Shearer David: Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — Second Reading In Committee Third Reading 
Shearer David: Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill — Second Reading In Committee Third Reading 
[Volume:666;Page:13405] 
DAVID SHEARER (Labour—Mt Albert) 
: 
 It is with some pleasure that I rise to speak on the Tariff (New Zealand-Hong Kong China Closer Economic Partnership Agreement) Amendment Bill. Like some of the speakers before me I acknowledge those Ministers who have contributed to this bill over a number of years starting with Jim Sutton and including Phil Goff and Tim Groser. I also acknowledge Julian Ludbrook who as my colleague Maryan Street said has been in many ways a font of knowledge and an extremely wise asset to the Ministry of Foreign Affairs and Trade in being able to shepherd this sort of negotiation through quite a complex phase. I do not forget the Foreign Affairs Defence and Trade Committee or John Hayes’ ability to take on some of these issues to question rigorously the ministry and to ensure that we have a very good agreement. 
As other speakers before me have said this is an important bill because it will enable an application of preferential tariff rates under the closer economic partnership. Hong Kong already has as many of us know very liberal trading laws that offer duty-free imports for many countries and this closer economic partnership will add additional benefits. Not only is Hong Kong an important market in its own right as our ninth-largest export destination in 2009 but also it provides strategically—and I think John Hayes touched on this—a vital foothold for New Zealand businesses in gaining access to an expanding greater Chinese market. As has been said we are the only country in the world to hold an agreement of this nature with both China and Hong Kong. It amplifies the important position the two countries occupy in terms of what our economy will face in the future. Building economic relationships with Asia in general but specifically Hong Kong is vital to New Zealand’s future economic prosperity. Those are the major developing and expanding markets and as New Zealand depends so much on our exports the closer economic partnership is another step in that direction. 
The agreement has been evaluated both positively and negatively by the Ministry of Foreign Affairs and Trade. One of the negative impacts it could have is an impact on manufacturers of footwear and some textiles. That is something that has come up in other free-trade agreements before it. I think that with the degree of phase-out period for the tariffs in this particular case it will allow those businesses in New Zealand to be able to adjust and hopefully maintain and develop into a higher-niche occupation in terms of our manufacturing. In terms of both labour rights and environmental sustainability again they are most important values to New Zealand and to New Zealanders. They are core values that should not be sacrificed in the pursuit of increased trade. Under the closer economic partnership from what we can see much of that issue is contained in the environmental agreement with shared objectives and the labour memorandum of understanding which states that labour laws should not be used for protectionist measures and that they should also not be weakened or reduced to increase trade and investment. That too is locked into this agreement. 
There are a range of advantages for New Zealand. Many of them have been traversed earlier but they include better access and service in the key sectors of business communications and environmental services. We will achieve through this agreement favoured nation status enabling New Zealand exporters to benefit from the preferential treatment that Hong Kong provides to its future free-trade agreement partners. That will certainly ensure that we have a much better more sustainable and stronger relationship as we go into the future. The closer economic partnership as others have mentioned is future-proofed to a large degree by the ratchet clause which states that any future unilateral liberalisation in Hong Kong such as in education will apply under this agreement. Although not included in the closer economic partnership New Zealand and Hong Kong have agreed in a legally binding exchange of letters to negotiate an investment protocol within 2 years of the partnership coming into force. In a sense we are gaining advantages ensuring safeguards and ensuring that the agreement is robust enough to be able to be taken forward into the future. 
New Zealand has been at the vanguard of many of the free-trade agreements throughout the world. As many people know we were the first to make such an agreement with China and under this bill we now have a free-trade agreement with Hong Kong. Our exports to China have increased by 65 percent in the short time since 2008 when Phil Goff negotiated that agreement with China. It was historic and it has meant that China is now our second-largest export market. It is likely to become even more important into the future. If we look back it is a long way from 1972 when New Zealand shipped practically two-thirds or three-quarters of its exports to the UK. When the UK joined the European Economic Community we were suddenly faced with the reality that we needed to find other markets. In under 5 years the proportion of exports that we were sending to the UK was under 20 percent. That in a sense is a remarkable achievement when we look back in history. It shows that when New Zealand faces adversity like that we are able to respond and be flexible. I think those were the historic antecedents that formed the basis for our looking outward and our capacity to look at other countries in terms of free-trade agreements. 
We are very good at diversifying our trading partners but I would argue that we are not so good in terms of diversifying our economy. Our economy has largely stayed reliant on those same products that we once exported to the UK back in 1972. If there is one weakness and one underlying factor of the way in which our economy has been declining over the last few years it is the fact that the relative wealth we are achieving from our exported commodities in particular is not keeping pace with the imported manufactured goods that we need for our economy. I will give just a small anecdote. A couple of weeks ago I was visiting Scion the Crown research institute in Rotorua that does research into forestry and our forest products. It has developed amazing products such as plastics made out of wood biofuels made from wood products etc. The biggest failing of course is that right now most of our forests are effectively owned by foreigners. Although much of that technology could not increase our value-added exports it is not even able to be applied. Instead as Russel Norman mentioned we are shipping logs offshore to China in an untreated unfinished and unprocessed way and we are not achieving what we could be from our primary products.