Sept. 12 (BusinessDesk) - A Labour-led government’s ban on sales of existing homes to foreign buyers will require a renegotiation of the Korean free-trade agreement, Labour leader Jacinda Ardern confirmed this morning.
But she claimed it would not require renegotiation of the FTA between New Zealand and China after claims by the New Zealand Institute of Economic Research that the relevant parts of the two-year-old Korean deal flowed through the China deal.
Ardern told RNZ's Morning Report programme that it was not unusual for elements of FTAs to be renegotiated, although was not pressed on whether that requirement would delay her plan to make the ban on foreign purchases of existing homes to be in law by Christmas, if elected.
In a research note issued yesterday, NZIER questioned Labour’s plan because of the way it would affect existing trade agreements as well as the unsigned Trans-Pacific Partnership Agreement.
“It is not possible for any New Zealand government to ban sales to investors from these countries (Korea and China) without breaching our FTA commitments. Any such ban would risk blowback in the form of retaliatory trade or investment measures, which would be damaging for Kiwi businesses”, said NZIER’s deputy chief executive, John Ballingall, in a statement.
The governing National Party weighed in on the issue too, with Trade Minister Todd McClay claiming a much wider range of FTAs would require renegotiation, including the Closer Economic Relations Agreement with Australia.
However, Labour’s trade spokesman, David Parker, rubbished the claim, saying only the two-year-old Korean FTA would be affected and stressing that Labour’s foreign buyer ban would not apply to Australians because of the “close economic relationship”.
McClay said Labour’s policy would “cut across a range of existing FTAs we have with countries like Singapore, Australia and Korea and cause considerable difficulty with China”.
“These FTAs have non-discrimination provisions that ensure New Zealanders are treated fairly overseas, and in return that our trade partners are treated fairly in New Zealand.”
However, the most sensitive issue is the potential for Labour’s policy to up-end the current administration’s attempts to get the 11 remaining TPP signatories to agree to a deal without the United States while avoiding a renegotiation of the complex Asia-Pacific trade and investment pact.
New Zealand and Japan have been pushing for the leaders of the so-called ‘TPP-11’ countries to announce a commitment to taking the agreement forward at the annual APEC leaders’ summit in Vietnam in November.
Officials are due to discuss progress in Japan this month, raising the prospect of the current New Zealand government trying to bind a future administration to decisions made around the time of the New Zealand general election.
However, McClay said final decisions would rest with leaders and there was no need to consult with Opposition parties on TPP-11 position-taking ahead of the Sept. 23 election.
Parker said there was nothing to stop a New Zealand government passing law to ban existing home sales to foreigners.
Labour’s position on this issue had been clear since before the initial agreement of the TPP, he said. TPP included the US prior to the election of President Donald Trump, who made leaving TPP his first act in office.
NZIER's Ballingall called for a restoration of the traditional bipartisan support for free-trade agreements that had long existed in the New Zealand Parliament, noting that while Labour was not anti-trade, it was "stuck on TPP and foreign investment into housing".