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Free trade lies! - Rod Donald Speech Notes

Free trade lies!

General Debate Speech Notes

Rod Donald MP,
Green Party Co-Leader,
20 June 2001

Three years ago the Alliance, including the Greens, led the charges against the MAI, the WTO and Fair Trade and Investment Agreements. Now that the Alliance is part of government, only the Greens are holding the line against the proposed Hong Kong – New Zealand FTIA.

Yesterday Jim Sutton said that substantive negotiations are due to begin in July.

Last month, MERT deputy secretary John Wood, crowed that it will be signed, sealed and delivered by Christmas.

Last Friday at a consultation meeting I attended in Christchurch, Foreign Affairs and Customs officials struggled to identify tangible benefits to New Zealand of the Hong Kong FTIA yet conceded both considerably difficulty in policing Rules of Origin and the inevitable negative consequences to domestic business and jobs in the textile and clothing sector.

When push comes to shove, logic in favour FTIA is lacking. It comes down to fear of being shut out of trade blocks, a fallacious argument if we don’t drop tariffs Hong Kong might introduce some - and a largely unshakeable belief that free trade “must be good for you”.

Time and time again apologists for free trade fail to provide empirical evidence of the benefits to New Zealand of making our domestic economy more vulnerable and more dependent on the global marketplace.

It is increasingly apparent that FTIAs have become a form of cargo cult – somehow markets will magically open up all around world as soon as we sign up to bilateral FTIAs. The Nats hold that fixation with religious fervour and the disease now afflicts Labour-Alliance Government even though, in their hearts and heads the, Alliance knows better.

Leaving aside for the moment all the excellent arguments you would expect from the Greens in opposition to FTIAs I would like to focus on the failure of NZ businesses to effectively market our products and services to the world and the false hope that FTIAs will some how replace our lack of forward planning, appropriate investment and marketing savvy.

Richard Leary, managing director NZ Housing Exporters Ltd, highlights NZ’s failure to capitalise on our opportunities in today’s Independent.
“In the 40 years I have known Hong Kong, it has gone from stocking Kiwi foodstuffs almost exclusively, to stocking virtually none. New Zealand is an unknown except when we win with the rugby sevens. We don’t even promote our stuff at retail level as our competitors do. We need promotion effort right now far more than the FTIA”

Why aren’t we effectively marketing our 100% pure, clean green, value-added retail products in Hong Kong right now? There are no tariff barriers. We are only limited by our creativity, enterprise and initiative. Instead a cargo cult mentality pervades our business sector.

One by one Leary exposes the other myths underpinning the proposed FTIA

The best argument the MERT official could offer in favour of the FTIA last Friday was that some consulting engineering firms might benefit from it. Leary’s response:
“Get real. All a serious global predator has to do is register an office in Hong Kong under this FTIA and it can destroy our firms in our own backyard. This goes for investment and other service industries

That’s the good news! Let’s look at the bad news.

The discussion document on the Hong Kong Fair Trade & Investment Agreement concedes at the outset that jobs and businesses will be destroyed in the TCF sector if the agreement proceeds:

“Apart from the implications of tariff elimination for protected sectors, the adjustment costs involved for New Zealand, would appear to be minimal”

That’s code of wholesale job losses. Why sacrifice the livelihoods of 20,000 people when there is not even a guarantee that 20,000 new jobs will be created as a consequence of removing tariff protection for TCF.

The government maintained until this week that it could police exports from HK to ensure NZ won’t be flooded with sweatshop clothing from China. But to quote Leary again:
“This is rubbish. Goods passing through Hong Kong from all over the world can be freighted to New Zealand with no check by Hong Kong authorities. I have trekked all the Hong Kong ports – some 20 of them, in an area smaller than greater Auckland yet transferring 10% of the world’s seaborne freight – and I see no controls that would serve our interests. An New Zealand’s Customs could not cope, nor does it have the benefit of country-of-origin identification rules.”

In response to my question in the house yesterday, Jim Sutton has now conceded that
“This is a key issue for New Zealand and no deal will be concluded unless we are satisfied that the agreed rules of origin address our concerns.”

I would like to believe him but I can’t because his last answer yesterday exposes his true agenda, and therefore this Labour-Alliance government’s real intentions.

Unwilling to face the facts the government has tried to sell free trade by massaging the statistics in their favour. But the whistle has now been well and truly blown.

Under the headline “Lies, dammed lies and Singapore statistics” Bob Edlin in today’s Independent exposes both the failure of the Singapore FTIA to improve trade since it was signed and the Government’s desperation to find some figures to justify their new right agenda.

Michael Cullen in his budget speech enthused “trade with Singapore is right now growing very rapidly”.

Jim Sutton and Jim Anderton put out a joint press release a few weeks ago claiming a 27% increase in exports to Singapore for the March quarter and only a 11% increase in imports for the same period.

The sales pitch was ‘all gain, no pain’ but the truth, according to Statistics NZ, and highlighted by Bill Rosenberg in the Listener on June 9, is that since the FTIA was signed exports to Singapore have actually declined, decreased, got smaller.

What’s more, because imports increased at the same time the trade deficit is $36 million worse than last year.

The April quarter figures are even more disastrous. Exports are down 25%, imports are up 27% and the overall trade deficit is $63 million. Compare that to a $3 million trade surplus last year, before the Singapore FTIA was signed.

So how did the Ministers get it so wrong?

As Bob Edlin says “they can look you in the face, clutching the Bibles, and swear they didn’t get it wrong”. These true believers in free trade were so desperate to show their Singapore deal wasn’t stupid after all that they used Customs figures which aren’t accrued and include extraneous items, instead of Statistic NZ figures.

The sales pitch for the Singapore deal also lacked substance, now the first quarter’s poor accounts expose the free trade lie.

What government would rush headlong into a similar deal with Hong Kong where the expected benefits are equally ideological rather than substantial? The answer: only one which lacks vision, initiative and common sense.


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