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Singapore Free Trade Agreement Speech

Singapore Free Trade Agreement
General debate speech notes
Wednesday 10 August 2000
Rod Donald MP
Green Party Co-Leader

Last week Michael Cullen confirmed our worst fears - the government intends to deny parliament the opportunity to debate and decide whether NZ should sign up to a free trade agreement with Singapore. It is the prerogative of the executive Dr Cullen says, never mind that the executive is an executive of a minority government or that the junior partner to that minority government, the Alliance, used to have and hopefully still does, serious concerns about free trade agreements.

Only 49 Labour MPs, indeed 16 Labour Cabinet Ministers, could lock this country into a free trade agreement which hasn't been adequately debated in public, let alone in parliament.

The secrecy around the Singapore Agreement mirrors the secrecy which surrounds the now defunct Multilateral Agreement on Investment. Under mounting pressure the then National Government actually released more information on the MAI than the current government has done on what its up to with Singapore. Speculation in the media has only cause to heighten our concern about this agreement and the process under which it is being negotiated.

The advent of minority multi-party governments must signal the end to the traditional crown prerogative. It is simply not acceptable for parties representing less than half the members of this house and therefore half the voters of this country to sign New Zealand up to long term commitments which are difficult to get out of.

My colleague Keith Locke has a members bill in the ballot which would bring the procedure for adopting international treaties into the twenty first century. All international treaties would come before parliament and parliament would need to give its approval before NZ became a party to them. That in turn would ensure that in future the only treaties that are given effect to by the courts in NZ law are those that have been before parliament.

That is the ideal situation. What we have now is far from it. The level of consultation on the Singapore Free Trade Agreement with the Green Party, on which this minority government depends for confidence and supply, has been zero.

According to today's independent the level of consultation with the likes of the Manufacturers Federation has been less than adequate. The Auckland export institute says they want to be brought into negotiations too.

Trade liberalisation supporters and critics alike are pressing for more information to be made available about the agreement. Many of us would have assumed this would be the case given the strong stand taken by the deputy prime minister when he was opposing the Multi lateral Agreement on Investment.

His questions on that agreement are just as pertinent on this one now: "If the Government is so certain that the Singapore Free Trade Agreement is so good then the arguments in favour of it must be pretty persuasive. The logic must be overwhelming. So the Government which is so sure that the free trade agreement is such a good idea should be prepared to debate it on the floor of the house and have a vote on it."

In the same way that Mr Anderton invited the then Minister of Finance to table the draft MAI agreement I would now invite the Minister of Trade Negotiations to table the draft Singapore Free Trade Agreement. Lets have some proper open debate both in parliament and in public before this agreement reaches the point of mere ratification.

What have we gleaned about this agreement? First and most fundamentally the likely economic benefits are minimal. A cost benefit analysis provided by Foreign Affairs provides no economic benefits. This is not surprising given that New Zealand and Singapore effectively have free trade between them already. In fact 98% of merchandise trade is already free of tariffs while the few restrictions on investment and trade in services are there for good reasons.

Instead the CBA tells us that the big advantage of the Singapore agreement is strategic. It is a stepping stone, indeed a Trojan Horse, towards an Asian free trade agreement with New Zealand and Australia. It is claimed that if such an agreement were signed then the benefit to NZ would be US$3.4 billion.

Clearly we should take this estimate with a large grain of salt. It was undoubtedly based on the same unrealistic assumptions about perfect competition that are trotted out time and again to justify trade liberalisation. These studies always promise "free beer tomorrow" but literally no one comes back the day after and checks whether anyone actually got a drink. In other words there are no studies documenting econometrically actually realised gains from trade liberalisation.

Despite Jim Sutton saying the Greens have rocks in their heads because of the questions we raise about free trade he is not even prepared to undertake a study on what if any net benefit New Zealand has gained from our free trade with Australia. On the face of it we have lost a lot. Thousands of New Zealand jobs have been exported to Australia as manufacturers have moved across the Tasman to take advantage of generous government assistance packages. Thousands of New Zealanders have followed their lost job opportunities. Since CER has signed New Zealand has had trade deficits for 15 of those 17 years.

Not only does Australia export more manufactured goods to us than we do to them but in recent years Australia has exported more food products to New Zealand than we have to them. And it's getting worse. Not withstanding Heinz Watties' decision to relocate some of its processing from Melbourne to Hastings the trend has been very much in the wrong direction. Goodman Feilder's decision to close down its oat mill in Gore and feed Kiwis on Australian porridge is one of the most retrograde. Even the Heinz Watties decision means that our tomato sauce will be made in Australia using tomatoes from Thailand.

That example illustrates the stupidity of globalisation but also the greed that underpins it. Capital moves to where ever production costs are cheapest. That means looking for governments that are willing to provide incentives such as cheap labour, poor working conditions, low environmental standards and tax havens.

The Singaporeans are driving a hard bargain to reduce the local content quota to only 20% in their negotiations on the FTA. That effectively means that clothes made in sweat shops elsewhere in Asia could be transhipped to Singapore and packed in retail boxes with a "Made in Singapore" label sewn on them in order to circumvent the tariff freeze that the government only passed this year. Even the 40% local content quota the government is prepared to agree to, 10% less than what we have with Australia, undermines the tariff freeze and the government's commitment to working people's jobs in New Zealand.

We have no confidence that a free trade agreement with Singapore will be to New Zealand's advantage. As Jane Kelsey says in this week's Herald "we can't have it both ways". Either the government stands for rebuilding this nation through regional development and job creation or it sides with globalisation. Its time to make the hard choices and if Labour is determined to take the globalisation path then it ought to front up to parliament and rely on National to get its way rather than resort to the Crown prerogative.

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