Kiwiblog

This image is from the National Library.

Interesting to see the same arguments then, that we still get today. Some are still in the 1920s though, with the Greens policy being to retain or impose tariffs to stop “unfair” competition. They also advocate “Support the option of using an across-the-board tariff to address balance of payments problems”.

China and India has delivered hundreds of millions out of poverty thanks to the reduction of trade barriers and opening up their economies, yet the Greens still support tariffs and protectionism.

A stark reminder of how the Greens out global solidarity ahead of NZ’s interests.

Audrey Young reports:

Meanwhile, the Green Parties of New Zealand, Australia and Canada are joining forces to campaign against the Trans-Pacific Partnership.

They issued a joint statement yesterday after Metiria Turei, co-leader of the NZ Greens, held a press conference in Canada with her counterpart from there.

Among the Greens’ concerns is the prospect of the heavily protected Canadian dairy industry being de-regulated, removing safeguards which they say aim to preserve farmers’ livelihoods.

So the NZ Green Party is against NZ dairy farmers being able to have fair access into Canada!!! Their concern is to protect inefficient subsidized Canadian farmers, not to help NZ farmers export more milk.

The Financial Post point out how the Canadian system works:

Canadians must hope New Zealand and Australia force Canada to scrap its protectionist supply management system for dairy, poultry and eggs before being allowed to join the coveted Trans-Pacific Partnership (TPP).

The Aussies and Kiwis have been upset with Canada over these agricultural subsidies for decades and are doing consumers in Canada, and the economy as a whole, a favor by opposing them.

Canada’s dairy, poultry and egg farmers belong to government-sanctioned cartels that keep out foreign competition with the help of tariffs as high as 300%. The government guarantees their success by setting a floor price. The result is monopoly profits and an estimate, by the OECD, that Canadians overpay $3 billion annually for these foodstuffs.

The Greens basically don’t like trade. They voted against the FTA with China which has seen us export an extra $12 billion to China since it was signed. They want Canada to keep up its tariffs of up to 300%.

As the most remote developed country in the world, trade is vital to our future. Yet, the Greens want to kill it off.

It’s been a long battle, but great to see this story of New Zealand apples being sold in Sydney.

John Hartevelt at Stuff reports:

Labour has been accused of “trying to have it both ways” on free trade, after one of its MPs raised concerns over the outsourcing of labour to India.

On her Twitter account yesterday, Labour MP for Dunedin South, Clare Curran, posted the question: “Wonder what we’ll hand over. More labour outsourcing?” alongside a link to a media report on negotiations for a free trade agreement with India.

Labour leader Phil Goff last week said Labour supported an FTA with India.

As trade minister in 2007, Mr Goff launched a feasibility study for the deal, which he said at the time “would have significant economic benefit for New Zealand”.

“We went into it, we laid the foundation, and were supporting this government building on that foundation,” he said last week.

Ms Currankeep said she did not have concerns about an FTA with India and that her statement had been particularly in relation to the outsourcing of contracts to countries like India.

Oh dear. So Clare is saying she is against free trade, if it involves a contract.

We own Phil Goff and Helen Clark a debt, for keeping Labour away from going down the failed path of protectionism. The FTA with China is a huge credit to them.

My concern is once Goff goes. Labour have already started backsliding on issues such as monetary policy, and my fear is that post-Goff they will join the Greens as an anti-trade party.

I hope not, as trade should be as bi-partisan as possible – and largely has been for the last 20 years or so. But it obvious from Clare Curran’s comments she doesn’t in fact support free trade, and she would not be alone in the Labour caucus with that view. To be fair, I suspect there are a few protectionists in National also.

Phil Goff was Foreign and Trade Minister for many years, and most would say he was a very good trade minister. The China FTA is a huge credit to him (and Clark).

He also knows that one rule to trade negotiations is that the parties do not publicly lay out bottom lines, or rule things out. The reason for this is simple – doing so destorys negotiations. The moment one country says publicly “we will never ever agree to this”, it means all the other countries will do the same. And then you have nothing to negotiate.

So reading the Andrea Vance story:

New Zealand’s drug-buying agency should not be sacrificed for a trade deal with the United States, Labour leader Phil Goff says. …

But Mr Goff said yesterday: “We should not be trading Pharmac off for a free trade agreement with the US.” The agency was an “absolute bottom line and we should not be trading it away”.

You need to understand Goff is saying something in Opposition, he would never ever say in Government.,

For the record as a fiscal conservative, I think Pharmac is great and keeps the cost of drugs down for the NZ taxpayer. I find it hard to imagine that the US could offer us something so good that the Government would consider major changes to Pharmac. But again to have negotiations proceed in good faith, you can’t lay down unilateral bottom lines in public.

Personally I’m sceptical that the US will offer anything greatly worthwhile in terms of trade access. Their rhetoric is much stronger than their commitment to free trade.  However there are strategic advantages to the US in concluding an agreement, so maybe they will actually offer something decent.

Few people are more enthusiastic advocates of free trade than me. I basically want to see a world without trade barriers.

The path to free trade is difficult due to entrenched interests. The best path is a multi-lateral agreement such as the GATT agreement which set up the WTO. Failing that, bilateral trade deals are worth pursuing. The China-NZ FTA, for example, has already led to a huge increase in exports to China. And CER with Australia is part of our economic DNA.

Personally I think bilateral free trade agreements are far too complex. My ideal FTA would be as follows:

1. Country A agrees that the businesses and residents of Country B can sell any goods or services they like to the business and residents of Country A, so long as they are legal in Country A.
2. Country B agrees that the businesses and residents of Country A can sell any goods or services they like to the business and residents of Country B, so long as they are legal in Country B.
3. There shall be no duties, tariffs or other barriers on exports or imports between Country An and Country B
4. ENDS

NZ is currently negotiating a free trade agreement, called the Trans-Pacific Strategic Economic Partnership Agreement, or TPP.

The TPP is now a brand new agreement. It is an extension to an existing agreement between Brunei, Chile, Singapore and NZ called the P4. Five additional countries are seeking to join it – Australia, Malaysia, Peru, Vietnam and the US.

Now New Zealand would gain immensely from free trade with the United States. One study estimated our exports to the US would increase by 51%. That’s an extra $2b a year approx.

So free trade with the USA would be great. But sadly free trade agreements are not as simple as the one I wrote above. They include areas which are not about reducing tarrifs, such as intellectual property laws. The United States wants New Zealand to agree to change our intellectual property laws, as part of any TPP agreement.

Top IT lawyer Rick Shera, has done a guest post at Public Address on what the US is asking for. I highly recommend you read his post in full. A summary is:

• Rights holders would be allowed to prevent parallel imports
• Massive extension of copyright terms, from life of author plus 50 years, to 70 years
• Circumventing a Technological Protection Measure (TPM) will to be a criminal offence even if the work it protects is in the public domain or you want to exercise fair dealing rights like educational use or current affairs reporting
• The return of guilt upon accusation three strikes Internet termination laws
• Forcing us to reverse the decision recently taken to exclude software from being patentable
• Introducing statutory damages (which give rights holders windfall damages up to 3 times their actual losses)
•  ISP policing of IP rights including a requirement for ISPs to give up their customers’ identities when they receive a mere allegation from a rights holder
• Criminal liability even where the infringement has no commercial value at all
• Pushing Courts to impose imprisonment as the default sentence for infringement even where no monetary benefit is obtained

Bloody nasty isn’t it. And it is not as if NZ is a country with weak copyright laws. The Property Rights Alliance do an annual index of property rights. Their 2010 report for New Zealand ranked NZ the 4th best country (out of 125) in the world for (lack of) copyright piracy.

The New Zealand Government position has been to reject these provisions, which is good. But at some stage, there will be some calls to be made and compromises to occur to get an agreement.

This will pose a challenge for free trade advocates such as myself. Is allowing the United States to rewrite our copyright laws, a price worth paying?

Well if it was a true free trade deal, where the United States agreed to phase out all (or at least the vast majority) of its tariffs, then yeah it might be. An extra $2b a year of exports would create a lot of extra jobs, extra investment, extra wealth and extra tax revenue.

But what if we don’t get the US to agree to let in our lamb, our beef, our wool, our milk, our fruit without restrictions? What if the lowering of trade barriers is modest at best? This can not be ruled out – the US/Australia free trade agreement was very modest in terms of lowering trade barriers.

Eric Crampton has blogged on the TPP agreement. I know Eric well enough to confidently say that he is probably just as big a fan of free trade as I am. However he is pessimistic about the TPP:

I suggested New Zealand might do best by sidelining the US for now. The biggest potential gains to New Zealand from a free trade deal with the States would be an opening of American dairy markets to New Zealand dairy products. But that won’t happen – a trade deal that would actually open up American dairy markets to New Zealand product would never make it through the Senate.

The actual economic impact on the US of allowing dairy competition would be minor overall. But it would create a political fuss in certain states which would make it very difficult for Obama to ignore.

Eric continues:

I’d put decent money that, if America signs onto the deal, there’d be years of costly arbitration before New Zealand had any kind of increased access to American dairy markets. For starters, American dairy farmers would argue that failure of the New Zealand competition authorities to prosecute New Zealand dairy cooperative Fonterra as a monopoly constituted a subsidy under US law and justified counterveiling duties. …

I don’t think the United States has any credibility on free trade when it comes to agricultural products. They can’t make time-consistent pledges. At point of signing it’s all friendly, then you’re straight into arbitration over whether you’re hurting US domestic competitors – never mind the benefits to American consumers who are paying double what Kiwis are paying for baby formula.

His solution:

And so it’s better that New Zealand sidelines America in the Trans Pacific Partnership negotiations so the rest of us can have a serious free trade zone. Get a serious free trade zone, then look to widen it by inviting China. The threat of a Pan-Asian free trade zone that includes China is about the only thing I can imagine that would bring the States around on agriculture. Since New Zealand already has a free trade deal with China, it’s not implausible that China could someday join the TPP.

The idea of a TPP without the US may sound implausible, but I think it is more important to have a high quality agreement that actually reduces trade barriers and doesn’t force IP law changes on us, then a free trade agreement that is more symbol than substance. John Key I believe wants this too – he basically told Japan to stuff off from the TPP negotiations, unless they were seriously willing to commit to a “high quality” agreement.

The same attitude should apply to the US. If at the end of the day we can’t get decent lowering of trade barriers, and they insist in trying to force draconian IP laws on us, then we should be willing to say that we’ll go ahead with Australia, Malaysia, Peru, and Vietnam joining the P4 – and leave the US for another day.

Stuff reports:

A beer drinkers’ society warns it faces bankruptcy if it loses its dispute with DB Breweries over a shandy-like lager which most of its members do not drink.

The Society of Beer Advocates (Soba), an organisation with about 500 members run by volunteers, has taken legal action against DB over the term “Radler”, which the brewing giant uses on a citrus-flavoured brand of Monteith’s.

DB has a trademark over Radler which Soba is attempting to have declared invalid, arguing that like pilsner or lager, the term is a generic name for a recognised style of beer over which no-one should have exclusive rights.

I agree with SOBA. It is a generic term.

A spokeswoman for DB said its application to trademark the term in 2003 was not contested.

DB does not claim to have come up with the term, acknowledging the German origins on its website, but bases its right to trademark it on the lack of public awareness of the origins, and the “considerable” investment in the brand.

My advice to DB is not to try and trademark generic terms, even if obscure. Go invent your own brandnames and trademark them.

An e-mail from the US Democratic Leadership Council highlights that 25 years ago Israel and the US signed a free trade agreement.

The change in aid and trade in that time has been massive

1. Aid has reduced from $3.7b to $2.3b
2. Services trade has gone from $1.0b to $7.5b
3. Goods trade has gone from $2.4b to $44.2b

The US used to supply more in aid, than trade to Israel. Now their trade is more than 20 times greater than their aid.

Europe and the US should drop their trade barriers so that we have more trade, and less need for aid.

Audrey Young reports:

New Zealand does not want Canada joining negotiations for the Trans Pacific Partnership agreement because Canada wants dairy products exempted from any deal, Prime Minister John Key said in Ottawa last night.

“The sticking point is Canada wants to exclude dairy, and that would be unacceptable to us,” Mr Key told the Herald.

I did not realise how protected Canadian dairy is until I read:

Canada, which has about 13,000 dairy farmers, runs what is called a supply management framework to control supply and demand and it even runs a quota system for cows. Farmers cannot just increase their herds if they want.

Good God. Canada runs it dairy system, like NZ runs it schools!!

The Herald enthuses over Queens Wharf:

It has been a long and tortuous road but, finally, an acceptable plan for the use of Queens Wharf during next year’s Rugby World Cup has been arrived at. “Party central” will be in a temporary structure on the site of one of the wharf’s two cargo sheds. This has two compelling pluses: the sprucing up of Queens Wharf for the Cup festivities for as low a cost as possible, and the demolition of both the unsightly sheds, an essential precursor to the wharf later being developed to its full potential.

All that is required for the World Cup celebrations is a gathering point. Little needs to be done. A temporary structure housing television screens and places for eating, drinking and dancing will suffice. Solidly constructed, it will easily withstand the buffeting of a wet and windy spring. The swept-up development advocated until recently by the Government was always unnecessary, as well as becoming constrained by time. It could also have resulted in the wharf’s final development being compromised for the benefit of a one-off event.

I tend to agree. People just need shelter, screens, sausages and drink and it will work.

The Dom Post calls on Australia to accept the WTO ruling on apples:

Australia has led New Zealand apple growers a merry dance for 89 years. Now the jig is up.

A World Trade Organisation disputes panel has found that Australian fears that fireblight, a bacterial disease found in some New Zealand orchards, can be transferred from mature New Zealand apples to Australian fruit trees are groundless.

It is past time for the Australian Government to show some leadership on the issue. The ruling is an embarrassment to a government that trumpets the cause of free trade in other arenas, Australian scientists who have lent legitimacy to an illegitimate argument and Aussie growers who appear to believe they cannot compete with their New Zealand counterparts.

Rather than prolong the process yet again, Australian officials and growers should sit down with their counterparts in New Zealand, agree a sensible regime, and develop a marketing strategy that will benefit growers on both sides of the Tasman.

Trans-Tasman believes that the Governments are working on an agreement which would be a good thing.

Trans-Tasman report:

The Trans Tasman Political Letter reports informed sources in
Wellington advise NZ has won a spectacular victory against
Australia in the World Trade Organisation  in the case it  took
to secure free access to the Australian market for apples.

The sources say the WTO panel, which adjudicated the long-running
dispute, comprehensively rejected the Australian defence.
Australia has blocked the import of NZ apples, despite the
existence of a free trade agreement, and scientific support for
the NZ argument there is no risk of the transmission of fire
blight.

This is a huge and long awaited victory.

NZPA provides background:

The trade row has been running since NZ apples were first banned from Australia over 80 years ago after fireblight was found on this side of the Tamsan .

Though New Zealand scientists have found fireblight in Australian ornamental plants and also showed that the bacterial disease is unlikely to be transmitted on mature, clean fruit, efforts to gain access to the potentially-lucrative Australian market in 1986, 1989, and 1995 were rejected.

Further talks over the restrictions also failed when New Zealand was given access with conditions so strict that exports would not be economically viable and so it applied to the WTO for the matter to be resolved in 2007.

If the Australian Government refuses to accept the ruling, them NZ can apply for sanctions. With Rudd, you never now what he might do. He should just accept the ruling.

Did anyone else see the irony that at the recent APEC meeting you had Russia and China urging the United States not to be protectionist?

Hasn’t the world changed!

Vernon Small reports on the conclusion of a free trade agreement with Hong Kong. So it got me thinking what are the countries we have an FTA wth, or are negotiating. The answers are:

1. Australia, since 1983
2. Singapore since 2001
3. Thailand since 2005
4. Trans-Pacific (Brunei/Chile/Singapore) since 2005
5. China since 2008
6. ASEAN (Brunei/Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam)
7. Malaysia
8. Gulf Co-operation Council (Bahrain, Oman, Kuwait, Saudi Arabia, UAE, Qatar)
9. Hong Kong
10. Korea

Now who are our biggest trading partners:

1. Australia $18.7b – in force
2. USA $9.0b – zip
3. China $8.9b – in force
4. Japan $7.6b – some momentum
5. Singapore – $3.1b – in force
6. Germany – $3.0b – zip
7. Malaysia $2.9b – finalised
8. UK $2.8b – zip
9. Korea $2.7b – under negotiation

Also the total value of trade with ASEAN is $12.2b and GCC $4.3b.

So while progress on Doha remains stalled, we’re doing pretty well. The big gaps are USA, Japan and the EU. The EU are hopeless. Japan is showing some signs of life and in a very welcome move, President Obama a few minutes ago said the United States would seek to join the Trans-Pac agreement.

I’m delighted his protectionist election rhetoric, may have been just that – rhetoric. I started writing this blog post unaware of Obama’s announcement – how is that for good timing!

The Herald reports:

New Zealand has successfully concluded negotiations for a free trade agreement with six oil-rich Gulf states, Trade Minister Tim Groser announced yesterday.

The Gulf Co-operation Council (GCC), made up of Saudi Arabia, Kuwait, the United Arab Emirates, Oman, Qatar and Bahrain, is New Zealand’s seventh-largest trading partner with bilateral trade worth $3.85 billion.

Not bad. Mind you I don’t think Groser should be given time off until we have free trade agreements with every country on Earth, bar North Korea.

The Dom Post editorial:

The gloom merchants and flat earthers who dispute the benefits of free trade agreements should examine a set of figures.

They are the figures showing the difference between New Zealand’s trade with China before the FTA between the two came into force in October 2008 and after it came into force. In the year to October 2008, exports to China totalled $2.2 billion. In the next year, they were $3.5b.

At a time when New Zealand is being buffeted by shockwaves from the global economic crisis, the deal has buffered jobs and boosted incomes. The political parties that voted against it – NZ First, the Greens and the Maori Party – should hang their heads in shame.

Can’t say it better than that. They are the enemies of our exporters!

Maryan Street blogs:

Am off right now to Kuala Lumpur to witness the signing of the NZ-Malaysia Free Trade Agreement. This is in keeping with the Labour, and now National, tradition of the Minister of Trade inviting the Opposition Trade Spokesperson along to such events. This isn’t just good politics – it’s good business.

Our business leaders need the security of knowing the policy rug isn’t going to be pulled out from under them at the end of a short electoral cycle. This is about NZ Inc and both Labour and National get that.

Yep. If only someone could convince the Greens and Winston First, and oh yeah the Maori Party also.

Europe and the US are retreating behind protectionist doors, but there are some really encouraging movements in Asia, and we are fortunate to be their neighbours.

The Herald reports on Mike Moore’s new book:

Mr Moore said more wealth had been created in the past 60 years than in all of history. Hundreds of millions of people had been lifted out of extreme poverty through globalisation.

Yet so many have fought against it. An unholy alliance of the hard left and far right.

Mr Moore said globalisation was “not a policy, it’s a process” and while it could be slowed it could not be stopped. Fascist and Marxist states that arose after the Great Depression had been vicious and protectionist.

And one great legacy of Helen Clark (and Moore and Goff) is firmly placing NZ Labour into the mainstream on globalisation and pre free-trade.

Protectionism was the “crack cocaine” of economics. “It does stimulate you for a while but it is addictive and it will eventually kill you.”

Nice analogy.

The cover has endorsements by former US Secretary of State Madeleine Albright, and former Czech President Vaclav Havel. It was launched jointly by Foreign Minister Murray McCully and Labour leader Phil Goff.

Again good to see bipartisan support for globalisation and free trade.

I worry a bit about where Labour may go, after Goff. Either Shane Jones or David Cunliffe will I am sure be pro free trade. But Andrew Little may not be, as unions are often heavily protectionist.

A photo of US Trade Representative Ron Kirk, with Goff and Groser, taken from Kirk’s blog. Fran O’Sullivan writes:

A public show of Kiwi bipartisanship infiltrated Washington yesterday as Trade Minister Tim Groser and his predecessor, Labour’s Phil Goff, paid a joint call on the Obama Administration official who calls the shots in United States trade. …

Kirk would have been left in no doubt after his meeting with the two men over the common commitment the major New Zealand political parties have towards advancing the cause of trade liberalisation in two pivotal areas: completing the World Trade Organisation’s Doha Round, and getting some traction on the proposed Trans-Pacific Partnership (TPP) free trade agreement involving the United States, Australia, New Zealand, Singapore, Vietnam, Brunei, Peru and Chile. …

But Groser, who has met Kirk six or seven times in the past few months, noted that while patience is the name of the game for those wanting to negotiate with the US, it was important that National and Labour demonstrated a united front on trade.

His invitation to Goff to join him at the meeting with the Trade Representative showed all the skills of his pre-politics background as a seasoned trade negotiator.

While neither politician would put it this directly, at least not in public, the political utility from a New Zealand perspective in presenting a united front means the US will not be tempted to play one major party off against the other when it comes to negotiating any bilateral tradeoffs within the prospective TPP.

Always good to see bipartisanship in the trade area. Both major parties have supported the free trade agenda since 1984, and long may it continue.

Phil Twyford blogs on trade:

Green co-leader Metiria Turei struggled to articulate her party’s position on trade in a tough interview with Guyon Espiner on Q&A this morning. She didn’t answer Espiner’s questions on whether or not the Greens supported CER or the China trade agreement.

Labour’s approach to the China agreement is unequivocal:

1. New Zealand’s long term prosperity relies on our firms successfully selling into international markets, particularly in the dynamic East and South Asian economies. We owe it to future generations.

2. China is becoming a super power. Trade (and political, diplomatic, cultural and people-to-people) engagement by NZ and other countries is a necessary part of bringing China into the international community, and fostering its commitment to international law and mulitilateralism.

I’m really pleased to see an unequivocal position on this – especially as it comes from Twyford, who is on the left of the Labour caucus.

Personally I’ve always been of the view that boycotting trade with China because they don’t share our views on labour, human rights and the environment is not tenable. Chinese workers deserve jobs just as much as workers anywhere else.

Yeah, and I have always wondered how anti-trade people who complain about Chinese workers getting $2.50/hour, think that it is better they get $0/hour by being unemployed.

Trade liberalisation can harm (for example by reducing the policy space to protect infant industries, or forcing countries to open up sensitive sectors to foreign competition) but it can also help (for instance by getting rid of rich-country protectionism that damage the livelihoods of farmers in poor countries and New Zealand).

Overall trade liberalisation has been hugely beneficial. Some FTAs are better than others. The US-Australia one was very disappointing and did little. The NZ-China one on the other hand was very good, in my opinion.

Not only is trade the only way that a small isolated country like New Zealand can prosper, it is also one of the most important ways the world’s poorest nations can work their way out of poverty. Trade is not inherently good or bad. It depends how the rules are written, who the winners and losers are, and how trade-offs are managed.

Trade has the potential to list far more people out of poverty than aid.

I don’t quite agree that trade is not inherently good or bad. Trade is inherently good. That is not to say all rules around trade are good, but trade is good and natural and in fact we all trade many times a day.

I also would not frame trade rules as having winners and losers. In most cases you get winners and winners. Lowering tariffs is generally beneficial to a country, regardless of whether other countries do the same. Sure there may be political losers, but in the medium to long term reducing barriers produces economic winners on both sides.

Green co-leader was on Q+A this morning, and it was a pretty lamentable performance. While there were a couple of tough topics, she just didn’t cope with the scrutiny, and appeared very flustered and evasive.

I backed Turei as their best choice for co-leader (not that I get a vote!) as she has generally been a strong MP. But today showed up the gap between her and someone like Fitzsimons, who would have handled things much more calmly.

Of course part of the problem was that on the trade issue, Turei had a nonsensical position to defend. Every country on earth supports the move to freer trade, apart from pretty much just North Korea. The Green view on trade is very much a fringe view, and it got exposed today.

From the transcript (not yet online:

GUYON Okay let’s look at an economic idea that you are opposed to, and that is free trade largely.   In your maiden speech in 2002 you said that, and I quote you, ‘the acceptance of free trade agreements threatens our economy, our environment, our people and our sovereignty.’  Do you not believe in any free trade agreements at all?

METIRIA Well our position is that you need to have systems of fair trade, that make sure that New Zealand can retain its economic sovereignty, and free trade deals tend to undermine the economic sovereignty.

GUYON All the free trade deals, I mean the free trade deal that we have with Australia for example that we’ve had for 20 years, has that undermined our sovereignty?

METIRIA It prevents New Zealand from being able to make the economic decisions around our manufacturing, around job retention, all of those issues that are best for New Zealand, and we want New Zealand to be a prosperous and sustainable economy, that means we have to move … we need to be able to make those decisions for ourselves.

GUYON Does that mean all free trade agreements, for example the CER agreement that we’ve had with Australia since 1982, does that cover that?

METIRIA Look the key issue for us…

GUYON No, can I get a straight answer for our viewers on this question please, because it’s all very well to give a speech about free trade.

Yet she still could not state whether or not the Green Party thought CER was a good or a bad thing.

I wonder why the Greens are so inconsistent on the issues of national sovereignty. They correctly point out climate change affects everyone regardless of national borders. They support surrendering sovereignty to the UN on every treaty there is. Yet on economic issues, they cite national sovereignty as a reason to prevent people freely trading with each other.

GUYON Okay with respect, let’s look at one of those countries, China.  Now on Thursday it was the first anniversary of our Free Trade Agreement with China, our exports have climbed 61% over that year to 3.3 billion.  I mean wouldn’t we all be the poorer if we’d listened to you and not gone ahead with that agreement?

METIRIA Oh look Guyon, I mean you can make that kind of accusation and I think it’s just silly, the truth is that so much of New Zealand’s economy at the moment is under serious threat if  you like from the fact that we’re having to borrow hundreds of millions of dollars every week actually in order to just pay the interest on our current borrowing.  We’re having a housing bubble at the moment which is going to also impact seriously on our economy and there are other kinds of tools that we can use to deal with economic issues that are affecting New Zealand, like increasing the ability for banks for example to lend ….

The stupidity of Metiria’s response is the China FTA means we are borrowing less. Exports rose 60% in the middle of a recession!! That is a huge sucess. She just had no answer at all to this.

GUYON Can we return to this agreement though because there are some real Green issues here in this China Free Trade Agreement and I want to talk to you about one of them, because the New Zealand Trade and Enterprise says areas like the health supplements in Manuka Honey are a great area for expansion of our exports, and in fact your own Super Fund has quite a large shareholding on Konvita New Zealand which has 18 branded stores in China and is actually doing very very well out of this China Free Trade Agreement, would you deny them that opportunity, because you opposed that agreement.

You have to love the irony. Their super fund is personally profiting from the China FTA that they battled against.

In my NBR online column, I praise Phil Goff for the outstanding results from the China Free Trade Agreement and lambast the Government with continuing existing tariffs until 2015. Some extracts:

So in the week we should be celebrating the success of free trade, the National-led Government bizarrely decides to continue with our current tariffs on imports, freezing them in place until 2015.

A 5% tariff on processed foods, machinery, steel and plastic continues on, as does a 10% tariff on clothing, footwear and carpets. …

Tim Groser surely knows that even without a free trade deal, it makes economic sense to reduce tariffs. It incentivizes capital and labour to flow into industries where New Zealand has a competitive advantage. We unilaterally reduced tariffs in the 1980s,1990s and 2000s, and up until the global recession had the lowest unemployment rate in the world.

So why is a National/ACT Government failing to reduce tariffs, when even a Labour/NZ First Government managed to do so? And was this not a missed opportunity for Phil Goff? He could have brilliantly done a Clinton triangulation and claimed credit for the 60% increase in exports to China, and lambasted the Government for being protectionist. That would have caused shockwaves, and forced Tim Groser to front up and explain why he thinks a 10% tariff on footwear should continue until at least 2015.

Comments and feedback can be left at NBR.

Sad to read in the HoS:

President Barack Obama slapped punitive tariffs on all car and light truck tyres entering the United States from China in a decision that could anger the strategically important Asian powerhouse but placate union supporters important to his health-care push at home. …

The federal trade panel recommended a 55 per cent tariff in the first year, decreasing 10 per cent in each of the next two years. Obama settled on an extra 35 per cent in the first year, reducing by 5 per cent for two years. Beijing yesterday sharply condemned the US move: “China strongly opposes this serious act of trade protectionism by the US.

“This act not only violates the rules of the World Trade Organisation but also violates the relevant commitments made by the US Government at the G-20 financial summit.”

Protectionism may sometimes deliver short-term gain, but at the expense of long-term pain. NZ is a sterling example of this as we got rid of almost all tariffs and subsidies, yet up until the global recession had the lowest unemployment rate in the OECD. Protectionism doesn’t save jobs in the long-term, it merely keeps capital locked up in relatively inefficient industries.

To be fair to Obama, Bush was also a protectionist despite his rhetoric. He slapped tariffs on regularly, against WTO rules. They know they will lose at the WTO eventually, but do it to get through the election.

It is a pity, in terms of trade policy, that John McCain did not win. He was a very sincere and dedicated free trade supporter – his policy was to remove barriers to trade with every country on Earth, except those they have security issues with.

UNICEF NZ have announced:

The UN Children’s Fund today released new figures that show the rate of deaths of children under five years of age continued to decline in 2008.

The data shows a 28 per cent decline in the under-five mortality rate, from 90 deaths per 1000 live births in 1990, to 65 deaths per 1000 live births in 2008. According to these estimates, the absolute number of child deaths in 2008 declined to an estimated 8.8 million from 12.5 million in 1990; the base line year for the UN Millennium Development Goals (MDGs).

“Compared to 1990, 10,000 fewer children are dying every day,” says UNICEF’s New York-based Executive Director Ann M. Veneman. “While progress is being made, it is unacceptable that each year 8.8 million children die before their fifth birthday.”

3.7 million less children dying every year is no small thing.

The data shows global under-five mortality has decreased steadily over the past two decades, and that the rate of the decline in the under-five mortality rates has increased since the 1990s. The average rate of decline from 2000 to 2008 is 2.3 percent, compared to a 1.4 percent average decline from 1990 to 2000.

A good trend.

In some countries, progress is slow or non-existent. In South Africa the under-five mortality rate has actually gone up since 1990.

A bad trend.

I was interested in the changes in each country. Not easy to find, but eventually got it on page 118 of this report.

China’s mortality rate has dropped from 45 to 22 deaths per thousand and India from 117 to 72. These two countries are significant for having opened their economies up and enjoying record economic growth. It shows the benefits of a wealthier society due to free trade.

I estimate 1.6 of the 3.7 million fewer under five deaths comes from China and India alone.

Last week Tim Groser gave a very good speech on trade to the US Chamber of Commerce in Washington DC. Worth reading the whole thing, but some extracts:

Clearly there has been erosion in the confidence of the American people in trade policy. It is more serious than it has been for some years but at base, it is not a new phenomenon. People tend to forget that the NAFTA squeezed through the US Congress by a narrow margin back in 1993.  President Clinton, during his first term, tried and failed to get what was then ‘Fast Track’ negotiating authority.

Let us see if we can agree on a more general point. Around the world, not just in Washington, trade is a hard sell politically. Like many trade negotiators I have been dodging protestors – frequently violent protestors – everywhere from New Delhi, Sao Paulo, Brussels, Geneva and let’s not forget the Battle in Seattle.

Unlike NZ, where there is a fairly strong pro-trade consensus, trade liberalisation is very unpopular in many places.

What is the problem here? Have we trade negotiators brought nothing but misery to the world? No, quite the contrary. There is overwhelming evidence that steady, incremental trade liberalisation, widening from its initial narrow focus on industrial tariffs, has underwritten a huge growth in trade, which has in turn been central to higher productivity, higher growth and the spread of technology to improve peoples’ lives.

Developing countries that have picked up on the message and developed strategies of export led growth have transformed their economies. We don’t need to imagine what Korea would be like today if South Korea had not embraced a market-led, export-led strategy. We don’t need to imagine it because we only need to look to their North to see it. I am sure you have all seen those satellite photos that, taken at night, show a dark patch on the Asian continent as the satellite moves across the DMZ from South to a North Korea, substantially without electricity, food or anything much of use to their people’s daily lives.

The same with West and East Germany.

Nor is this expansion of the trading system without highly favourable political and strategic consequences. This is far broader than merely commercial matters. There is an equation between open economic and open political markets. That is an equation that certain leaders in this great town – justifiably called the world’s capital – have always understood over the past 50 years. …

As the US works through the issues, I hope those responsible will not make light of this broader strategic point. That equation between open economic and open political markets has not gone away. If the trade issue is seen simply as some type of mercantilist score card, with pro-trade lobbies on one side and anti-trade lobbies on the other, you will not get the right result.

Free trade leads to freer countries. China still has a massively long way to go, but is far less repressive than decades ago.

Now I do not want to insult any merchants in the audience, but it is worth recalling that the intellectual father of the market economy famously said: “When two or more merchants are gathered in the same room, it is usually for the purpose of deceiving the public”.

The market economy must have appropriate regulatory frameworks around it to meet Adam Smith’s point and to be sustainable politically. The market economy has not failed by any rational historical measure – it has been an astonishing success compared with command or feudal economies. It has created vast wealth, a massive increase in life expectancy everywhere, mass literacy, a huge decline in hunger, malnutrition and disease, the spread of economic freedom and ultimately has underpinned the recent remorseless growth towards improved human rights and diverse forms of democratic government.

But completely unregulated capitalism does not make any sense, politically or economically. The problem with the current financial implosion is clearly that the regulatory frameworks had not kept up to the speed of financial innovation. In my view, it is not a failure of the market economy we are witnessing – it is a serious failure of the regulatory frameworks around the market economy.

What an excellent way to put it.

Robert Zoellick, now President of the World Bank and of course a former USTR of great distinction, pointed out recently that the World Bank has shown that 17 of the G20 countries that made a public promise to resist protectionism have implemented trade-restricting measures. Lowering the bar on legal protectionism is no small achievement.

Bastards.

I give you another example. Within the last few months New Zealand and Australia signed a deal with the ten countries of ASEAN whose quality likewise surprised onlookers. Again, within about a decade, we will have one large and fully integrated free trade zone involving the economies of Australia, NZ, Indonesia, Malaysia, Singapore, Vietnam, the Philippines, Thailand and all the other countries of South East Asia. The rest of the world may be having a long reflective conversation with itself on trade, but the countries at the core of the Asia Pacific region are not. We are doing business.

And long may it continue.

I was highly amused to see the headline at the NZ Herald:

Jane Kelsey: Free trade deal may not make sense in these hard times

Why this is so amusing is that Jane Kelsey has spent her life arguing against free trade deals at any time. Kelsey probably protested against CER with Australia.