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Robson: FTA with China - Disaster or Opportunity

14 April 2008 Media Article

Free Trade Deal with China - Disaster or Opportunity?

By Matt Robson - Deputy leader of the Progressive Party

In a NZ Herald Opinion Piece John Minto of the organization Global Peace and Justice argues that the recently completed New Zealand Free Trade Agreement (FTA) with China will only benefit China and bring “nothing but more pain and suffering for New Zealand workers”, that the FTA sanctions the methods of a repressive regime and that a combination of rising fuel prices and global warming will make the “cost of sending protein products around the world unsustainable”.

His answer to these predicted calamitous results is simple: “Future proofing our country and our economy means developing much greater self-reliance.” In other words his solution to the development of the economy and providing reasonable living standards is one of isolation for New Zealand on almost all fronts.

To cap his argument he approvingly quotes Green co-leader Rod Donald slamming “Asian entrepreneurs who make their money off the backs of children, political prisoners and sweatshop labour”. You only have to swap ‘Jewish’ entrepreneurs for ‘Asian’ and you can understand that this is an argument so weak on actual facts that it has to resort to summoning up images of the “evil foreigner” to win adherents.

The facts will help readers to understand why the government has entered into this agreement. New Zealand workers have long lived in an economy that has had the lowest tariff profiles in the developed world. The tariff levels are low by world standards with a simple average Most Favoured Nation tariff rate across all goods of 3.5 per cent. The mean tariff rates are lower than this and across all manufactured goods, mean tariff rates are less than 1%.

The highest tariffs have been confined to carpet, clothing and footwear with rates of up to 19 per cent. Cabinet in 2003 authorised a unilateral tariff reduction process to begin. Alongside this process the government has been working through its existing industry and regional development policies to assist affected industries adjust to tariff reductions.

An extensive analysis over a long period of time has been carried out by officials to see if the Agreement will assist or damage the economic development of New Zealand. The answer has been a resounding “yes” in support.

MFAT’s National Interest Analysis shows that exports to China will range between 20 to 39 percent higher between 2008 and 2028 because of the FTA. This translates into an additional income for New Zealand of between $ 180 million to $ $280 million each year. In contrast, Chinese exports will be only 5 to 11 percent higher in the same period. Thus the balance of trade will swing in New Zealand’s favour.

Our goods are now going to get faster, preferential clearance into China and those same goods will be released within 48 hours of arrival. A joint committee will work on barriers to trade. New Zealand companies will gain access skills, technologies and plants in China that are unavailable in New Zealand. This means growth and it means jobs.

Despite these trade and economic advantages Mr Minto fears that New Zealand jobs will be lost in vast numbers. Some will but what Mr Minto chooses to ignore is that New Zealand’s agricultural and related industries, manufacturing industries and our educational and intellectual- based enterprises have not been sitting around as the world changes around them.

Nor has the Labour-led government since 1999 been leaving it to the market to provide employment but has been investing heavily in skills training, regional development and now a $700 million investment, matched by the sector, to develop high-value food and pastoral products.

Thus New Zealand workers are not being left to pick up low-paid service jobs in a period of great transition but are able to enter training for skilled positions and to gain employment in a variety of industries and enterprises that are developing at a fast rate.

The Trade agreement with China recognizes that China has had by far the best deal so far with entry into a virtual non-tariff economy and now New Zealand’s products will have that opportunity in China. The trade deal has not been worked on for many years to deliver New Zealand a poor hand but to provide an opening into one of the biggest markets in the world.

And as part of that agreement New Zealand and China have agreed to work on ensuring that labour laws and policies will meet internationally agreed standards and the unions of both countries will monitor progress and be involved in all of the steps that are required.

And despite the contention of Mr Minto the record shows that China has been steadily signing up to the International Labour Organisation protocols. The Agreement also provides for New Zealand and China to work cooperatively on the Kyoto Protocols and strive to reduce carbon emissions.

This writer has no argument with Mr Minto that China’s regime is politically repressive and has utilized Stalinist police methods since its inception. Prior to 1949 Chinese workers copped it from the equally repressive methods of Chiang Kai Shek.

However, Mr Minto would have to have lived as a hermit for the last decade not to notice the enormous rise in living standards in China, nor to have read the many reports that large sections of China’s workforce have experienced a rapidly accelerated rise in living standards and that for the first time since 1949 worker’s have been able to agitate and win higher wages, improved safety standards and better working conditions. All this alongside large pockets of poverty and a powerful state apparatus for which repression is second nature. But change is in the air and on the ground. You don’t rocket to the front of the world’s economic performance on a slave –labour economy.

Mr Minto is not only wary because he thinks the FTA will be a” calamity for working New Zealanders”. He cites China’s repressive record in Tibet and that it has “repeatedly refused to sign up to even the most minimum labour-standards of the International Labour Organisation. The country is a vast slave-labour economy”. With a flourish Mr Minto then asks: “Why would New Zealand give preferential treatment to a regime like this?”

But if we are to cut off links with China because of its repression how can we logically stop with that country? Surely we don’t want to be cast as hypocrites? There is an endless list of countries, large and small, where large sections of the population work without union protection, where sweat shops abound, where immigrant labour is worked at slave-labour rates, where police brutality and even murder is common-place.

These countries regularly thumb their collective noses at international law. And as for not signing up to international conventions, another bugbear that Mr. Minto has with China, the United States probably holds the record for refusing to sign the most important international conventions including those on the elimination of nuclear weapons, landmines and gun controls. It refuses to sign the Kyoto Protocol and won’t recognize the International Criminal Court.

The use of cheap prison labour is widespread. Noticeably, Mr Minto has not, for sensible reasons, suggested that we cut trade links with that powerful country. Nor with a country that can beat China hands down in terms of repression – oil rich Saudi Arabia which powers Mr Minto’s motor car.

Mr Minto has no confidence that development of trade and international links can go hand in hand with effective methods to combat global warming both domestically and through international cooperation. He advocates a self-reliant New Zealand. However, Capital long broke though national boundaries and there is no turning back without imposing stagnation and disaster.

Mr Minto’s isolationist policy would not “future –proof New Zealand” - it would doom it - and the workers for whom Mr Minto professes deep concern. The industrial revolution necessitated that countries exchanged resources, goods and services to allow the development of their individual societies. If Mr. Minto wants to know what economic isolation does to a country he should ask the Cubans if they wish to continue with the ever-tightening economic blockade imposed, illegally, for over 40 years.

Mr. Minto sees himself as a man of the left. He approvingly gave the last word in his article to Green MP Rod Donald’s condemnation in 2000 of free trade and Asian entrepreneurs. I would suggest that he should go to that super star of the left Frederick Engels, the collaborator of Marx, who in 1888 provided an opposing view to the self-reliance theory of both John Minto and Rod Donald and give him the last word:

“It is hardly worthwhile to speak of Russia...that same government amuses its subjects by dangling before their eyes the prospect of making Russia , by means of this tariff, an entirely self-supplying country requiring from the foreigner neither food , nor raw material , nor manufactured articles , nor works of art. The people who believe in this vision of a Russian Empire, secluded and isolated from the rest of the world, are on a level with the patriotic Prussian lieutenant who went into a shop and asked for a globe, not a terrestrial one or a celestial one, but a globe of Prussia.”


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