Editorial We have more work to do
Just before Waitangi Day last year, New Zealand hosted the signing of the world’s next big step towards a global trading environment based on agreed rules and the principle of non-discrimination against foreign competitors. That principle has never been popular because most people instinctively think it a very good idea to discriminate against foreign competitors.
Small countries can see the value of free trade more readily than big ones. Self-sufficiency in the production of all the good things of modern life is not a realistic option for a nation of New Zealand’s size. We know from bitter experience that it means protecting local manufacturing and incurring the high costs of living, which made our competitive exports more costly overseas and sent our economy into decline.
After lowering our trade barriers, floating the dollar, discovering we can survive in real markets, enjoy world prices for consumer goods and attract investment with good, consistent government by both our leading political parties, it was natural that New Zealand was a co-founder, with Singapore, of the project that grew into the Trans-Pacific Partnership.
Since its signing a year ago, a catastrophe in American politics has put the TPP, and all progress towards free trade, under threat. But Donald Trump is adept at exaggerating his own importance. He won the presidency by a whisker in three swing states and lost the nationwide vote. He will do great damage to world trade by putting up the shutters to such a large economy, but ultimately the greater damage will be done to the US economy. Protection favours established business from all competition, making it less agile, less innovative.
No other leaders are taking Trump’s path to protection. Britain’s new Prime Minister, Theresa May, has made it clear she wants Brexit to be a route to global trade liberalisation. The European Union has also responded to Brexit by doing a free trade agreement with Canada and wants to do something similar with New Zealand. Even China’s President spoke like a new convert to free trade at the annual Davos retreat last month.
The Weekend Herald reported that Mexico, the first country to feel Trump’s cold shoulder, wants to do new deals with other members of the TPP, including New Zealand. There is in fact no need for new deals. Bill English has asked Trade Minister Todd McClay to sound out all the remaining partners on the way forward for the TPP. Japan’s Prime Minister has expressed a wish to proceed with it. The only question now is what to do with provisions such as those for copyright, which are important mainly to American producers of software, pharmaceuticals and movies.
Tempting as it may be to retaliate to Trumpery, especially if “America First” means higher prices for pharmaceuticals, as he has warned, it would be better to keep that part of the TPP for the day the US is rid of him. Software, pharmaceuticals and movies are Californian industries and California is not Trump country.
New Zealand marks its 177th birthday with a thriving economy and has no need of despondency for the future of world trade. It just has more work to do.