Coleman Jonathan: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Coleman Jonathan: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading 
[Sitting date: 22 June 2010. Volume:664;Page:12104. Text is incorporated into the Bound Volume.] 
Hon Dr JONATHAN COLEMAN (Minister of Immigration) 
 on behalf of the  
Minister of Trade 
: I move  
That the Tariff (Malaysia Free Trade Agreement) Amendment Bill be now read a second time 
. 
Hon Darren Hughes 
: “I would like to thank the Foreign Affairs Defence and Trade Committee.” 
Hon Dr JONATHAN COLEMAN 
: The member has been listening! I thank the Foreign Affairs Defence and Trade Committee for its consideration of the bill and for reporting the bill back to the House. The committee’s recommendation is that the bill be passed with no amendments. As the committee noted in its report the Malaysia - New Zealand Free Trade Agreement will serve to benefit New Zealand merchandise exporters that target Malaysia as well as provide new opportunities for service providers particularly in the areas of educational environmental and engineering services. 
Malaysia is already our tenth-largest trading partner. Two-way trade between our countries is now approaching $2 billion and the trajectories are all in the right direction. Over the last 4 years goods exports to Malaysia have grown by over 50 percent. This free-trade agreement therefore comes at just the right time to give our exporters a chance to consolidate their positions within a priority market. 
On day one of this agreement entering into force approximately 95 percent of New Zealand’s merchandise exports to Malaysia will immediately be duty-free. This is a terrific head start for our companies competing in Malaysia against firms from Europe the United States Latin America and even Australia. And it will get better for New Zealand companies; by 2016 99.5 percent of our exports will be duty-free which will be 5 years earlier than the time secured under the free-trade agreement concluded by Australia and New Zealand with the 10 economies of the Association of South-east Asian Nations or ASEAN. That free-trade agreement is already a high-quality and comprehensive free-trade agreement. It placed New Zealand and Australia ahead of the queue of ASEAN’s other free-trade agreement partners including Japan Korea China and India let alone those who have yet to negotiate a free-trade agreement like the European Union and the United States. 
The elimination of tariffs is just one part of the story. The enhanced rules of origin negotiated in the Malaysia free-trade agreement will encourage Malaysian producers to make greater use of New Zealand products for imports and manufacturing. This will benefit a whole range of small and medium sized enterprises producing what are known as intermediate goods. Recent OECD research has shown that 56 percent of overall goods trade flows are in intermediate products. This is the way that modern trade is done. That is recognised in the rules of origin provisions in modern free-trade agreements including the one we are considering today. 
This free-trade agreement is not just about eliminating barriers to the export of New Zealand products. Trade in services is an increasingly important element of New Zealand’s trade profile particularly in the case of Malaysia where areas such as information and computer technology and engineering are expected to grow over time. Education in particular is an area of growth potential with growth of over 70 percent in fee-paying Malaysian students studying in New Zealand between 2003 and 2008. New Zealand delivers high-quality education services including training literacy programmes for schoolchildren and so on across the Internet and in-country in Malaysia. This free-trade agreement ensures that this trade is now protected and secure from Government intervention which might have wanted to limit or prevent that access. 
Better still and in addition to all these upfront benefits for New Zealand this agreement has been future-proofed. Specifically most favoured nation treatment in key sectors of commercial interest has been secured for New Zealand service suppliers. This means that if any future free-trade agreement partner with Malaysia is able to negotiate benefits that improve on what New Zealand has gained in a range of services sectors and investment we will automatically get the same benefits. If we combine that with our first-mover advantage of having preferential access for our exporters immediately members can see that this agreement is a very strong outcome for New Zealand business that sets us up well for the future in Malaysia. 
As with previous free-trade agreements that New Zealand has entered into the Malaysia free-trade agreement protects New Zealand’s most import-sensitive industries. New Zealand has left the elimination of existing tariff protection for its most import-sensitive industries to the end of the tariff phase-out in 2016. That is exactly the same date at which Malaysia will eliminate its tariffs on New Zealand products. 
The minority view in the Foreign Affairs Defence and Trade Committee report questions the effects of the investment provisions of free-trade agreements on the New Zealand economy. Increasingly New Zealand investors are looking to countries like Malaysia to enhance their global competitiveness. It is not surprising therefore that between 2003 and 2008 New Zealand’s total stock of investment in Malaysia increased by 77 percent. Our investors need to be sure that their investments will be satisfactorily protected. This free-trade agreement delivers that by offering additional and improved protections for New Zealand investors and their investments in Malaysia. In this way the agreement protects a New Zealand company’s ability to transfer its profits protect itself from expropriation and be assured of fair and equitable treatment—all of which are supported by a robust effective and legally binding dispute settlement mechanism. For its part New Zealand in respect of inwards investment from Malaysia has retained the flexibility to continue to apply the existing Overseas Investment Act and regulations regardless of the origin of any prospective investor. In other words the current investment screening regime in New Zealand continues to apply to prospective investors from Malaysia. This free-trade agreement has not changed the Overseas Investment Act in any way. 
The Malaysia free-trade agreement is expected to have a positive effect on exports gross domestic product and employment in New Zealand including in the manufacturing sector. The reality is that improving market access for New Zealand firms through a progressive trade agenda that includes free-trade agreements like this agreement ensures that we continue to stimulate economic growth and helps to safeguard the jobs of the many thousands of New Zealanders who work in or support export-oriented industries. 
The bill amends New Zealand’s domestic legislation so that the Malaysia free-trade agreement can be brought into force. The bill amends the Tariff Act 1988 in order to implement preferential tariff rates on imported goods from Malaysia and to enable transitional safeguard measures to be applied in appropriate circumstances on such imports. The Government would like to see the bill enacted on 24 June 2010 so that New Zealand can be ready to bring the Malaysia free-trade agreement into force on 1 August 2010. This will ensure that New Zealand business can benefit as soon as possible from this new addition to our free-trade agreement stable. I commend this bill to the House.