David Parker: We have to fix the overseas home owner status

David Parker calls for the right to ban the sale of homes to overseas buyers. Photo / Michael Craig

The New Zealand-China Free Trade Agreement was established by Labour in 2008, led by then-Trade Minister Phil Goff, now Auckland Mayor. We remain proud of the FTA.

Trade with China has grown enormously since then. However, total New Zealand exports to the world have dropped from 30 per cent of GDP nine years ago to 27 per cent of the economy now.

The focus of the FTA update should be two-fold: to address non-tariff barriers, and restore the right of a future Government to ban the sale of New Zealand homes to overseas buyers.

Non-tariff barriers can be used to frustrate or complicate the sale of New Zealand goods or services into China. Application of fair rules at the border is of course proper in New Zealand as well as China. But fair regulatory rules need to be clear and based on legitimate criteria such as quality assurance.

Rules favouring one seller over another, or biased in favour of goods with less value added (for example, partly processed livestock or forestry products) undermine New Zealand processors and jobs, and are inconsistent with the objectives of the FTA.

Controversial examples of other non-tariff barriers alleged include the refusal to accept kiwifruit into China after complaints were made about Chinese steel being dumped at low prices into New Zealand.

Some say this was retaliation. Others allege inconsistent barriers put in the way of infant formula sellers, depending on whether the New Zealand seller was or was not partly owned by Chinese investors.

It is unnecessary to conclude whether or not these allegations were correct - we should be able to agree to rules against such practices, and mechanisms to speedily resolve such issues if they arise.

The other crucial issue to fix is the right of Government to ban the sale of our homes to overseas buyers. This is the largest area of disagreement on trade issues between National and Labour, and needs to be resolved.

Labour's policy is to ban overseas buyers of existing houses, other than to our closest neighbours like Australia where we have a close relationship and reciprocal rights.
Under the FTA negotiated by Labour, any future New Zealand government could ban the sale of farmland or houses to Chinese investors. China can do the same, and since the FTA it has indeed banned non-residents, including New Zealand investors, buying houses in some of China's main cities.

The FTA requires New Zealand to treat China no less favourably than other countries.
This is under the most-favoured-nation provision - article 139.

This allowed New Zealand to ban the sale of farmland or houses to Chinese investors, but requires New Zealand to treat China no less favourably than other countries (for example, South Korea).

Clause 3 of article 139 means earlier agreements with Australia and Pacific Islands are not affected, and do not flow into the New Zealand-China FTA.

Later agreements do. The recent South Korean FTA, and the terms of the on-ice Trans Pacific Partnership have caused a serious problem.

National does not believe we should ban foreign buyers, and negotiated different terms in the South Korean FTA and the TPP. These purport to stop a future New Zealand Government banning the sale of our homes to buyers from South Korea. The South Korean provision flows to China under the most-favoured-nation clause in the New Zealand-China FTA.

South Korea in its FTA with Australia a year earlier allowed Australia to ban the sale of their homes to Koreans.

Even more absurd is the fact that South Korea can ban house sales to New Zealanders, though New Zealand can't do the reverse.

The update of the FTA should make it clear a future New Zealand Government can ban the sale of New Zealand homes, notwithstanding article 139 of the New Zealand-China and South Korean FTAs. China will understand, because they have retained the right to ban New Zealanders from buying their homes.

Labour believes in trade, and is proud of the benefits the NZ-China FTA has brought both countries.

However, if public confidence is to be maintained and we are to avoid the protectionism on the rise in the United States and elsewhere, public concerns about selling New Zealand homes to foreign buyers must not be ignored.

David Parker is Labour's Trade Spokesperson