Cunliffe David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — In CommitteeText is incorporated into the Bound VolumeCunliffe David: Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill — In Committee[Sitting date: 22 September 2015. Volume:709;Page:6839. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn): It is a great pleasure to take a call in the Committee stage of this Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill and to convey again Labour’s strong but somewhat qualified support for the bill. Mr Chair in the time that you allow me I intend to firstly recap on several of the principles that my colleague the Hon Phil Goff has attested to to note the substance of the deal firstly in terms of the tariff reductions on goods trade and then to touch briefly upon services and investment issues. I want to dig into the investment matter both in its own right and in comparison with the China free-trade agreement and finally I want to look at the investor-State dispute settlement provisions as they relate both to this bill and to the sequence of events in the relationship between the China agreement/disagreement and the current Trans-Pacific Partnership agreement negotiations so far as we are able to be aware of them.In terms of the principles let me restate what my colleague the Hon Phil Goff has just said. Very clearly Labour is an internationalist party. We have a strong and proud tradition of supporting free and fair trade. It was Labour that initiated and negotiated the China free-trade agreement for example and we have throughout supported the Government’s work in this negotiation and in other free-trade agreement negotiations. I think that that is a very important and national interest - driven position as well as a principle-driven position for us to underline particularly when we get to a later debate about the Trans-Pacific Partnership agreement because we attest that that is not just a free-trade agreement but a behind-the-border economic and governance agreement as well and for that reason a broader debate is necessary.Let us turn briefly to the advantages of the bill to New Zealand. In doing so can I acknowledge the work of the officials and the quality of the national interest analysis that has been provided which although not long is nice and specific and quantitative—and not all national interest analyses are—and this one is useful. For example the reduction of goods tariff shows that tariffs on 48 percent—or $793 million—of New Zealand’s current exports to Korea will eventually be eliminated. There is a time-scale where over the first 5 years 67.4 percent will become duty-free; over 10 years it is 79-odd percent; and at the end of 15 years 97.8 percent of current exports to Korea will be duty-free. That is clearly of value to New Zealand. It is of real bankable value to our exporters not only in agricultural goods such as dairy meat and fruit and horticulture but across a wide range of products.There are reservations; there are hold outs. It is not perfect—no deal ever is—but it is our contention that this is a deal worth having and we commend the work that the Government and its officials have done in that regard. Of course there are obligations on New Zealand and they are not exactly symmetric. We start from a different position. We had lower tariffs from the get-go so we therefore have less to reduce. Therefore it is not illogical that the time frame for that reduction is shorter with a maximum of 7 years.There are various protocols and cooperation agreements that have been negotiated to provide some assurance to our Korean friends that the process of liberalisation will be measured will be methodical will be accountable and will not be unduly disruptive. We do not think that those provisions are irresponsible. So overall turning to the trade and services provisions we think that although not complete they are worth having and the investment measures are where we have some qualifications.Can I note though that there is a cost-cutting issue in respect of the measurement of services and investment flows that the Labour Opposition has repeatedly highlighted to the Government which is that our department of statistics does not capture these in sufficient granularity. An example that is relevant is the Singapore closer economic partnership agreement where it was postulated that New Zealand would benefit greatly from the services and investment flow gains but may in fact in the short term at least lose in terms of the goods trade balance with the difficulty being that it was difficult to tell because our services and investment data—Mr Chairman I am anticipating your finger poised on that—[Bell rung]—and right I was. Thank you for the opportunity to complete this speech.The importance is that if we want to know net-net whether the New Zealand economy and the New Zealand taxpayer are benefiting it is important that we modernise our statistics and capture the newer sectors the high-tech sectors the services sectors and the spin-offs of the investment flows including their externalities as well as the relatively easy to measure flow of goods trade which is volume times value minus the change in tariff level.Let me turn now to the investment issues. In its minority report the New Zealand Labour Party drew attention to a potential weakness here that we were not sufficiently assured by officials on. Although it is clear that the existing restrictions that we have to be able to limit for example the sale of New Zealand farmland or sensitive land can remain under the agreement what is not clear is whether it would be possible to introduce new restrictions for example on the sale to non-resident foreign investors from the Republic of Koreaof residential real estate—either a ban or a stamp duty both of which occur in Australia.There is mixed opinion about this. It is our strong hope that the Government will be able to do some form of clarifying instrument such as a side letter. I ask the Minister if he would please to perhaps take a brief call on that matter and provide some indication firstly of the Government’s understanding of the position—because this is important in relation to other potential trade agreements—and secondly whether it has in mind to undertake any form of clarification to the extent that the Government agrees that there is some lack of clarity. It is important for our sovereignty particularly where we have something like a tremendously overheated Auckland property market—The CHAIRPERSON (Lindsay Tisch): Order!Hon DAVID CUNLIFFE: —and high levels of actual inbound migration that we are able to manage the investment flows such as could be liberalised under this agreement. We need to preserve the opportunity for future regulation.That brings me to the third major area of debate. It is not sufficient to cause us to withdraw our support from this agreement which overall although not perfect is one worth having. I repeat that and we repeat our commitment to free and fair trade. But as my colleague Phil Goff said we are concerned about the use of investor-State dispute resolution mechanisms. That in common language is where a corporation can sue the New Zealand Government in some form of tribunal that is not a Government forum and that is outside the normal rule of law in the partner countries. It is Labour’s contention that those investor-State dispute settlement—ISDS as they are called—provisions can have some value where we are trading with for example a developing country that does not have a well-developed system and where New Zealand companies are not assured of the rule of law. So we are not saying we are opposed to investor-State dispute settlement in all cases. However we do not believe that it was necessary here because frankly the Republic of Korea does have a well-developed legal system and the risk of extralegal appropriation of New Zealand property rights we would deem to be pretty low.Why that matters is that there is a sequence of negotiations that started with the China free-trade agreement where we had a much cleaner and more robust investment provision and where there may have been more cause for investor-State dispute settlement and we are now embarked on the Trans-Pacific Partnership agreement negotiations. I know that you are counselling me to stay within the confines of this bill Mr Chairman albeit all parts are being taken as one but I do believe that it is a highly relevant matter to Labour’s support of this bill that we have considered whether we could still support it because of concerns that both the investment chapter and the investor-State dispute settlement provisions could be read in such a way as to tilt the Trans-Pacific Partnership agreement outcome to a point where we could not support it. That in such an important call would be important.I do want to just set down the balance that we have struck between support for this agreement and our very important set of five bottom lines around the Trans-Pacific Partnership agreement: that Pharmac must be protected—The CHAIRPERSON (Lindsay Tisch): Order! The Trans-Pacific Partnership agreement is not part of this debate.Hon DAVID CUNLIFFE: I take your guidance Mr Chairman and I will narrow the scope but in doing so let me repeat that we had to consider—