Parker David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeParker David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — Second Reading[Sitting date: 10 September 2015. Volume:708;Page:6567. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Labour): This is the only piece of legislation that comes before the House in respect of the New Zealand - Korea free-trade agreement. It is the only opportunity that we as politicians have to talk about the pluses and the minuses in the agreement and I propose to do so.Labour shares the ambition of National to grow our trade and we think that reducing tariff barriers to the entry of our exports into other countries is an important part of the Government’s agenda to improve trade. Sadly the need for these tariff reductions and the need for better export performances are laid bare by the current statistics for the New Zealand economy where exports as a percentage of the economy have dropped from 30 percent of GDP when the Government took over to 28 percent now and they are projected to drop further still. That should be contrasted with the Government’s ambition to lift exports. Its target was to lift exports from 30 percent to 40 percent of GDP which it is plainly failing on because its economic settings are wrong.This legislation is supported by Labour because for once National has it just about right—it is not perfect but it has got it just about right—so we can support this piece of legislation. Indeed as the Acting Minister of Trade correctly records tariffs that are currently paid by New Zealand exporters that are going to be reduced in the first year alone amount to about $65 million which will mean that the net proceeds of sale that are received by New Zealand exporters selling into Korea will be higher because they do not face those tariff bills and therefore more of the sale price will end up in their pocket.That is good for the New Zealand economy because it means that more money will come into the New Zealand economy we will be able to afford to buy more things from overseas as a consequence of the things that we export and those businesses will be more competitive and will be able to expand and afford higher levels of cost including over time higher salaries and wages. That is how an economy like New Zealand’s grows in value and prospers.That is the reason why the Labour Party is clearly pro-trade as evidenced by the most important trade agreement that we currently have which is the New Zealand - China free-trade agreement which was negotiated by the Hon Phil Goff who will take a call in this debate. That agreement shows how important trade agreements can be to growing trade. I do not agree with some of the other parties in this House that say that free-trade agreements are irrelevant to our trading prospects. They most certainly are relevant.One of the reasons why we find it easy to agree to this agreement is that other than this amendment to the Tariff Act there is no change required to New Zealand’s legislation. There is no change required to our tax legislation to our environmental legislation or to our labour laws. All of them remain as they are and can be properly changed in the future. We had good advice from officials in the earlier part of this process that confirmed that we could for example properly regulate for public health and safety for environmental laws for labour laws or for tax laws. All of those things are unaffected by this free-trade agreement. So the sovereignty of the New Zealand Parliament to govern in the interests of New Zealanders is not undermined in those ways.There is a problem with this agreement that we have highlighted already—and I was surprised that the Minister did not address it in his second reading speech just as he did not address it in his first reading speech—which is the mistake that the Government has made in respect of what can be controlled in terms of South Korean investment into New Zealand. At the moment the New Zealand Government is able to change what it screens for. It can say for example that it wants to ban the sale of New Zealand’s houses to overseas buyers. This agreement constrains that ability and Labour says that that is wrong. Labour also points out that this is poor negotiating by the National-led Government because the Australians were able to protect that same right. Australia does control who can buy its existing houses. It does so including in respect of South Korea and is able to do so under its free-trade agreement that was negotiated in recent years with South Korea—between South Korea and Australia. So I have got no doubt in my mind that if the Government had wanted to retain the right to control who buys New Zealand houses in its agreement with South Korea it could have done so.Why did the Government not do it? It did not do it because it does not care about that. It does not think that a future Government should be able to ban the sale of New Zealand houses to overseas buyers. That was made clear by both Minister Groser and the Prime Minister John Key respectively about a month ago speaking on The Nation and Q+A. They both said: “Well we don’t want to ban the sale of New Zealand homes to overseas buyers notwithstanding the fact that other countries like Australia do.”We in the Labour Party think that we should be able to. It is proper for National members to disagree with our position. It is not proper that they curb the sovereignty of a future Government’s ability to do so and that is our complaint with this. Our request that we made at the time of the Foreign Affairs Defence and Trade Committee report was that the Government clarify this by way of a side letter or renegotiation of this aspect of the agreement and it has to all appearances not done anything. It has not responded to the select committee. It has certainly given no signal that it is trying to do that.What are the consequences of this? The Minister made reference to the most favoured nation clause in this agreement meaning that if South Korea does something more favourable to another country New Zealand gets the benefit of it. What he did not say was that most favoured nation agreements do not actually apply to goods so they could have different tariff rates and that would not flow through but they do apply to investment protocols. I find that somewhat inconsistent but that is as it is in a number of other agreements.What is the effect of that? Well the effect of that is the same as it is under prior agreements. The most favoured nation agreement under the Chinese free-trade agreement applies to things that are given away by the National Government in the South Korean free-trade agreement. So by the action of National not retaining the right to screen for new categories of investment i.e. to ban the sale of New Zealand homes to South Koreans the most favoured nation provision in the Chinese free-trade agreement means that that flows through to the Chinese free-trade agreement. The effect of this is that New Zealand could not have a future ban on land sales that exempted South Korea but applied to China because that would put us in breach of the Chinese free-trade agreement. So the effects of this flow through to other trade agreements. The current Government is putting future Governments in the position that if they wanted to ban the sale of land to foreigners—we have the position that if you have got the right to live here you have got the right to buy here—we would have to renegotiate the South Korean free-trade agreement in order to avoid breaching the Chinese free-trade agreement.We have five bottom lines for free-trade agreements. This is true in respect of the proposed Trans-Pacific Partnership agreement and it is true in respect of this agreement. Those conditions are that Pharmac has got to be protected and corporations cannot be able to successfully sue Governments for regulating in the public interest—I have talked about that. We would actually prefer in agreements with First World countries not to have investor-State dispute resolution clauses. The officials told us this time that they could not have had an agreement with South Korea because that was a bottom line with the South Koreans; they needed investor-State dispute resolution clauses from their perspective. We think that New Zealand has to have the ability to control who buys our farmland and our houses the Treaty of Waitangi must be upheld and we have got to have meaningful gains in tariff reductions for our exporters.All of those conditions were met in the Chinese free-trade agreement. All but one the land one that I talked about are met in respect of the South Korean one. We do not yet know what is happening in respect of the Trans-Pacific Partnership agreement but we know that at the start of the process Minister Groser Prime Minister Key and Bill English all said that they were going to be huge reductions in tariffs such as those that have been achieved in the Chinese free-trade agreement and to a similar extent in the South Korean free-trade agreement but we do not yet know.With those comments I reiterate that the Labour Party recognises that we are a trading nation. We have got a proud record in favour of free and fair trade and for those reasons we are supporting this bill.