KEITH LOCKE (Green)
: The Green Party will be opposing the legislation, because we oppose the Trans-Pacific Strategic Economic Partnership Agreement, which this legislation is implementing. It is not that we are against trade agreements, but we are against this particular agreement. On an ideological basis, it is an agreement that just reduces tariffs everywhere, without demonstrating practical, positive effects for New Zealand.
If one looks at the tariff reductions in the bill, one must ask how they will overcome the huge trade deficit that we currently face, which was at the record level to the year ended January of about $7 billion. There has not been any working through of that issue. In one respect, the removal of the tariffs in the other three countries in the agreement, and the lowering of barriers there, will allow some of our exporters to export more into those economies. But that does not necessarily mean that there will be a net benefit, and it does not necessarily mean that we will get more for our existing exports. Phil Goff talked about companies saving $2.2 million in Chile in the duties they currently pay. Well, it is not necessarily a saving, because if those duties are built into the price that exporters get in Chile, when those duties are removed, the retail price drops down proportionately. It may not result in any savings for the New Zealand exporting companies. It is true that when we have knocked off duties in New Zealand, the prices have often gone down, and it has not necessarily meant an increase for the overseas companies exporting into New Zealand.
It is true that, as the previous speaker said, this is not a major agreement, in the sense that it does not change an existing situation dramatically, but it could lead in the direction of losing export capacity if the removal of tariffs in New Zealand made it more difficult for New Zealand manufacturers who might then have gone on to export. It could reduce our exporting capacity because we are competing with a lower-wage economy in the case of Chile, and with an economy that is not a level playing field in the case of Singapore. The Singapore Government plays a big role in many of its industries and can undercut New Zealand in its exports and bids for services — as it has already done. It is true that the existing free-trade agreement with Singapore has not demonstrably benefited New Zealand in terms of the balance of trade. It has tended to go more in Singapore’s favour, although there are arguments about what the current situation is. Some argue there has been a bit of an upturn in our favour if we consider the last few months, but over the last 4 years a benefit cannot really be demonstrated for New Zealand.
As Phil Goff, Murray McCully, and Tim Groser have all indicated, this agreement is not to be viewed on its own but as part of a larger strategic plan for free-trade agreements in Asia and in our whole region. It is a stalking horse for free-trade agreements with China — a much bigger economy — and with Malaysia, etc. If we look at these issues more broadly, towards a free-trade agreement with China, we are looking at the serious problem of losing more of our manufacturing industry, particularly in the textile, clothing, and footwear areas that are already hard hit and finding it difficult to compete. We want to retain some infrastructure in that area, and these agreements, and moves in this direction, are making that more difficult.
They take us in the opposite direction to what the Government, in cooperation with the Greens, is rightly doing — that is, promoting a Buy New Zealand Made campaign — whereas this agreement says there shall be absolutely no preference for New Zealand products over those from Chile, Singapore, or Brunei, and equal treatment has to be given to all exporters from those countries. That applies, for example, to the area of Government procurement, but if we are to have a successful Buy New Zealand Made campaign, the Government will have to take the lead and encourage local bodies to procure locally, too.
However, this agreement says that we cannot give any preference to New Zealand products over products from those other countries, or services from them in terms of procurement. If we were worried about unfair competition, about bad labour standards in Singapore, Chile, or Brunei, or about bad environmental practices there, all of which were undercutting our ability to trade and which were not leading to good situations in those countries, then there is a provision in this agreement — not in the bill itself but in the agreement — to have discussions about those problems. But there is no implementation enforcement procedure in the agreement. So I think that if we look at that, we will see that this agreement will have a detrimental effect, as a whole.
We should not look just at the balance of trade; we should look more broadly than that to the whole balance of payments, which is pretty dire in New Zealand at the present time and going very much against New Zealand, with billions of dollars worth of dividends going out of the country each year because so much of our economy has been taken over by foreign investors. There is roughly about $80 billion of foreign investment in New Zealand, and about only $20 billion of outgoing investment. There is a huge imbalance there, and it is getting worse all the time.
Unfortunately, this agreement helps to lock in an approach that will lead to even more foreign control of our economy. The Green Party believes that the existing excessively high threshold of $100 million, under which approvals are not needed for foreign investors coming into the country, is locked into this agreement with Singapore, Brunei, and Chile, and a future Government will not be able to change it, because there is a ratchet provision there saying that once we have agreed we cannot then push the threshold down, in the case of the investment side of the agreement. Even though this is not an investment agreement as such, New Zealand has committed itself under that agreement to locking in that $100 million threshold in a way that cannot be changed by a future Government. That undermines the sovereign power of any future Government that wants to change things, and of this Parliament itself.
The Minister of Trade indicated in his speech that services are also covered in this agreement, and the Greens have a particular concern there. The Minister said that educational institutions are quite keen on this agreement; unfortunately, it is the private educational institutions that are the most interested. The New Zealand Government is very involved in promoting those private educational institutions abroad, particularly through the World Trade Organization’s General Agreement on Trade in Services (GATS) round. It is true that some New Zealand providers might get a certain advantage out of those practices, but it works the other way, too, with private providers from overseas coming in and potentially gaining a big foothold in control in our own education system. Under those arrangements, and under this one, foreign providers have to be given equal treatment and equal Government subsidies — if Government subsidies are to be provided to private education services.
There is a new approach in this agreement to service commitments, which is different from the normal GATS approach, whereby the four countries are to provide what is called a negative list of services — that is, things they want kept out of the agreement in terms of provision of services, but with a free rein on everything else. So if this Government forgets to put certain things in that negative list, then for all time the other things — and they may be the result of further technological development — stay outside of the commitment and it is a free-for-all between those four countries in terms of the provision of those services. There is also ambiguity in the list of services that are excluded from free competition, which is provided in the treaty, as to exactly how they apply, and the determination of how they apply is not made by New Zealand — not the sovereign Government or Parliament of New Zealand — but by international arbitration. When we talk about the agreement protecting public education, and a lot of education services are, in reality, mixed public/private, who is to determine what is protected?
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