Regular readers of this blog will be aware that they are at a strongly free-trade site. Our position rests on three main arguments. The first is principial. State barriers to free trade (tariffs, quotas, subsidies) represent an indirect assault upon the property of others. They are theft by other means. They are a form of soft-redistribution of wealth from many to the favoured some.
The second is more pragmatic. State trade barriers distort price signals making the market inefficient--and, therefore, wasteful.
The third argument is political.
State trade barriers inevitably represent a government favouring some group or special interest at the expense of others. Inevitably, in a democracy, this translates into bribery in order to gain support at the ballot box. In time, the body politic becomes infested with the toxin of corruption.
The United States has had tariffs, quotas, and subsidies for well over half a century. We are, therefore, not surprised that the rank odour of corruption permeates the corridors of the federal government, regardless of which administration is in power.
New Zealand is one of the most open economies in the world--although we still have plenty of petty tariffs to get rid of. The Customs department is still far too busy levying tariff invoices for our liking. But, compared to the United States our trade is much more free. This stands us in great stead when we are negotiating free trade agreements with Asian and Middle Eastern countries. But not so the United States and Europe.
It's no surprise, then, that New Zealand got "talked down to" by the US ambassador recently. We are currently amidst negotiations with the US over a free trade agreement within a broader multi-lateral negotiation amongst a number of countries referred to as the Trans-Pacific Partnership. This is how the ambassador was reported in Stuff:
Earlier, US ambassador to New Zealand David Huebner said he believed New Zealand should look at the greater good that could come from a "21st century" trade deal – including greater investment, migration and intellectual property links – rather than focusing narrowly on "19th century" concerns such as tariffs, subsidies and quotas.So, New Zealand is still in the nineteenth century, huffing and puffing over those oh-so-yesterday tariffs, subsidies, and quotas. Yes, well, we are a primary producing country dominated by agriculture--which is one of our greatest commercial strengths. The US, due to the political corruption arising out of levying the very same tariffs, subsidies, and quotas has become beholden to farmer lobbies. A flippant "that's yesterday's issue" from the ambassador is a gratuitous slur against New Zealand. It is also an egregious obfuscating of the now perpetual US trade barriers, intractable due to political corruption.
The rhetoric from New Zealand's third-largest trading partner puts the heat on the government negotiating team to make some headway before the US loses interest.
The ambassador might not think of it this way, but the continued protection of US farmers in that country does indeed wed the United States to (now) thoroughly debunked Victorian economics--and the attendant corruption that inevitably goes with it.
Of course we want a 21st century trade deal--like the one we have with, ummmm China--you know, that emerging global economic power to which the United States is now deeply indebted. OK, cheap shot--but no doubt y'all get the point. In some ways the Peoples Republic of China is far more the "land of the free" than the United States.
Decades ago the US tried to bully New Zealand into backing down on its "nuclear free" policy. It soured relationships for years. Kiwis don't like to be condescended to, nor bullied. For our own part, we have never agreed with our own luddite anti-nuclear stance, but neither have we had much sympathy for the condescending, big brother attitude of the United States.
The US was a late entrant to the Trans-Pacific Partnership. Probably they have never been serious about the negotiations. We are aware that Obama has expressed vehement anti-free trade sentiments in the past; moreover, the Senate and the Congress are up to their eyeballs in parochial agricultural special-interest-corruption.
For our money we would regard the early exit of the US from negotiations with equanimity. To capitulate on these kinds of issues would represent a kind of economic treason--a real selling off of the national family silver. So we are heartened by the reported comments of our Prime Minister on the matter:
Prime Minister John Key says the timeframe of concluding the Trans Pacific Partnership agreement is important but not as important to New Zealand as getting a high-quality deal. . . .
"In the end a deal that doesn't include agriculture and a deal that doesn't have access for New Zealand's great products in that area from beef to dairy is unacceptable," he said. "That is specifically because in the end we are not going to weaken future negotiations we have by signing up to something we have that is substandard and there would be nothing in it for New Zealand."
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