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Green Party and NZ First fail To Impress TLN

25 July 2005

The trade policies of the Green Party and NZ First do not impress the Trade Liberalisation Network.

Set out below is the key excerpt from TLN Executive Director, Suse Reynolds' speech to the Christchurch Businessmen's Club yesterday.

Christchurch Businessmen's Club "Trade policy, the election and your business?" Monday 25 July 2005

The Trade Liberalisation Network is a non-partisan, non-political organization. We are pro-trade. We do not lean left or right. It must be acknowledged however that trade does not exist in a political vacuum.

Internationally, political considerations will always be relevant in trade deals - be they between individual countries, between regions or multilateral. The current multilateral trade negotiations taking place under the auspices of the Doha Development Round, for instance, will only conclude successfully if there is enough political mileage in it for all the participant members to sell it to their domestic constituencies at home.

Domestically, we are of course about to enter an election campaign. Trade, as such, is unlikely to feature in its own right but it will be a key part of debates on the economy, employment, manufacturing, industry assistance and foreign investment. The proposed agreement with China will provide a touchstone for many of these issues. The TLN has examined the trade policies of the main political parties and I will comment on each.

The TLN has written to the leaders of the key political parties and asked five questions.

1. Does your party support trade liberalisation?
2. How would you promote trade if your party was in government?
3. What will you do to help New Zealand exporters expand their markets?
4. How would your party approach the Doha Round?
5. Will your party support the trade agreements currently being negotiated?

The two largest political parties, Labour and National, both support the multilateral trade system and trade liberalisation. There is little to distinguish the policies of the two with regard to trade.

The current Labour Government has wanted to give more weight to provisions protecting the environment and workers. The TLN believes these issues are more appropriately and effectively dealt with in international environmental agreements or by the International Labour Organisation.

We are not unduly concerned about their inclusion in trade agreements, particularly in the form of side letters or Memoranda of Understanding, as long as they are not overly proscriptive or open to abuse as a mechanism to restrict competition between countries, particularly competition from developing countries.

The National Party has indicated it will put more effort into the pursuit of a trade agreement with the US than the current administration. If ever there was a trade agreement where politics, in all senses of the word, played a part this is it.

NZ First's trade policy gives the TLN very real cause for concern. It is "weary" of trade agreements with "large Asian nations". While Mr Peters has not gone as far as to say he advocates pulling out of any of the current negotiations you get the feeling he is happy to convey the impression he might.

NZ First also believes "fiscal incentives" must be employed to promote exports. Their plan is to introduce a tax abatement scheme which would see all new net export earnings taxed at 20%. While this policy is bound to appeal to exporters, if implemented, it would breach our WTO obligations. The Agreement on Subsidies and Countervailing Measures prohibits subsidies contingent on export performance.

In Annex I, the Agreement specifically lists the partial remission, specifically related to exports, of direct taxes payable by industrial or commercial enterprises as a prohibited subsidy. New Zealand has an impeccable WTO record. We would hate to see this threatened.

Few of you will be surprised to hear the TLN is not impressed with the Green Party's trade policy. When asked if the Green Party supports the current trade agreements being negotiated the response is an unequivocal "no". The Green Party advocates trade promotion through protection and believes in import substitution. Both these policies have been tried and failed to produce the sort of sustainable, internationally competitive economic growth New Zealand needs.

The Maori Party's trade policy gives heavy emphasis to the need to recognise and safeguard the rights of Maori under the Treaty of Waitangi in any international negotiation. But it supports trade liberalisation and a system of international rules. We were also pleased to see a reference to lowering trade barriers and tariffs on imports from poorer countries.

Act is keen to see all New Zealand's remaining tariffs phased out and would like to speed up the negotiation of all trade agreements currently under negotiation. The TLN also supports the ongoing lowering of New Zealand's remaining tariffs.

United Future is also supportive of the current Government's trade agenda and the trade agreements being pursued. It specifically mentions the US "if circumstances permit" and Taiwan. Pursuing a trade agreement with Taiwan before an agreement with China was concluded would severely complicate those negotiations. Even if the agreement had been finalised, it would cause real problems.

There is a great deal to keep anyone interested in trade fascinated in the next eighteen months. Internationally and domestically there will be developments which impact on all of us.

Thank you.


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