More sparks fly over Shane Jones' forestry Bill and trade deal fears

Forest owners worried proposed legislation could limit log exports. Photo / File

Claims that proposed forestry legislation could breach New Zealand's WTO obligations are meritless and not rational or factual, says the chairman of the select committee which dealt with Shane Jones' controversial Bill.

Labour MP Dr Duncan Webb's response to this trade threat suggestion by the Forest Owners Association and a group of port chief executives, comes as Herald inquiries also cast doubt on a National Party claim that Government members "blocked" Ministry of Foreign Affairs and Trade officials from briefing the select committee.

Trade Minister David Parker's office said the ministry had not been approached to appear before the select committee. Webb said the request for MFAT advice was made by National Party members at the end of the select committee process, too late to have any impact on the content of the Bill.

Herald inquiries also reveal Forestry New Zealand Te Uru Rakau consulted with MFAT on the Bill.

Te Uru Rakau deputy director-general Julie Collins said this was done before the Bill was presented to Parliament to ensure it was compliant with New Zealand's trade obligations.

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National's claim was in the environmental select committee's report on Forestry Minister Jones' Forests (Regulation of Log Traders and Forestry Advisers) Amendment Bill, now at second reading stage in Parliament. National, a minority on the select committee, did not support the Bill.

Jones has said the purpose of his Bill is to support a continuous and long-term supply of logs and timber for New Zealand wood processors, a sector that has seen more than 1000 recent job losses through mill closures - before Covid-19. About 80 per cent of this country's plantation logs are exported, mostly to China.

The Forest Owners Association has, since the select committee hearing, commissioned a second NZIER report on the Bill's trade implications. The first was presented in oral hearings.

And the Ports CEO Group, which strongly opposed the Bill in its submission, is still promoting its concerns about the implications for trade agreements.

Its spokesman, lobbyist Charles Finny, a former trade negotiator, New Zealand trade representative overseas and trade policy specialist, said the Bill could be read so that controls could be placed on the quantity of logs for export.

This would have implications for New Zealand's obligations under Gatt (General Agreement on Tariffs and Trade) and "potentially some of our free trade agreements".

"We submitted that it was very important to get this right and seek advice from MFAT which is the only Government entity that is competent to comment on international trade. And according to the National minority (report) they didn't follow up."

But committee chairman Webb, who has a doctorate of law, told the Herald the suggestion that the Bill breaches world trade organisation obligations was "meritless".

"It does no such thing and no one has yet been able to point to a provision in the revised Bill that breaches any identified WTO obligation. While I appreciate that some stakeholders oppose the Bill on grounds that are rational and relate to actual facts, those who oppose the Bill on the basis of an alleged WTO breach are not among them."

Finny also claimed the Ministry for Primary Industries, which includes Forestry New Zealand, "has no competence in this matter".

"The only definitive advice for Government comes farm MFAT's legal division on international law."

MPI responded that it "had trade experts within its own ranks, both within New Zealand and internationally, to ensure that we are regularly communicating with our trade partners".

The Bill requires compulsory registration of forestry advisors and log traders, and establishes a Forestry Authority regulator which would have rule-making powers to set forestry practice standards and a code of ethics.

What has spooked forest owners and managers is that it provides for later regulations to be introduced around registration entitlement, exemptions and obligations on participants.

They fear it could lead to price-setting and an obligation on forest growers to sell a certain amount of their harvest to local sawmillers, when they could get better prices from exporting.

The Bill attracted more than 650 submissions. There are mixed sector views on the select committee's treatment of the Bill.

Forestry Minister Shane Jones. Photo / File

Opponents approached by the Herald are relieved, saying it has been "neutered" and tightened and is now more prescriptive, with some of its more draconian aspects such as the suggestion for price controls set aside.

Supporter, the Wood Processors and Manufacturers Association is happy that the Bill is "still largely intact". Chief executive Jon Tanner said there had been nothing in the proposed legislation suggesting price-setting controls.

The NZ Timber Industry Federation is also happy with the select committee's report, but is seeking legal clarification from MPI on some wording and implications, said executive director Kevin Hing.

Forestry Minister Jones said the select committee had clarified some of the provisions which had caused angst and introduced some positive requirements. In particular he was pleased with the recommendation to amend one purpose of the Bill - to support supply of timber to the domestic sector - "to include supporting equity of access to timber for domestic processing and export".

Finny said a concern of export ports was that they would have classed as log traders because the Bill's definition had been so broad. They were pleased the select committee recommended exempting ports.

Wall of wood at Napier Port. Photo / File

They were also pleased that the Bill's language now suggested pricing would not be subject to regulation.

"But there is still language there that is potentially concerning to the sector. This is a $5 billion industry and it's important for the ports sector," Finny said.

"The problem the Government faces here ... is that Gatt, within the rules the WTO operates under, basically says (there can be) no prohibitions or restrictions on imports or exports.

"But you can have export prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party.

"The problem here is the Government has just had a lockdown and declared the forestry industry as non-essential. So you can't argue with the WTO that forests are essential so we can restrict exports because they have been deemed non-essential."