How we get the best of trade

By SUSE REYNOLDS*

If you are about to read this at the kitchen table, in a chair in the sun or sitting in your office - stop and look around. What can you see that wouldn't be available if New Zealand wasn't a trading nation?

New Zealand is renowned for being one of the few nations that could survive, albeit at a fairly basic level, if our borders suddenly closed. But we'd certainly notice the lack of choice.

An open trading environment has a lot going for it. Choice, of course, but trade also means more jobs and better lifestyles. Prosperity through trade promotes higher labour and environmental standards too. And it gives the global poor a chance they don't have now.

New Zealanders can't afford to be less than 100 per cent behind trade and 100 per cent behind the WTO Doha Development Round now in progress.

It's the single best shot we have at lifting living standards in a serious way.

Some might argue the toss on that, but global trade will continue to liberalise. New Zealand will forfeit millions of dollars of potential income if it doesn't follow suit.

If you're part of a New Zealand business you needn't just be watching from the sidelines. You can influence the Government's position on trade by telling the Ministry of Foreign Affairs and Trade what you need most out of the next round. It's timed to conclude in 2005 - not far away in terms of business planning.

What's the round's prognosis like for the various sectors of New Zealand's economy? Agriculture is still hugely important to us. But there is no dodging the fact that liberalising agricultural trade will be tortuous.

The US Farm Bill, passed in April, was a step in the wrong direction. It promises farmers $171 billion of income support for the next 10 years - huge money. Unbelievably, the top 10 per cent of recipients of this money (those making over US$250,000 a year) will receive 73 per cent of it. Twelve are Fortune 500 companies such as Chevron and Caterpillar - ridiculous.

On a more positive note, later in the year the US Administration put forward bold proposals for agricultural reform. The EU has only just revealed what shape its offer will take but it's not ambitious. There will be unprecedented pressure from New Zealand, the rest of the Cairns Group and developing countries to make meaningful change.

If you produce industrial products, the big news is proposals by New Zealand, Australia and the United States to totally remove all tariffs on these goods. New Zealand was the first to announce the idea in early November. And it was applauded by the Financial Times and the Wall Street Journal.

Needless to say, not everyone is so enamoured. The Indian Ambassador to the WTO points out tariffs provide 30 to 40 per cent of some developing countries' tax revenue. This compares with just 1 per cent for the US.

The US Ambassador's response was to note that 90 per cent of developing country exports are industrial goods. So the idea benefits them too.

And finally the services sector or Gats (The General Agreement on Trade in Services). Services trade is made up of anything you can sell but that you can't drop on your foot. It's the fastest growing area of world trade.

Unfortunately Gats is often misunderstood. It's not about privatising health and education or compelling local bodies to deregulate water services or waste disposal. Governments are completely free to decide which services they want to open up to the global market and they can attach whatever conditions they choose.

New Zealand's chief objective for the services negotiations is quite simply to improve access for our services exporters to key markets and to improve the treatment given to those exporters in foreign markets.

So what deadlines should you be aware of? Among the most pressing are deadlines to resolve issues that are vital if the WTO is to be seen as responding to developing country concerns. These issues include the provision of life saving drugs.

Resolution is required by the end of this year. New Zealand officials are playing a key role in this by working hard to come up with ideas to help.

The first deadlines in the New Year are those in March for initial proposals for the negotiating frameworks for all the key sectors.

Don't think you can't make a difference. After all your lifestyle, income and ability to choose are at stake.

* Suse Reynolds is executive director of the Trade Liberalisation Network.