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Polity: Free trade fundies

Written By: - Date published: 12:17 pm, June 19th, 2014 - 2 comments
Categories: Economy, exports, International, trade - Tags: , , , ,

polity_square_for_lynnRob Salmond at Polity looks at the significiant lack of quid pro quo that NZ brings to any bilateral or even multilateral free trade deals.

Here’s Tracy Watkins Stateside:

Around the world we’re known as free trade fundies – pious, hectoring even, in our search for the holy grail, a free trade deal that opens the world’s borders to our dairy and agriculture exports…

For years there was the mirage of a Free Trade Agreement with the US. That debate got so fraught, insiders say New Zealand was forced to strategically withdraw before the US turned it into a quid pro quo debate about New Zealand’s nuclear-free legislation.

Tracy is right. The great tragedy in New Zealand trade policy came in the 1990s when we almost literally gave away the farm, dismantling most of our tariffs unilaterally to “demonstrate” how much fun life is with no tariffs. You can’t get much more fundie than that.

And now – quelle surprise – we have basically no cards to play when negotiating with other countries. Who would have thought it? Well, everyone can see that. Except, that is, the MFAT architects of New Zealand’s unilateral trade disarmament – prominently including a certain T Groser.

I set this out in a 2003 article in an Australian public policy journal, along with analysis of why the US would find it near-impossible to ratify a meaningful bilateral free trade deal with us.

Our “demands” of the US on agriculture, if met, would hurt a few farming States hard. But because we have few tariffs left to remove, we cannot generate a big trade / jobs benefit to any other States. This means our agreement has strong enemies in the Senate, but no strong friends. That’s where the agreement would die.

Five years on, the TPP is proving just as elusive, despite the original dream of keeping negotiations focused and tight between a handful of like-minded countries.

A flying visit to Tokyo by US President Barack Obama recently appears to have kickstarted talks – but at a big cost. Desperate to have Japan in the deal, the US has signalled its willingness to make compromises in areas, including agriculture.

The US and Japan have many differences on trade policy. But agricultural protection is not one of them. If the US and Japan take a more-or-less common position on dairy tariffs, New Zealand is stuffed. Again.

I want to be sure that, deep down, Minister Groser knows this. But given his history…

2 comments on “Polity: Free trade fundies”

  1. Macro 1

    No only did we give away all our protections for our farming industry, so that now we are reduced to the exportation of milk powder, but we also gave away protections for our industry as well (in effect exported jobs). Now we are in the parlous state that we are unable to support ourselves should the worst happen and NZ is isolated in a Pacific war.

  2. DS 2

    In theory, of course, unilateral removal of tariffs is still a good thing, since it allows resources to flow into those areas where New Zealand has comparative advantage. Note “in theory” – in the real world, there are plenty of resources (human or otherwise) which cannot simply be relocated from one sector to another, and it is there that pesky reality intrudes. If the theory underlying New Zealand’s free trade dogma was carried to its logical extreme, every last person in the country would be working for Fonterra.

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