Joe Hendren

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Tuesday, April 19, 2005

The Phony Free Trade Debate

Despite the fact a good deal of media attention is devoted to trade issues, New Zealanders are very poorly served by the so called debate over 'free trade'. The vast majority of politicians and the media appear to live in a pollyanna idealised land where there are only benefits to be had from trade liberalisation deals, whether they be bilaterals or through the WTO. But every government action has costs as well as benefits, and to suggest otherwise is ridiculous.

The Minister of Trade Negotiations consistently tells New Zealanders to 'debate the benefits' of free trade. What sort of Orwellian nonsense is that? Only debating the benefits can never be a genuine debate. In April 2004 MFAT released a document called "A Joint Study Investigating the Benefits of a Closer Economic Partnership (CEP) Agreement between Thailand and New Zealand". Only potential benefits of the deal are considered - there is no discussion of any costs or risks to either New Zealand or Thailand.

Just think of the uproar if any other Government department attempted to pull a similar politically motivated swifty. What would happen if the Ministry of Education put out a document that only stated the benefits of removing all public funding from independent schools. Right wingers would scream bias and would understandably have no faith in the results. Why do we put up with pollyanna nonsense from MFAT and the Minister for Trade Negotiations?

This does not allow an informed public debate, as Christine Dann points out.

It is particularly galling for citizens who contest the free trade hype to be told that we should produce evidence to prove our case, when our taxes are going towards paying "experts" who have skills to do economic Cost Benefit Analyses but who are not directed to do so, or who are told to look only at the private commercial benefits and not at the public economic costs.

Sure enough, the minimal discussion of the "Disadvantages of entering into a CEP with Thailand" included in MFAT's National Interest Analysis (NIA) is shallow and politically loaded. While it acknowledges the negative impact of the removal of tariffs for the clothing, textile, carpet and footwear (CTCF) industries, MFAT says NZ was going to remove these tariffs anyway, which completely begs the point. While Thailand may currently account for around 1% of NZ CTCF imports, surely a competent NIA would include an estimation of the expected increase of such imports, and the real likelihood of jobs being lost in some of New Zealand's poorest communities (such as Porirua). Its simply not enough to tell these workers to get other jobs, as their skills may not be transferable to other industries, meaning that they will be forced into even lower paid employment.

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At 12:57 pm, Anonymous perceptualChaos said...

Free trade is a stupid concept - we should be aiming for fair trade, not 'free' trade!

Of particular concern to me wrt a free trade agreement (FTA) with China is the deviation from any attempts at sustainability and true cost economics.

Any free trade agreement would surely reduce our contries GPI. I really want to see this concept getting used more often but it is of course not in the interests of the elites because using the GDP instead makes people believe that increased corporate profits is good for the country. GDP is such an effective piece of propaganda...

- Chaos

(p.s. I was linked to you by resistantsoy)

At 5:51 pm, Blogger Joe Hendren said...

I agree we should be aiming for 'fair trade'. I could have easily written another paragraph on free trade advocates calling for 'free and fair trade' in a deliberate attempt to muddy the distinction.

An FTA with China is highly likely to destroy NZ manufacturing - but the zealots seem to regard this as a good 'inevitiable' thing.

It also worth noting that the side agreements on labour and environmental standards are not enforceable as they are not part of the main agreement. Its likely there will similar 'window dressing' with a China FTA.

While I welcome alternatives to neo-classical economics I would be wary adopting models like 'true cost economics' without also assessing the impact of such policies on social justice. For example, those who are less well off are less likely to have a car that may meet tighter emission standards - would that mean they could be liable for higher 'pollutor pays' taxes?

At 5:53 pm, Blogger Joe Hendren said...

Just to clarify...

When I refered to the side agreements on labour and environmental standards above I was referring to the Thai agreement.


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