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Import News: Don't Waste Your Time, Mr Hu

Import News from the Importers Institute of New Zealand
28 October 2003 - Don't Waste Your Time, Mr Hu

Prime Minister Helen Clark said an agreement to consult on economic cooperation framework signed with Chinese President Hu Jingtao may ultimately lead towards a free trade deal. Mr Hu shouldn't hold his breath - and neither should we. It's all talk.

In five years, this government concluded only one free trade agreement (with Singapore) and that was negotiated by the previous National government. It allowed negotiations with Hong Kong to collapse, when it decided to cave in to the what is left of the local protectionist lobby.

Hong Kong, like Singapore, is wealthier than New Zealand. We stood to get substantial benefits, mainly in the area of services. But a few local clothing and shoe manufacturers worried that the agreement could result in some goods from mainland China coming in duty free.

Our negotiators demanded that only goods that were finished in Hong Kong and shipped direct from there to New Zealand would qualify for duty free entry. As garments designed and made in Hong Kong are usually sent to factories in Southern China for finishing, that request amounted to much the same as excluding the clothing sector from the agreement.

This was not acceptable to the Hong Kong government and the negotiations stalled. What are the chances, then, that this government will manage to convince its supporters in the Trade Unions and the Green anti-trade activists that they should support free trade with China? None whatsoever.

Miss Clark knows that talk of free trade is popular with the electorate and she continues to talk the talk. This week the talk is China, last week it was Thailand - another non-starter. She is still talking about a possible free trade agreement with the US, as if her peacenik politics had not completely scuttled that prospect.

Australia is on a fast track to free trade with both China and the US. The trade and investment diversion effects of Australia making those agreements, while New Zealand retreats further into military, political and economic isolationism, will have profound effects for generations to come.

Our decline relative to Australia and the rest of the OECD will only accelerate and will continue long after today's politicians return to their jobs as university lecturers and trade union officials. It is no longer a case of Tasmanianisation, what we are witnessing is the Argentineanisation of New Zealand.

The influential Australian commentator Gerrad Henderson said, "it is surprising that New Zealand is so publicly off-side with the US (the world's only superpower) while privately drifting apart from Australia (its closest ally). And more surprising still that many opinion leaders in New Zealand deny both realities."

Yes, it appears that some New Zealanders will continue to swallow this talk of free trade, all the while oblivious to the enormous damage caused by this government's fuzzy-headed trade policies. The Importers Institute will continue to expose the talk for what it really is - political spin.


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