Free trade fails New Zealanders

As I was growing up in the 1960’s, self sufficiency was a frequently stated goal of our economic policy.

The idea was that we develop our industries and manufacturing sector so we would be less reliant on imported goods. One important aspect of this drive for self sufficiency was the need to diversify our exports away from reliance on agricultural products. These were our major income earners and our standard of living depended too much on international prices for wool, meat and dairy products.

To work towards self sufficiency we protected our industries with tariffs on imported goods so locally produced goods could not be undercut by cheaper imports. It was a sound strategy and the same as adopted by every developed country while it got its industries established.

This all went out the window in the 1980’s as Dave Lange’s government embraced globalisation and its “free trade” agenda.

The idea behind “free-trade” is that the world in future will become one single free market.   Countries must develop competitive products for this market.   We have a “competitive advantage” with agriculture and therefore our future lies in getting other countries to open their borders to our wool, meat and dairy products.  In other words we decided to put all our eggs in the agriculture basket but to achieve better access for our farm products into overseas markets we would have to give up other areas of our economy to foreign imports. 

In fact we jumped the gun, eliminating tariffs ahead of any other country and saw factories close and tens of thousands of quality jobs in our manufacturing sector lost as cheap imports flooded the country. We won this race to the bottom and we are continuing to pay a heavy price socially and economically.

Meanwhile New Zealand’s holy grail of agricultural access to foreign markets remains as elusive as ever with the World Trade Organisation’s Doha round of free-trade negotiations failing on this very point last week.

The US and the European Union refused to reduce barriers to imports of agricultural products in return for developing countries opening their borders to non-agricultural goods from the developed world.

On paper it seemed like it could have been a fair trade-off. However in the previous Uruguay round developing countries were shafted as they made a host of concessions concerning foreign investment etc while getting nothing of worth in return. Because of this brutalising experience the new Doha round was called the “development” round and was touted as the chance for developing countries to have their turn. But this idea evaporated quickly as negotiations progressed because the drivers of the WTO and its agenda are not governments but transnational corporations with no interest in “development” per se.

In fact it’s no exaggeration to say that governments provide a façade for these corporations at the WTO. A recent study showed that no less that 93 per cent of the 742 official external advisors to the US trade department represented business groups and corporations and they had access to confidential WTO negotiating documents. With more than two-thirds of world trade conducted by transnational corporations, rich countries field huge teams of corporate representatives, lawyers and negotiators to make sure they get the lion’s share of what’s on offer.

Here in New Zealand we should be thankful Doha was a failure. A “successful” outcome would have been bad for the developing world as well as a long term disaster for New Zealand.

It is stupid to rely so heavily on agriculture. Global warming and climate changes means our farming future is uncertain at best.   We also invite further damage to our environment through increased intensification of farming practices as we squeeze the last millilitre of milk from the last blade of grass.

A “successful” outcome would have continued the destruction of our manufacturing sector as even more cheap imports pour in. We would have seen more well paid manufacturing jobs replaced with low paid, part time jobs which would drive more of our families into poverty.  

A “successful” outcome would also have seen even more millions of peasants around the world losing their land to large agri-businesses and being forced into urban ghettos. 

When the WTO was established in 1994 its purpose was to raise standards of living, ensure full employment and a growing real income for all the world’s people.   Precisely the opposite has happened under their policies in New Zealand and around the world.

Our experiment with “free trade” has been a failure. We were first out of the trenches and the most serious casualty in the developed world. Small wonder no-one has followed our path. Other countries are staying closer to self sufficiency. So should we.