Political parties have been warned against spreading “misinformation” about the benefits of free trade in the run-up to the election. A new report by Export NZ says policymakers need to do a better job of explaining issues to the public, but opposition MPs argue it is the Government which has abandoned bipartisanship on trade. Sam Sachdeva reports.
As Donald Trump and Brexit have shown, voters around the world appear to be increasingly susceptible to what Prime Minister Bill English describes as “the headwind of protectionist rhetoric”.
Export industry body Export NZ is attempting to head off those headwinds with the release of a new report, encouraging political parties to back free trade in the run-up to the election.
The report, produced for the organisation by the NZ Institute of Economic Research, says trade directly and indirectly accounts for $85 billion of New Zealand’s GDP and almost 750,000 jobs.
“The gains to New Zealand households from improved product choice from trade alone come to $3.9 billion, or around $2300 per household, based on estimates from the literature.”
However, it cites growing public concerns about globalisation, as demonstrated by Trump and Brexit, and the breakdown of New Zealand’s “long-cherished bipartisan support for trade deals” with Labour’s opposition to the TPP.
Export NZ executive director Catherine Beard says the report was sparked by concern among exporters about that perceived loss of “broad political support” for free trade.
“We’ve sort of taken for granted over the years that trade is good for New Zealand and it’s a no-brainer to support it, and that seems to have changed in recent years so we thought it was important to get some economic analysis and restate the facts about why trade is so good for this country.”
The report says New Zealand’s real GDP would increase by $18 billion if G20 tariffs and non-tariff barriers were halved, according to OECD estimates.
“The opportunities are massive and we think people just need to refocus on the facts and cut through the emotion,” Beard says.
Labour still party of trade?
Labour leader Andrew Little set out his party’s opposition to the TPP last year, saying the deal met most of its bottom lines, but failed on the fifth – the party’s policy to ban the sale of existing residential properties to overseas buyers.
Beard says the party’s stance is disappointing, given its support for the China FTA under Helen Clark in 2008.
“To step back from that and start nickel-and-diming, I guess, around details of free trade agreements is a worry, because it sort of sends a signal to middle New Zealand that maybe they should be worried.”
Criticism of the TPP largely centred on aspects like the investor state dispute settlement (ISDS) clause, allowing multinational companies to sue governments, which were seen as undermining international sovereignty.
At a recent foreign policy event, Little argued Labour was still the party of trade, but would always oppose agreements which “placed private corporate interests above our national interest”.
“I have never accepted the argument that in the 21st century, international trade must always come at the expense of a country’s democratic right to legislate in the interests of its citizens.”
However, Beard claims there was “a lot of misinformation” spread about the threat of the TPP, with emotion triumphing over the fact that New Zealand has never been successfully sued through ISDS.
“Our government plays with a straight bat … so the grounds for anyone ever suing the New Zealand Government would be pretty negligible.”
Concern about sovereignty, not trade
Labour trade spokesman David Parker says the report is right to encourage politicians to get in behind trade, but argues it should be a “wake-up call” not for the opposition but the Government.
“The TPP fell to bits … exports have dropped from 30 percent of GDP to 27 percent of GDP, notwithstanding National’s 2008 ambition which still sits there to lift them to 40, and really the trade performance of the current government is nothing short of poor.”
Parker says Labour has a “long and proud history of supporting trade”, arguing it was National who broke the bipartisan position on trade when it agreed to a South Korea FTA with terms that “sold us out”, allowing South Koreans to buy homes in New Zealand without reciprocal rights for Kiwis.
“It’s not the trade or goods and services where there is any disagreement across Parliament, in my opinion – it’s actually in respect of some of these investment protocols.”
Parker dismisses the suggestion that fears about a loss of sovereignty are overblown, saying other countries in the TPP retained the right to keep restrictions on foreign homebuyers.
Green trade spokesman Barry Coates says the report is “a little bit patronising”, with the suggestion that criticism is simply due to ignorance.
“It’s the usual thing of ‘These people don’t really understand any of this, so if we just explain it to them they’ll understand they’re wrong and we’re right’.”
That we need to trade is not the issue up for debate, Coates says – instead, it’s provisions which reach deeply into society, going beyond trade into procurement, local government, education, and health.
“There are deeper issues on the table than market access.”
Opposition to some trade deals is about restoring balance, he says. While New Zealand has never been sued under the ISDS, that does not mean it will not be in the future.
“This isn’t just us saying it, this is the EU saying it and all sorts of people saying it…this is a problem for countries who have very good governments and very good regulations.”
Coates is also sceptical about claimed benefits from the removal of non-tariff barriers, saying they are over-exaggerated “to a ridiculous extent”.
Push for more information
Opposition parties are not the only targets in exporters’ sights.
The report says policymakers and researchers have failed to provide a “sufficiently compelling” response to criticism of free trade.
“More needs to be done to remind stakeholders of the benefits of trade liberalisation – and the costs of the alternative.”
While it argues most fears were overblown and based on outdated negotiating positions or “only marginally relevant precedent agreements”, the blowback over the TPP highlighted a change in how the public thinks of trade issues.
“Members of the public want to know – and rightly so – what trade liberalisation and deeper economic integration will mean for their everyday lives.
“Many Kiwis won’t care about how many additional tonnes of quota access New Zealand gains from an FTA; they will care if the cost of their Netflix subscription rises or their prescription costs jump.”
Trade Minister Todd McClay backs the report’s call for politicians to back trade, saying the Government’s Trade Agenda 2030 strategy should be a seen as a declaration of its importance.
“If we didn’t have the access we do, our economy would be in a perilous state.”
He dismisses concerns about the overreach of recent trade deals, saying it “sounds like opposition parties just have to find something to oppose”.
“Ultimately, trade agreements are not just about goods and tariffs anymore – most of the concerns raised with me by New Zealand businesses are about non-tariff barriers, they’re not about tariff rates.”
While he argues the TPP was the subject of wide consultation, he concedes more public outreach might have informed people better, and says Trade Agenda 2030 is in part about ensuring people understand the importance of free trade.