Hon CHRISTOPHER FINLAYSON (Acting Minister of Trade) : I move, That the ASEAN-Australia-New Zealand Free Trade Area Bill be now read a second time. I begin by thanking the Foreign Affairs, Defence and Trade Committee for its consideration of the bill and for reporting it back to the House. The committee’s recommendation is that the bill be passed with no amendments.
The committee also conducted an international treaty examination of the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area and its associated treaty and non - treaty level agreements. The enactment of this bill will allow the agreement and its associated treaty-level outcomes to be brought into effect. I would also like to thank those who made submissions on the treaties and on the bill. The report reflects the strong agreement in this House and the wider business community for the free-trade area, as well as for alternative views.
As the Foreign Affairs, Defence and Trade Committee noted in its report tabled in the House on 9 April, this free-trade agreement is a significant agreement for New Zealand that provides new opportunities for New Zealand exporters and investors. The scale of the opportunity is significant. New Zealand - ASEAN two-way trade was worth more than $12 billion last year, which is 85 percent greater than New Zealand’s trade with China for the same period. ASEAN is our fastest-growing market, with New Zealand goods exports growing 121 percent—or 25 percent per annum—since 2000. The free-trade agreement will further facilitate this growth.
A number of submitters welcomed the very positive outcome for services. The agreement provides new market access opportunities and greater certainty for services trade with sectoral commitments by ASEAN countries that, in many cases, significantly expand on their existing commitments in the World Trade Organization. This is an important outcome, as services currently constitute about 30 percent of our exports. Submitters also recognised the agreement’s investment protection disciplines as providing improved certainty and security for New Zealand investors and investments in ASEAN countries. Importantly, the committee also reported that a failure to sign on to the agreement would leave New Zealand exporters and investors at a disadvantage in the region.
ASEAN is now an integration hub for free-trade agreement activity in Asia. It has free-trade agreements in place with China, Japan, and Korea, and it is about to sign an agreement with India. It is also in free-trade agreement negotiations with the European Union. The agreement ensures that New Zealand exporters and investors enjoy the same treatment—and, in some cases, better—that is granted to ASEAN’s other free-trade agreement partners, in addition to an advantage over our key competitors in the region who do not already have a free-trade agreement in place.
The committee’s report recognises that the agreement does not affect New Zealand’s ability to protect public morals; human, animal, or plant life; national treasures or sites of historical or archaeological value; or its ability to support the creative arts, where measures do not constitute an arbitrary or unjustifiable discrimination or a disguised barrier to trade. The committee was also satisfied that the agreement, through a specific provision, protects the intellectual property rights of Māori and New Zealand’s ability to take measures to accord more favourable treatment to Māori in fulfilment of Treaty of Waitangi obligations.
Some concerns were raised about the effect the agreement may have on the New Zealand manufacturing sector and on employment. The agreement is expected to have a positive effect on exports, gross domestic product, and employment in New Zealand, including in the manufacturing sector. Significantly, improving market access for New Zealand firms through a progressive trade agenda that includes free-trade agreements like this, ensures that we continue to stimulate economic growth and help safeguard the jobs of the many thousands of New Zealanders who work in or support export-oriented industries.
As a consequence of this 12-country free-trade agreement, New Zealand manufacturers and producers that export directly to the ASEAN region, or that use imports from the region as inputs into their products, will enjoy the benefit of the elimination of 99 percent of all tariffs on current trade with key ASEAN economies. Furthermore, the enhanced regional rules of origin encourage Australian and ASEAN producers to make greater use of New Zealand inputs in regional and global supply chains.
The agreement takes import-sensitive industry concerns into account through the phased removal of tariffs to smooth any adjustment process. New Zealand has left the elimination of existing tariff protection for its import-sensitive industries until the end of the tariff phase-out, particularly between 2017 and 2020. That is a time frame of up to 12 years. This represents New Zealand’s most conservative tariff phase-out time frame ever negotiated in any free-trade agreement to date.
New Zealand’s ability to regulate the financial services sector was another concern that was raised. Under the agreement, existing regulatory and policy settings for services and investment are protected, as is this country’s ability to regulate the financial services sector where this regulation does not constitute an arbitrary or unjustifiable discrimination or a disguised barrier to trade.
The free-trade agreement’s financial services annex includes specific provisions that protect New Zealand’s current regulatory settings and preserve its ability to regulate its financial services sector. In fact, the annex on financial services also provides a framework that may help to prevent any future financial crisis in New Zealand by providing for enhanced transparency and certainty through provisions relating to the application of prudential measures, transparency, and transfers of information relating to the broader sector.
I note the concern expressed in the committee that the agreement undermines New Zealand’s ability to tackle tobacco use. The agreement does not in any way change New Zealand’s current approach to tobacco regulation, nor is it likely to have any significant impact on the price or availability of tobacco products in New Zealand. Furthermore, there is nothing that contravenes or undermines New Zealand’s commitments under the Framework Convention on Tobacco Control. New Zealand currently employs a number of policy tools outside trade policy to regulate tobacco use, including education, excise taxes, and labelling requirements. The use of these policy instruments to address tobacco use is not undermined or compromised in any way by this free-trade agreement.
In conclusion, I point out that the free-trade agreement represents a significant achievement and new opportunities for this country. It ensures we are not left on the sidelines of the rapid economic integration of east Asia. The bill amends New Zealand’s domestic legislation so that the agreement can be brought into force. It amends the Tariff Act 1988 in order to implement preferential tariff rates on imported goods from free-trade agreement parties and enable transitional safeguard measures to be applied in appropriate circumstances on such exports.
The bill also amends the Customs and Excise Act 1996 by creating a system for issuing certificates of origin for goods exported from New Zealand to ASEAN markets. The Government would like to see the bill enacted as soon as possible so that New Zealand can be ready to enter the free-trade agreement into force by the 1 July target agreed by the parties. I commend the bill to the House.
As the Foreign Affairs, Defence and Trade Committee noted in its report tabled in the House on 9 April, this free-trade agreement is a significant agreement for New Zealand that provides new opportunities for New Zealand exporters and investors. The scale of the opportunity is significant. New Zealand - ASEAN two-way trade was worth more than $12 billion last year, which is 85 percent greater than New Zealand’s trade with China for the same period. ASEAN is our fastest-growing market, with New Zealand goods exports growing 121 percent—or 25 percent per annum—since 2000. The free-trade agreement will further facilitate this growth.
A number of submitters welcomed the very positive outcome for services. The agreement provides new market access opportunities and greater certainty for services trade with sectoral commitments by ASEAN countries that, in many cases, significantly expand on their existing commitments in the World Trade Organization. This is an important outcome, as services currently constitute about 30 percent of our exports. Submitters also recognised the agreement’s investment protection disciplines as providing improved certainty and security for New Zealand investors and investments in ASEAN countries. Importantly, the committee also reported that a failure to sign on to the agreement would leave New Zealand exporters and investors at a disadvantage in the region.
ASEAN is now an integration hub for free-trade agreement activity in Asia. It has free-trade agreements in place with China, Japan, and Korea, and it is about to sign an agreement with India. It is also in free-trade agreement negotiations with the European Union. The agreement ensures that New Zealand exporters and investors enjoy the same treatment—and, in some cases, better—that is granted to ASEAN’s other free-trade agreement partners, in addition to an advantage over our key competitors in the region who do not already have a free-trade agreement in place.
The committee’s report recognises that the agreement does not affect New Zealand’s ability to protect public morals; human, animal, or plant life; national treasures or sites of historical or archaeological value; or its ability to support the creative arts, where measures do not constitute an arbitrary or unjustifiable discrimination or a disguised barrier to trade. The committee was also satisfied that the agreement, through a specific provision, protects the intellectual property rights of Māori and New Zealand’s ability to take measures to accord more favourable treatment to Māori in fulfilment of Treaty of Waitangi obligations.
Some concerns were raised about the effect the agreement may have on the New Zealand manufacturing sector and on employment. The agreement is expected to have a positive effect on exports, gross domestic product, and employment in New Zealand, including in the manufacturing sector. Significantly, improving market access for New Zealand firms through a progressive trade agenda that includes free-trade agreements like this, ensures that we continue to stimulate economic growth and help safeguard the jobs of the many thousands of New Zealanders who work in or support export-oriented industries.
As a consequence of this 12-country free-trade agreement, New Zealand manufacturers and producers that export directly to the ASEAN region, or that use imports from the region as inputs into their products, will enjoy the benefit of the elimination of 99 percent of all tariffs on current trade with key ASEAN economies. Furthermore, the enhanced regional rules of origin encourage Australian and ASEAN producers to make greater use of New Zealand inputs in regional and global supply chains.
The agreement takes import-sensitive industry concerns into account through the phased removal of tariffs to smooth any adjustment process. New Zealand has left the elimination of existing tariff protection for its import-sensitive industries until the end of the tariff phase-out, particularly between 2017 and 2020. That is a time frame of up to 12 years. This represents New Zealand’s most conservative tariff phase-out time frame ever negotiated in any free-trade agreement to date.
New Zealand’s ability to regulate the financial services sector was another concern that was raised. Under the agreement, existing regulatory and policy settings for services and investment are protected, as is this country’s ability to regulate the financial services sector where this regulation does not constitute an arbitrary or unjustifiable discrimination or a disguised barrier to trade.
The free-trade agreement’s financial services annex includes specific provisions that protect New Zealand’s current regulatory settings and preserve its ability to regulate its financial services sector. In fact, the annex on financial services also provides a framework that may help to prevent any future financial crisis in New Zealand by providing for enhanced transparency and certainty through provisions relating to the application of prudential measures, transparency, and transfers of information relating to the broader sector.
I note the concern expressed in the committee that the agreement undermines New Zealand’s ability to tackle tobacco use. The agreement does not in any way change New Zealand’s current approach to tobacco regulation, nor is it likely to have any significant impact on the price or availability of tobacco products in New Zealand. Furthermore, there is nothing that contravenes or undermines New Zealand’s commitments under the Framework Convention on Tobacco Control. New Zealand currently employs a number of policy tools outside trade policy to regulate tobacco use, including education, excise taxes, and labelling requirements. The use of these policy instruments to address tobacco use is not undermined or compromised in any way by this free-trade agreement.
In conclusion, I point out that the free-trade agreement represents a significant achievement and new opportunities for this country. It ensures we are not left on the sidelines of the rapid economic integration of east Asia. The bill amends New Zealand’s domestic legislation so that the agreement can be brought into force. It amends the Tariff Act 1988 in order to implement preferential tariff rates on imported goods from free-trade agreement parties and enable transitional safeguard measures to be applied in appropriate circumstances on such exports.
The bill also amends the Customs and Excise Act 1996 by creating a system for issuing certificates of origin for goods exported from New Zealand to ASEAN markets. The Government would like to see the bill enacted as soon as possible so that New Zealand can be ready to enter the free-trade agreement into force by the 1 July target agreed by the parties. I commend the bill to the House.
