McClay Todd: Trans-Pacific Partnership Agreement Amendment Bill — First ReadingText is incorporated into the Bound VolumeMcClay Todd: Trans-Pacific Partnership Agreement Amendment Bill — First Reading[Sitting date: 12 May 2016. Volume:713;Page:11059. Text is incorporated into the Bound Volume.]Hon TODD McCLAY (Minister of Trade): I move That the Trans-Pacific Partnership Agreement Amendment Bill be now read a first time. I nominate the Foreign Affairs Defence and Trade Committee to consider the bill. A report to be presented by the committee later this year will be a significant step for New Zealand in completing our domestic procedures necessary to ratify the Trans-Pacific Partnership (TPP) agreement. The amendments introduced by the bill will take effect only from the date that the TPP agreement enters into force for New Zealand.New Zealand needs to trade with the rest of the world. We will not become more prosperous or richer simply by selling to ourselves. Taking what we do best to the world—high-quality primary products innovative solutions and technologies and the world’s best place to travel and study—is what provides for our Kiwi standard of living. Improving access to international markets is part of the Government’s wider plan to create a stronger economy with more jobs and higher incomes for all New Zealanders. This Government strongly believes that with an open innovative economy we can succeed in the global market.Successive New Zealand Governments have pursued free-trade agreements to support New Zealand’s global connections and maximise opportunities for exporters. The TPP agreement is the latest in this legacy. I want to acknowledge the previous Labour Government and the foresight of Helen Clark and Phil Goff for kick-starting the negotiations that led to this very good agreement. I equally want to recognise the courage of David Shearer and Clayton Cosgrove for standing up for free trade. They appreciate that New Zealand’s future lies in being an open confident country on the world stage.The TPP is our largest free-trade agreement to date and it places us centrally in a region encompassing nearly 40 percent of global GDP. The TPP will deliver benefits to New Zealand and ultimately to all New Zealanders. The 12 TPP countries total 800 million people who already buy over 40 percent of New Zealand’s exports—that is $20 billion in goods and $8 billion in services. The TPP is New Zealand’s first free-trade agreement with the US Japan Canada Mexico and Peru and together these countries buy around $12 billion of New Zealand’s goods and services annually.Tariffs will be eliminated on 95 percent of New Zealand’s trade to these five countries once the TPP agreement is fully phased in and in total it will see savings of around $274 million a year on goods exports around half of which will accrue immediately when the agreement comes into force. This is around twice the savings initially forecast for the China free-trade agreement. With the exception of some dairy products to some markets and a reduced tariff rate on beef to Japan—where the rate falls from 38.5 percent to 9 percent for beef into Japan; the lowest ever agreed—all New Zealand - originated exports to TPP countries will ultimately be duty-free. The TPP will also reduce non-tariff barriers to trade and ensure fair access for New Zealand firms doing business in these 11 other countries.The real strength of the TPP however lies in the fact that it is a regional set of rules greater than the sum of its parts. The TPP will help New Zealand exporters build regional supply chains trade across multiple markets under the same rules and build new partnerships and ultimately it is estimated that the TPP will add at least an additional $2.7 billion a year to New Zealand’s GDP by 2030. Some will say that this is an insignificant amount. Well it is $2.7 billion worth of additional economic activity securing jobs in all of our regions.The reasons for New Zealand becoming a party to the TPP are both economic and strategic. It is important to note that as a founding member of the TPP New Zealand will gain an opportunity to exercise influence on the development of rules that the agreement will set for the region. This is both in respect of its present form and more significantly in the future as membership may well increase.The Asia-Pacific region is the world’s fastest growing and offers immense opportunity for New Zealand. Through agreements like the TPP we will be exceptionally well placed to take advantage of those opportunities and shape future trade liberalisation in our region. A counterfactual scenario where New Zealand is left out of such an agreement puts New Zealand at risk of marginalisation and decline in the region. As a former Prime Minister said it would be unthinkable that New Zealand would not sign up to the TTP—a real visionary for the Labour Party of old.Over the past few months I have been talking with New Zealanders in large numbers at events around the country including at TPP roadshows and hui and it is clear that people understand that trade is critical to New Zealand’s prosperity but there is some misinformation or misconceptions out there. The TPP preserves our core interests and it meets publicly stated bottom lines by those no longer pro - free trade. The TPP does not change the fundamentals of the Pharmac model or the standard 20-year length of patents for medicines. Consumers will not pay more for their subsidised medicines as a result of the TPP. The TPP will not change the Government’s ability to make good law and regulations. Investor-State dispute settlement exists in many New Zealand agreements and the risk of an investor-State dispute settlement case being taken against the Government let alone it being successful is extremely low.In the TPP the Government has preserved the right for a future New Zealand Government to restrict the purchase of residential land by non-resident foreigners. Flexibility remains to impose new discriminatory taxes on purchases of residential property by TPP investors and this could be extremely helpful for a future Government that wants to further restrict the 1 percent of foreigners who are buying homes in New Zealand.Nothing in the TPP will prevent the Crown from meeting its obligations to Māori. The TPP includes a specific provision preserving the pre-eminence of the Treaty of Waitangi in New Zealand. The Waitangi Tribunal’s report on the claims concerning the TPP which came out last week found no breach of the Treaty of Waitangi. The TPP delivered meaningful gains in tariff reductions and market access with total savings of $274 million a year in tariffs for New Zealand exporters and tariff elimination on 95.4 percent of New Zealand’s exports to new markets in the US Japan Canada Mexico and Peru.This is a good trade deal for New Zealand negotiated by the very same people who negotiated the China free-trade agreement. All of those bottom lines have been met so the question must be asked—and it must be answered—has the Labour Party really turned its back on trade? If as I suspect it was higher in the polls it would be voting in favour of the TPP because it is clear that if Helen Clark or Phil Goff or David Shearer was still the leader of the Labour Party they would be supporting the TPP.This bill is the latest step in New Zealand’s domestic processes with the TPP text and national interest analysis having just been examined by the Foreign Affairs Defence and Trade Committee. The committee utilised a substantially longer period for its examination than is specified by the Cabinet Manual and received public submissions both in writing and in person.New Zealand is already an open transparent and trade-friendly country so most of the TPP’s obligations are met by New Zealand’s existing domestic legal and policy regime. However a number of legislative and regulatory amendments are required to align New Zealand’s domestic laws with certain obligations. This bill is an omnibus bill which makes all of the domestic legislative changes required to comply with New Zealand’s obligations in the TPP except for obligations relating to plant variety rights which New Zealand has a 3-year period following the TPP’s entry into force to consider and then implement. It is necessary for New Zealand to pass this bill before it is able to ratify the TPP.The key amendments contained in the bill enable the application of a preferential tariff rate for imports originating from TPP countries the increase of New Zealand’s overseas investment screening thresholds for significant business assets from $100 million to $200 million for certain non-government investors and the implementation of the TPP intellectual property obligations. This follows a consultation carried out in March by the Ministry of Business Innovation and Employment on the proposed implementation of certain intellectual property changes to New Zealand law required to ratify the TPP.The TPP provides for an initial period of up to 2 years for all TPP countries to complete their respective domestic processes necessary to ratify. To make the economic opportunities of the TPP a reality for the people of New Zealand we must progress our domestic ratification process allowing New Zealand to bring the TPP into force along with our trading partners.The TPP is our biggest and our most valuable free-trade agreement to date and it places us centrally in the world’s fastest-growing region. It will deliver immense opportunity for New Zealand businesses. It will level the playing field for our exporters whom this Government backs to succeed and to grow. It gives me pleasure and pride to commend this bill to the House.