Free trade policies lead manufacturing out to dryer: Assessing the NZ-Thai free trade deal

Kiwi whitewear manufacturer Fisher and Paykel announced on Friday it was moving production of washing machines and dryers to Thailand. This seems like a good time to ask the question - was the free trade agreement with Thailand really such a good idea?

Well, that's one question that the Ministry of Foreign Affairs and Trade will never ask, as they have a documented history of only considering the "benefits" of such trade deals - la-la-la. (see my article here)

The so called Closer Economic Partnership Agreement between New Zealand and Thailand came into force on the 1st of July 2005.

Fisher and Paykel chief executive John Bongard said free-trade agreements with countries such as India, China and Thailand being sought by the Government were unhelpful to the manufacturing sector. "I guess the loss of the CER duty preference into Australia early next year was kind of the straw that broke the camel's back," Mr Bongard said.

I took a look at the NZ-Thai free trade agreement. Prior to its signing, washing machines and dryers made in Thailand attracted a 7% tariff when imported into New Zealand. This dropped to 5.5% once the agreement was signed in 2005, with the tariff to be completely phased out by 2010. I have no doubt this also influenced the decision of F&P to move to Thailand - as the NZ-Thai trade agreement allows the company to profit from cheap labour and then import their machines back into NZ at little cost.

New Zealand currently has a trade deficit of $560m with Thailand(1), meaning that we import far more from Thailand than NZ exports to that country. This deficit has improved of late - but the overall pattern since the negotiation of the Thai deal has been a ballooning of imports into New Zealand with a significantly smaller increase in NZ exports to Thailand.

At the time of the signing of the Thai deal in 2004, CTU President Ross Wilson expressed concern at the large number of "free trade" agreements promoted by the Labour-led Government. "There is a risk these deals will permanently damage New Zealand’s manufacturing base. There is also (the risk) that the phased elimination of tariffs will expose some sectors, such as whiteware and clothing, to unfair competition" (Press, B5, 2/12/04, "Business keen on Thai deal")

Now the whitewear is off to Thailand.

For Helen Clark to claim such closures are the "way of the world" is just an excuse to hide the fact the neo liberal free trade policies of her Government are killing off New Zealand's manufacturing base. A similar argument was advocated by Roger Douglas, as in TINA (there is no alternative).

While Helen Clark stated in 2000 "We have unilaterally disarmed ourselves on trade but very few others have been so foolish", for the last six and a half years in government Helen Clark and Co have continued to do exactly that. Labour's economic/trade policies has changed very little from the time of the Forth Labour Government, despite the efforts of some Labour activists to exaggerate the differences between the two governments (2). Clark and Co are now promoting the 'Jeremy Moon' model, where products are designed in New Zealand and made offshore - but how long is it before the design team is off overseas too? Neither is it an answer to focus purely on services - as this ignores the fact the local manufacture of merchandise creates greater demand for the service sector.

Sleepyhead managing director Graeme Turner has called for more Government help for exporters rather than leaving them to the vagaries of the currency. Well the way I see it this is due to Roger Douglas's removal of all exchange controls and the continued support of both major parties to the highly economically reductionist Reserve Bank Act. I get the strong impression the Turners would prefer to stay here.

The end of Kiwi made Fisher and Paykel washing machines is just the latest example of how the pursuit of neo-liberal "free" trade policies undermines the aims of the left for sustainable economic and industry development. It is also environmentally irresponsible, as bulky heavy washing machines are not the kinds of products the world wants transported long distance if it is reasonably practical to make them locally(3).

(1) Figures from Statistics New Zealand, Overseas Merchandise Trade, year ending March 2007
(2) Sure its a good thing Labour have halted the widespread sale of state assets, but what I am talking about here is the continued agressive attitude to 'trade liberalisation' and overall legislative structure of the economy (eg Reserve Bank Act, Fiscal Responsibility Act etc) which Labour have failed to change into something more recognisably social democratic. Labour are attempting to use a relatively low tax neo-liberal economy to create money for greater social spending, but this will become a self defeating project as soon as the economy retracts - just watch them retrench!
(3) Moving a heavy washing machine around a flat is difficult enough, as I can recently attest. And the amount of packing that came with my new machine suggests washing machines are brittle things to transport.

Random historical interlude #4: Long history of protest on Anzac day

In my previous post I stated that there has been a long history of intolerance of anti-war opinions in New Zealand, with the treatment of conscientious objectors being one example.

Today is the 30th anniversary of an action taken by four Wellingtonians on Anzac Day 1967, where they attempted to lay a wreath "To the dead and dying on both sides in Vietnam. Why must their blood pay the price of our mistakes?"

They were prevented from placing the wreath at the Cenotaph like other citizens. Despite one Returned Services Association (RSA) representative indicating they could lay it later (which they did), on doing so university lecturer Christopher Wainwright and student Christopher Butler were arrested by the police for disorderly behaviour and resisting the police. A judge later quashed the later charge, but upheld the other charge because they had presented "a point of view, however sincerely held, which they knew would be annoying to some and offensive to many". So much for free speech.

In 1970 the Christchurch Progressive Youth Movement (PYM) made a wreath from the poster of the My Lai massacre with the words "To the victims of Fascism in Vietnam". The Mayor of Christchurch at the time, Ron Guthrey, tore the wreath from the memorial and threw it away. It was put back later, only to be removed by the police. A Hamilton veteran of the Korean war turned his medals into Guthrey as a protest against the betrayal of the values for which he had fought.

A later Mayor of Christchurch, Neville Pickering, refused to attend the 1972 service as he believed the attempts the RSA to control the service, such as placing a cordon between the memorial and the crowd and vetting all inscriptions meant the ceremony was no longer a citizens service. The PYM attempted to place their wreath for the third successive year, only to have it thrown down, stamped on and utterly destroyed by the mob.

Mayor Pickering said "I can fully understand the sensitivity of former servicemen who watched their comrades being killed. But the older generation should show greater restraint and tolerance".

- Material sourced from Elsie Locke's excellent book 'Peace People'

In 'lest we forget' we forget too many

I was very pleased to see Peace Action Wellington's large banner make it into the TV coverage of the ANZAC day ceremonies*. Conscientious objectors (COs) demonstated a great deal of heroism in standing up for their anti-war beliefs, despite facing a great deal of persecution and ostracism from their own society. In some cases their stance did endanger their lives.

This attack on civil rights was driven by the wartime Government of Peter Fraser.

In his 1983 book John Cookson# compares the treatment of CO's in New Zealand with other countries during WWII.
"In no other Commonwealth country - we might add the United States as well - was the proportionate number of conscientious objectors imprisoned or detained, much less indeterminate sentences imposed. New Zealand was also exceptional in the total severity of its policy. There was no recognition of objection that fell short of opposition to all war, no exemption from some form of national service, and no provision for appeals against the decisions of the local boards. The attack on civil rights extended to exclusion from government employment and, for defaulters, disenfranchisement."

So why does it remain controversial to point out that COs were also victims of war? Many were indeed 'prisoners of war' also, but behind bars in New Zealand instead of overseas (note I am not equating this with the worst of the enemy internment camps). New Zealand has a long history of intolerance of anti-war opinions. While this intolerance is not as evident as it used to be, a few of the pro-war mob in Auckland today still thought it was appropriate to attempt to pull down anti-war signs at the ANZAC ceremony in Auckland. Perhaps they though the anti-democratic wartime regulations were still be in effect?

I was also pleased to see the town of Fielding include 17 year old Turkish exchange student Kasim Turkistanli in their Anzac day service. Given the generous welcome given by the Turks to New Zealanders and Australians wanting to visit Gallipoli I am pleased New Zealand is becoming more generous in acknowledging Turkish losses - New Zealand invaded their homeland after all.

In Christchurch the "Women in Black" group highlighted other victims of war, 'In remembrance of women and children raped and killed in wars'. The response from those attending the service was mostly positive, but a few made disparaging remarks claiming that ANZAC day should be only be about the soldiers.

So if ANZAC day is to be a real day of remembrance, why are we so selective in the victims who are remembered? It should be more than the men in suits.

Span has a great roundup of posts on ANZAC day 2007 and her own thoughts here.

* But I do wonder if the loud horns were counterproductive. But I somewhat sadly I also wonder if it had made the news without the arrests or the appearance of 'conflict'.
# Cookson, John "Illiberal New Zealand: The formation of Government Policy on Conscientious Objection 1940-41"

Peaceful WTO protesters win $1 million compensation

It is nearly eight years since the 'Battle of Seattle'* where over 40,000 people converged on the city to show their opposition to the global neo-liberal agenda of the World Trade Organisation.

During these demonstrations 175 people were wrongly arrested for peacefully protesting the WTO in downtown Seattle's Westlake Park. That was 1 December 1999. After 7 long years, the 175 have finally won justice.

In January a civil court jury found the City of Seattle liable for violating the protesters' Fourth Amendment Rights. This legal win follows seven years of determined work by the Public Justice legal team. Facing further litigation for damages, the Seattle opted to settle the case.

The City of Seattle will now

• pay $1 million to compensate the protesters for the violation of their constitutional rights.
• seal its own records of the arrests, and will formally request other agencies expunge any records they may have received or maintained regarding the December 1 arrests. One wonders if the NSA/CIA will also obey the law in this instance.
• Incorporate key rulings from the case into police training. These rulings make it clear police lacked probable cause to arrest the peaceful protesters at Westlake and others arrested outside the 'no protest zone'.

Following a day of widespread but largely peaceful protest Seattle's Mayor attempted to make the downtown area near the WTO meeting off limits - a 'no protest zone' in all but name. Many of those arrested in the zone were held for four days, which just so happened to coincide with the end of the WTO conference. No police officers were reprimanded or disciplined by the City.

This week in New Zealand former National chief of staff Richard Long wrote in a column how he approved of measures to protect visiting Chinese Premier Jiang Zemin from protesters in 1999 because otherwise it might have cost us a free trade agreement. Long and the ex-Seattle Mayor appear to be singing from the same songsheet.

PS: * I nearly avoided the phase 'Battle of Seattle' as I see it as a phrase coined by a media with a far too ready tendency to focus on any apparent 'conflict' as a means of ignoring the real issues raised by the protesters. And talking of a battle discounts the contribution of the majority - those who chose to protest peacefully. But then I found out that the Battle of Seattle also refers to an event in 1856 when native Americans launched an attack on the settlement of Seattle, as they were angered by treaties imposed by Territorial Governor Isaac Steven. Given that the WTO is also criticised for weakening the rights of indigenous peoples worldwide, referring to the events of 1999 as the Battle of Seattle has more meaning than might be first apparent.

Happy Birthday Blog - You are 3 today

Sitemeter Hits since May 2, 2004: 20618

On my first anniversary I reported hits of 2527.
On my second anniversary I reported hits of 12741

So on a year by year basis, numbers are a little down on last year - I blame full time employment!

In my first post I looked at the 2004 decision of the Government to raise the parental income thresholds for student allowances. I showed, using budget figures to back me up, that Labour were not being as generous as they wished to appear, as these changes were accompanied to significant cuts in elligibility for student allowances, such as the removal of the ability to apply for independent circumstances on the basis of supporting yourself through work for two years.

I found it quite interesting to look back on this post, especially in the context of the interest free loan policy. In 2004, I called on the Government to face the fact that significant amounts of "student debt" was never going to be paid back - its good to see interest free loans - as this is a recognition of this policy reality. I also note that there has been a change in Minister.

Yet after over 7 years of a Labour dominated government there has not even been an attempt to come up with a better means testing system, let alone a universal allowance. So no Jordan, the call for universal allowances is not a call for more middle class subsidy*, because the current means testing does not work. Well heeled parents are able understate their income if they happen to run a business. Have a rich parent who left your family years ago and has never given you a dime - no allowance. Fair? No.

The number of students actually recieving an allowance has continued to drop while Labour has been in Government. Given many of the current Labour front bench spent years in the 1990s making political mileage out of National's means testing system when they were in opposition, one might have thought they actually might have done something about it.

Oh that turned out a bit longer than expected!

* Working for Families, with its high thresholds is a much more significant example of 'middle class subsidy'. It also doubles as corporate welfare for underpaying employers.

Don't let climate change quibbles weaken the movement

I wish people would stop attempting to undermine the arguments of campaigners working on climate issues by continually demanding they justify their own carbon use, especially in the context of their own campaigns.

Quite frankly, for those of us who are concerned about encouraging real and lasting policy change, such talk is as destructive as it is counterproductive. Encouraging the world to change its ways is going to need an effective political movement, and building such a movement should be the ultimate aim.

A focus on personal responsibility can be taken too far, and it may be said this is more common on the right of politics. A chemical process worker should not be finger pointed at for his job if the society around him does not provide a true alternative source of income.

Collective action will be the most powerful force in dealing with climate change, not individual responsibility.

A few of my greenie friends have refused to fly to meetings, events, conferences etc that would have formed part of most other political campaigns. I think is great people do care, but I sometimes wonder if people get too hung up on it, especially when we are yet to see real alternatives to flying in New Zealand, such as high speed rail. Yes we do need to strongly advocate for such alternatives, but the point is that they do not exist now.

Of course we need to 'think before we fly', especially when there are alternatives available, but I think there is a more important question to ask first - will burning a few tons of carbon build the movement? If so, it may be a case of burning a bit now, to burn a lot less later.

So no, I don't begrudge Al Gore for flying around the world to do his climate change talks. I may think his proposed solutions rely too heavily on carbon trading, but he has been able to communicate the scale of the problem to many people who otherwise would not have heard it. This does not prevent anyone from criticising the oil baron from flying around in his corporate jet - that should be called exactly what it is - needless climate damage.

I hope my friends working on climate change issues don't take this as a criticism - what I am really saying here is Kia Kaha - stand strong! As a hypothetical, say the opportunity came to fly to London to meet up with other climate change campaigners and build international solidarity on the issue. I would want you to go - because of my faith in your ability as effective campaigners.