Shearer David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — Third ReadingText is incorporated into the Bound VolumeShearer David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — Third Reading[Sitting date: 24 September 2015. Volume:709;Page:7080. Text is incorporated into the Bound Volume.]DAVID SHEARER (Labour—Mt Albert): Very much in the spirit of the last contribution Labour is supporting this agreement. Just to be very clear about it this is a bill that enables the Korea free-trade agreement to come into operation; it is not actually the free-trade agreement itself. That has already been signed but it does need enabling legislation and that is what we are talking about here.We are pleased to support this because on balance it is a good agreement. It is not perfect but it is a good agreement. New Zealand depends on these agreements as the previous speaker Mark Mitchell was just saying in order to be able to grow our trade. New Zealand is a small country and we do not have the big internal market that the United States and other countries might have. If we do not trade then we will not be able to continue the prosperity that we enjoy today. It is worth noting that in those countries with which we do have free-trade agreements we do better in terms of our trade. We have better access we have better returns and we are able to prosper more.It is worth noting that when we signed the China free-trade agreement in 2008 we had I think about $7 billion in two-way traffic in trade and a little over $3 billion in terms of our exports with China. That figure has now grown to around $10 billion worth of exports to China. There are some people who say that that would have grown anyway but all of the analysis around that that I have read has shown that actually we would not have got those sorts of gains in China if it had not been for the free-trade agreement that we have with it. It was China’s first free-trade agreement I should add and it very much set the bar—it was a high-quality agreement—for other free-trade agreements since then.So when other parties in this Parliament say that we do not need to sign on to this free-trade agreement or that it is not good enough or that there is some sort of problem with it they should just reflect on what that means to our exporters. If you are a kiwifruit exporter sitting there in Tauranga or up in Northland and you want to get access to a growing Korean market it is going to be a very difficult thing to do to compete against the Chilean exporter who pays zero tariffs when we in New Zealand have to pay 45 percent. In other words we will not be able to compete fairly on a playing ground that is not in any way level.So we need this free-trade agreement in order to firstly bring down the tariffs that operate on New Zealand goods going into Korea and secondly to be able to grow that market even more than we have at the moment. Currently Korea is our fifth-largest export market so it is very significant. It is a growing economy. It is just one step behind us in terms of its GDP per capita and it is growing faster than New Zealand overall so it is likely to overtake us. So it is an important market both for what it is now and for what it could likely become. That is the reason we need to be there and have an agreement with Korea.I want to as Mark Mitchell and Phil Goff have mentioned as well compliment both Tim Groser and the negotiators on getting this agreement through. It has been a tough agreement and it has been a tough agreement for a very simple reason. For us Korea is our fifth-largest export market. For Korea New Zealand is their 41st most important export market. In other words it is well down the list of priorities for Korea and it is really high for us. For us after about a 4-year period we will get $229 million in benefits from tariffs being removed. Korea will get $4.5 million. So when you add it up what is in it for Korea? Well actually not a lot. If you were a Korean negotiator out there you would be saying: “We get $4.5 million worth of access into your market and you get $229 million worth of benefits into ours.” To get this agreement across the line was a very good feat and the people who negotiated it deserve our praise. For example $45 million worth of tariffs on beef will come off and our ability to grow our beef exports to Korea will go up. Other examples of tariffs coming off are the 22 percent tariff on lamb the 45 percent tariff on kiwifruit and tariffs on logs and a number of manufactured goods. At the end of 15 years 98 percent of our exports to Korea will have no tariffs attached to them so it is a good deal.We have heard that we certainly did not get what we wanted on milk powder; on frozen deer velvet which is an important market for deer farmers; or for some products of seafood. We did not get everything we wanted. We would have liked a bit more but we did not get it. But we have done very well. We have also included in the agreement provisions on labour standards and environmental standards. Unfortunately they are not sufficient for the Green Party to come aboard and sign up to this. That makes me sort of sad really because you have got to ask: what is the threshold for the Green Party to agree to a free-trade agreement? It is a pretty high bar and when you start narrowing down the countries that would be able to meet that bar it is a very small number of countries and if we had to rely on that smaller group of countries then we would not be trading as we are with many countries around the world and we certainly—certainly—would be poorer. If you are going into this saying you support free trade but you are not signing up to free-trade agreements there is only one conclusion you can come to—that actually you do not support exports and you do not support free trade. There is no other conclusion to come to.I want to just talk very briefly about one of the reservations that Phil Goff mentioned in relation to this free-trade agreement and that is the problem around property investors coming into New Zealand and buying up residential property. I am an Aucklander and I have seen property prices go through the roof in Auckland. We do not want our residential property to be treated like pork bellies on the New York Stock Exchange. We want our residential property to be places where people live and are able to afford to live. By allowing foreign speculators to come into our property market we then open up our property market for speculation that will drive prices up and that is undoubtedly driving prices up right now. This free-trade agreement that we have with Korea will enable speculators to be able to enter our market and from what we can see and certainly in the wise words of Dr Kāwharu from Auckland University it will mean that we will not be able to stop those speculators coming in and speculating in our market. That is a source of concern. Australia in its free-trade agreement with Korea locked in a protection against that but we for some reason did not.Lastly I want to mention the concerns around the investor-State dispute settlement process—the tribunals that are set up where there are disputes in agreements. It is included in this free-trade agreement with Korea. It was included at the behest I understand of the Korean Government. It is mainly because Korea wants to have a uniform set of agreements that include this. We did include it in our free-trade agreement with China at our behest. And why did we do that? It was because we were uncertain and unclear about whether we would get a fair deal in a Chinese court. We do not have that same fear with Korea. I would think that a dispute would not go to an investor-State dispute settlement form of judicial recourse because it would either go to a New Zealand court or a Korean court. We would be able to settle it in those courts because we respect each other’s judiciaries.The bar to get to an investor-State dispute settlement tribunal is incredibly high and if you look at the case law around it you will see that the chance of New Zealand ever getting to an investor-State dispute settlement tribunal is very unlikely. We have not been taken to one before. We have not been taken to a World Trade Organization court before. There have been 350-odd cases that have been taken there and 84 percent of those countries in the OECD that have gone before an investor-State dispute settlements tribunal have won their cases. So I think that when you put this on the ground it is still a very good trade agreement.