleased to take a call on the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill. Remember that this is not the treaty itself; this is the legislation we need to put through in order for this free-trade agreement to come into force.I want to just pick up on a couple of points that have been made earlier. I want to start rather unusually with where Tim Groser left off when he was speaking before which was to look at what we miss out on if we do not enter into these free-trade agreements. It is one thing to say that we should not be part of a free-trade agreement with Korea because it is not the perfect free-trade agreement—and it is not the perfect free-trade agreement; it is a very good one but it is certainly not the perfect one—but the point is what do you miss out on?Let us take a good look at some of those things that we would miss out on. The 45 percent tariff would not come off kiwifruit over a period of 6 years. If I was an MP residing in Tauranga or around the Bay of Plenty for example I would have thought that was a pretty important sort of thing to get through for the farmers in Tauranga. Or if I happened to be the MP for Northland where a lot of kiwifruit are grown up there as well I would have thought that that was a pretty important tariff to have removed so that those kiwifruit farmers are able to sell their kiwifruit into Korea without having to pay a 45 percent tariff. That means that the price does not have to be discounted at the expense of the farmer but over a period of 6 years effectively profit would increase. There is a second important point because without that tariff going down it would mean that we would not be able to compete with Chile. Chile has had an agreement with Korea for a long time and it is able to sell its kiwifruit—an inferior product—into Korea and undercut New Zealand producers.So if we do not have this free-trade agreement those farmers in those areas will miss out on that funding. I would suggest Mr Tabuteau that that is particularly important if you happen to be living in the Bay of Plenty area or you happen to be the MP for Northland which your leader is. So that is the first thing I would say.The second thing relates to butter. The tariff goes off that—89 percent of the tariff goes off that over 10 years. That is an immediate benefit to dairy farmers throughout New Zealand. Thirty-six percent comes off cheese 10 percent comes off wood products 20 percent comes off salmon and we could go on and on. If you have the industry representatives who came in and met before our Foreign Affairs Defence and Trade Committee you would hear from them that this has meant millions of dollars to those producers that will flow through their industry and will benefit thousands of workers—or in many cases a hundred thousand workers—directly from that. It is not the perfect agreement but it is certainly a very good one.There are some problems and they have been referred to—milk powder for example. On some dairy products such as cheese and butter the tariff rate will fall but on milk products it is not as good as we would like. Likewise with frozen deer velvet and with some seafood products. Why is that? This is a pretty difficult free-trade agreement to negotiate—and I want to acknowledge some of those negotiators who are here in the Chamber with us tonight—but when you add up the benefits to New Zealand let us see why it is so difficult. Let me give you sort of an indication. What does Korea get out of this free-trade agreement? Well we are the 41st - most important trading partner of Korea—the 41st - most important. You know that is not exactly what you would call being in the top 10. For us Korea is the fifth - most important trading partner—more important than the United Kingdom now for example. Korea is a fast-developing country. It is just below us in the GDP rankings but it looks set to overtake us in the coming years.So what does Korea get out of this? Well it gets a tariff reduction on Korean goods coming into New Zealand of $4.5 million—$4.5 million it gets in savings. How much does New Zealand get? Well New Zealand gets $229 million. You are looking at that and you think: “Who’s getting the better deal here?”. Well there is no doubt as to who is getting the better deal. New Zealand is getting the better deal and that might perhaps hint at why this free-trade agreement was a little more complicated to get through and a little more difficult quite apart from the fact that the Koreans are particularly—I do not want to use the word “obstinate” but they are certainly difficult to deal with when you are conducting these negotiations. So the balance of benefits is firmly on the side of New Zealand and I think it is partly because we are a leader in free-trade agreements and we are such a strong proponent of free trade that we were able to hold some of the moral high ground when it came to negotiating this particular agreement.This agreement is very important to New Zealand. It is very important to us. There are some issues that have been mentioned and I want to touch on those that I think are issues as well and one of those refers to property rights. This was raised by Professor Kāwharu from Auckland University who is one of New Zealand’s experts in free-trade agreements. She pointed out that under this free-trade agreement it will be very difficult for us to be able to basically stop foreigners coming in and buying residential land up if we chose to regulate that. I think that is an issue that we need to be very cognisant about and it opens it up under the most favoured nations status to other countries that we might have deals with as well.Lastly I want to mention the investor-State dispute settlement provisions because I think we have to put this in perspective. We have never been taken to a tribunal. We have never been brought in front of the World Trade Organization. The bar for this is incredibly high as was just pointed out by Dr Reti. This is an aspect of the free-trade agreement with Korea that is highly unlikely to come into play because Korea has very good judicial institutions and so does New Zealand. It would be likely that if there was any disagreement it would be played out within the respective courts of either New Zealand or Korea. It is highly unlikely that it would end up in an investor-State dispute settlement tribunal and even if it did the chances of us losing that case are very very low—84 percent of all cases taken against an OECD country have found in favour of the nation rather than the private corporation.I just want to say in conclusion that there are some issues around free-trade agreements and certainly as we look at the possibility of the Trans-Pacific Partnership agreement being signed we must try to keep these in perspective in terms of the risks and the benefits—and the foregone risks if we do not enter these free-trade agreements—to those producers and the manufacturers in New Zealand who will not gain access to markets and as a result will not add to the prosperity of New Zealand. I do think there needs to be a much better and more informed debate in New Zealand about free-trade agreements. I do believe that it is largely the fault of the Government for not exciting and certainly promoting that debate. I wish it could do more because we definitely need it when we hear the rather ill-informed comments and debate that we are hearing now albeit with the greatest intent and certainly the wish that they do the best for New Zealand. But I do think we need to have some balance in that debate.With that I would like to conclude my speech this evening by just saying that this free-trade agreement will go through tonight. As a result of that there will be effectively a double whammy of 2 years added together and as a result of that a lot of producers around New Zealand will be a lot better off as will a lot of New Zealanders.