Fear of imports via back door

By BRIAN FALLOW Economics editor

Submissions to the Government on New Zealand's proposed trade deal with Hong Kong are evenly divided between support and opposition.

Business groups generally favour a closer economic partnership (CEP) agreement, seeing it as providing opportunities, particularly in service industries, and as building momentum for wider regional or global trade liberalisation.

But there are varying degrees of concern about rules of origin, which are crucial to ensuring that a deal does not open a back door to a flood of imports from China in areas which are still afforded a measure of tariff protection, such as textiles, clothing and footwear.

The Auckland Regional Chamber of Commerce says Hong Kong's policing of its exports is already robust.

But the Footwear Industry Association has doubts about New Zealand's ability to police its borders against third-country imports claiming Hong Kong preference.

The Council of Trade Unions cites United States Customs reports expressing concerns about the origin of textiles imported from Hong Kong.

The Greens oppose a CEP, saying that most of the goods which would enter New Zealand tariff-free would have been made in China, under more oppressive conditions.

The New Zealand and Hong Kong Governments have agreed that labour standards will not be part of the agreement.

"Separate but parallel" talks on labour standards will proceed alongside the main negotiations. The CTU questions the usefulness of that.

New Zealand Post subsidiary Transend says that Hong Kong has not made commitments in the World Trade Organisation on a number of services in which New Zealand has significant trade interests, including postal services.

Several submissions raise concerns about implications for the education sector in New Zealand.

The New Zealand University Students Association says Government subsidies which favoured local providers over Hong Kong entities might be in breach of the CEP and be subject to the disputes clause.

The Association of University Staff opposes the inclusion of tertiary education and research and development services in the agreement, as it would enable Hong Kong education and research contractors to bid for contestable public funding such as the Marsden Fund.

Ecoaction, a Victoria University group, said: "The CEP would threaten New Zealand's ability to make and uphold regulations that protect our environment, because of the risk of private companies seeking compensation or the removal of environmental regulations that might adversely affect their profits."