China deal caught by buyer ban - minister
Trade Minister Todd McClay claims Labour’s proposed ban on foreign buyers of houses will mean the China free trade agreement will need to be negotiated.
Labour has immediately dismissed the claim as wrong, and further scaremongering from the National Party.
However, its trade spokesman, David Parker, admits renegotiating trade deals with the likes of South Korea could potentially take years, undermining the party’s 100-day pledge.
On Sunday Labour leader Jacinda Ardern announced that foreign, non-resident buyers would be shut out of the housing market ‘‘by Christmas’’.
She has since acknowledged that trade deals, including that with South Korea, will have to be renegotiated, but played down the difficulty of doing so.
On Tuesday McClay added Taiwan to the number of trade deals which that National claims would need to be renegotiated under Labour’s ban.
In an interview, McClay also claimed the free trade agreement (FTA) with China, New Zealand’s largest trading partner, would need to be negotiated.
The FTA with China includes a ‘‘most favoured nation’’ clause, which automatically makes China eligible for any more advantageous terms granted to other countries in later deals.
Labour says while concessions granted to South Korea currently apply to China, if the issue with the South Korean deal was eliminated through renegotiation, the China issue would be resolved.
But McClay said yesterday that Labour’s ban would also require the China deal to be renegotiated.
‘‘Yes I do. China now has rights,’’ he said. ‘‘You can only take away a right through negotiation. If you do it unilaterally, you’re ripping up a trade deal.’’
McClay said China would not simply give up the rights. ‘‘I think they will laugh at us.’’
Parker accused McClay of scaremongering, saying he had engaged in talks with experts that the China FTA did not, in itself, need to be renegotiated.
‘‘He [McClay] is just wrong on that. That is typical National Party scaremongering,’’ Parker said.
Asked about the risks to the South Korean trade deal on Tuesday, Ardern said Seoul had demanded restrictions on New Zealanders wanting to buy residential property in South Korea.
South Korea has granted reciprocal restrictions on residential property with Australia, so adding a restriction on foreign buyers here would not be a major issue, she said.
‘‘I don’t believe it will put that deal at risk. Korea already has that provision for themselves. I’m sure they’ll be very understanding of the rationale of why we would want the same.’’
McClay said the comments were naive, noting that negotiating the South Korean free trade deal took five years.
‘‘Turn it around: Why would they give up a right that we’ve negotiated, to somebody else, without payment or compensation?
‘‘The thing about trade is, the whole world is watching. If a large country gives something up free for New Zealand, everyone will want something for free.’’
One trade negotiator claimed it was conceivable that South Korea could be willing to accede to New Zealand’s request, possibly in return for New Zealand supporting its path into the TPP.
However, the timing was ‘‘abysmal’’ as the United States was trying to force South Korea to renegotiate the deal with Washington.
Parker acknowledged that South Korea might make demands in return for granting New Zealand’s wish, but said: ‘‘We’re not going to know until we try.’’
The issue was one of National’s making, Parker said. ‘‘The idea that a new Government can’t try to improve New Zealand by making sure New Zealand houses are priced according to a New Zealand market, rather than being outbid by one percenters from overseas, is abhorrent … You should be asking them why they put us in this position, not asking us why we’re going to fix it.’’