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Goff: Tariff Amendment Bill, first reading

1 March 2006

Hon Phil Goff Minister of Trade

Speech Notes

Tariff Amendment Bill, first reading

I move that the Tariff (Trans-Pacific Strategic Economic Partnership) Amendment Bill be now read for the first time. I intend to move that the bill be considered by the Foreign Affairs, Defence and Trade Committee, with an instruction that the committee present its report to the House on, or before, 13 March 2006.

The Trans-Pacific Strategic Economic Partnership Agreement is a four-way agreement liberalising trade between Brunei, Chile, New Zealand and Singapore. It is the first trade agreement spanning four countries across Asia and the Pacific and has strategic and economic opportunities for New Zealand.

Together the four countries, which are all member economies of APEC, have a combined GDP of some NZ$400 billion and trade flows among the four countries are worth over NZ$2.5 billion dollars.

The agreement not only reinforces the desire of New Zealand and Chile to develop trade and economic relations with Asia, but also serves as a building block to wider trade liberalisation within the APEC region as a whole.

This bill amends New Zealand’s domestic legislation to bring it into line with the Trans-Pacific Strategic Economic Partnership Agreement. This will allow the agreement to come into force.

This entails an amendment to the Tariff Act 1988 to enable the preferential tariffs conferred by the agreement to be applied to parties to the agreement. The tariffs conferred by the agreement are included in the “preferential tariff” column of the New Zealand Tariff. The actual rates of duty as spelled out in the agreement will be added to the Tariff by a subsequent Order in Council.

The tariff reductions under the agreement will make New Zealand’s exports more competitive and will bring small but useful immediate benefits to our exporters. On entry into force of the agreement, tariffs on 89 per cent of New Zealand current exports to Chile will be immediately eliminated. All remaining tariffs will be phased out by 2017. This will bring a savings to New Zealand exporters of around NZ$2.2 million in import duties, the amount incurred in the year to June 2004.

In this way the agreement will deliver immediate benefits to New Zealand exporters including of products such as coal, and a wide range of agricultural technology products where New Zealand’s exports are currently growing such as seeds, animal genetic material and veterinary vaccines.

New Zealand exported a small quantity of goods worth NZ$3.55 million to Brunei Darussalam in 2004, incurring duties estimated at NZ$52,000.

Brunei will bind at zero tariffs covering 92 per cent of New Zealand’s exports to Brunei. It will eliminate all remaining tariffs by 2015. Tariffs between New Zealand and Singapore are already zero under the existing New Zealand-Singapore Closer Economic Partnership.

This agreement, however, is about much more than just tariffs. It has a clear strategic focus beyond the direct tariff benefits that will accrue to the parties.

The Trans-Pacific SEP will provide more opportunities and greater certainty and transparency for New Zealand business wishing to operate in Chile, Singapore and eventually Brunei Darussalam across a whole new range of services sectors. New Zealand companies will be able to bid for government procurement on the same footing as domestic suppliers.

The Trans-Pacific SEP provides a framework for resolving issues concerning technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures. Some barriers identified by New Zealand exporters have been included in the immediate work programme of the TBT committee.

The Trans-Pacific SEP also establishes a framework for closer economic, scientific, technological, educational, cultural and primary industry cooperation. The objective is to build on existing cooperative relationships, with a focus on innovation, research and development, creating new opportunities for all parties.

Cooperation programmes to support sustainable development will also be established under the Environment Cooperation Agreement and Labour Cooperation Memorandum of Understanding, which were concluded as part of the overall package of the agreement.

This is New Zealand’s first trade agreement with a Latin American county. It will put New Zealand’s relationship with Chile, one of our closest Latin American partners, on a new level.

As relatively small agricultural traders, with comparable productive structures, the agreement provides the basis for fostering a closer sense of partnership between Chile and New Zealand, opening the way for working collaboratively in third markets.

Chile has established itself as a business platform for South America in a similar way as Singapore acts as a hub in Southeast Asia. The SEP will raise New Zealand’s profile in Latin America and make it easier for businesses to use Chile as a launch pad. Since signature of the agreement, there has already been increased interest among businesses and Crown Research Institutes about the opportunities Chile presents.

Singapore and Brunei’s membership, as ASEAN countries, is also an important part of the strategic rationale of the agreement and adds significantly to the combined GDP of the member countries.

The Foreign Affairs, Defence and Trade Select Committee has considered the agreement under the international treaty examination process. Its report to the House notes that the agreement serves New Zealand’s objective of broadening relations with Latin America and Asia, as well as promoting New Zealand’s wider trade policy interests in APEC and multilaterally.

To conclude, the Trans-Pacific Strategic Economic Partnership Agreement represents a significant economic and strategic opportunity for New Zealand.

It enjoys strong support from the business community and others, including educational institutions, with an interest in strengthening relations between New Zealand and the Latin America and Asia regions.

The government would wish to see the bill enacted by March 23, in order to allow adoption by Order in Council of relevant regulations within the timeframe in which the parties hope to ratify the agreement. I commend the bill to the House.


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