Hayes John: Tariff Act 1988 Repeal Bill — First Reading 
Hayes John: Tariff Act 1988 Repeal Bill — First Reading 
[Volume:662;Page:10797] 
JOHN HAYES (National—Wairarapa) 
: 
 That speech made by Sir Roger Douglas sounded plausible but I rise to oppose him and I rise to oppose his piece of political theatre—one and a bit pages of four clauses that if passed would allow imports without the payment of tariffs which are currently provided for by the Tariff Act 1988. In effect this tiny piece of political theatre would get rid of the Tariff Act 1988. The Act provides a framework for the Tariff of New Zealand and its administration. The Tariff Act also provides for transitional safeguard measures where such measures have been provided for under free-trade agreements. Such safeguards protect New Zealand industries from serious injury caused by increased imports resulting from the reduction or elimination of tariffs under a free-trade agreement. 
In many circumstances I would be inclined to support the proposal. Why? Lowering trade barriers is good for the ordinary person in my electorate and more broadly for this country. The Uruguay round of trade negotiations which reduced trade barriers right across the world from 1994 is estimated to have increased world income by roughly US$100 billion. If tariffs on agricultural and industrial goods and services were reduced by one-third there would be a further gain of about US$600 billion—or about 2 percent of world income. The removal of all trade barriers would deliver over 6 percent of world income. In fact the gains would be much greater I suspect because these numbers are back-of-the-envelope calculations estimating the gains from bringing cheaper goods from world markets into what are currently protected markets. It is a very simple application of Ricardo’s theory of comparative advantage. 
So why am I standing against this proposal from Sir Roger Douglas? Essentially I say to Sir Roger that the question is about judgment; mine differs from his. New Zealand tariffs are already amongst the lowest in the world. New Zealand’s economy along with economies like those of Hong Kong and Singapore which Sir Roger mentioned is one of the most open in the world. There are very few tariffs left to be knocked off and those that remain are very low. The current 5 percent and 10 percent tariffs are subject to reductions that may arise out of the World Trade Organization’s Doha round and also to reductions that may be negotiated with New Zealand’s free-trade agreement partners over the coming years. The most recent of these is the Malaysia free-trade agreement which is before my select committee the Foreign Affairs Defence and Trade Committee. 
In fact if we look at New Zealand’s existing free-trade agreements we see that there are very few tariffs left. They have been eliminated from exports from Australia and our recently concluded free-trade agreements with China and 10 nations of South-east Asia—Hong Kong and others—mean that we are on a path towards the elimination of tariffs on goods from these countries also. In addition through the World Trade Organization we have offered duty-free access to the world’s poorest countries the least developed countries. There are only a few sectors such as clothing textiles footwear and some manufacturing sectors where tariffs remain. New Zealand’s last scheduled unilateral reduction of tariffs took place on 1 July last year when the highest tariffs mainly on footwear and carpets were reduced to 10 percent. On 1 July 2008 tariffs on a range of mainly manufactured goods were reduced to 5 percent. 
Let us talk about companies in my electorate such as Metalform in Dannevirke where I will be on Friday helping to lock up a container with the 500th high-tech wheelchair to be exported. These companies are in absolutely no rush to see the remaining tariffs eliminated. They have competed with imports for years. Shoe manufacturers in my electorate and certainly clothing manufacturers have competed with imports for years and will continue to do so. These tariffs are likely to be negotiated away as our free-trade agreements take effect but there is little to be gained from doing this immediately. This is why my judgment differs from Sir Roger’s. I remember what happened back in the late 1980s when Sir Roger and his colleagues from the Labour Party caused massive economic restructuring and what did that achieve? It increased unemployment it ruined many small businesses it ruined many farmers in my electorate it penalised those on low incomes and it penalised the elderly who rebelled against discriminatory taxes. I say to Sir Roger that this is not what we need at this time on the back of a recession. It is a question of judgment and that is why I stand against him. 
The problem New Zealand faces is not that our consumers are hampered by high tariffs; that was certainly once the case but it no longer is. It is that other countries have not followed suit—I am particularly thinking of America. We would see real economic gains if tariffs were reduced in our key export markets and that is precisely what the Government is working hard to do through its agenda of free-trade agreement negotiations. We have done it with China which is now our second-largest trading partner and we are reaping the benefits. New Zealand exports to China grew by 43 percent last year. I say to Sir Roger that that was a key factor in driving New Zealand through the global recession and helping to keep New Zealanders in jobs. Increased market access in key export markets achieved through free-trade agreements can be expected to provide significant benefit to the New Zealand economy to New Zealand companies and to New Zealand consumers and in turn support employment which is so critical at this time of economic fragility. 
Last year Cabinet decided to maintain tariffs through until 2015. That judgment was made on the basis that tariff reductions through trade negotiations rather than through unilateral tariff reduction—as Sir Roger is proposing in the House tonight—will provide more benefit for domestic tariff liberalisation and enhanced as well as reciprocal access to the markets of important trading partners. I say to Sir Roger that we have to be smart about this. That strategy makes sense for the economy as a whole. That is what Sir Roger Douglas overlooks; it is why his bill is faulty and it is why I will vote against it tonight. Thank you.