By BRIAN FALLOW
The Government's decision to freeze tariff reductions for the next five years should not be seen as a faltering of commitment to trade liberalisation.
It is just a departure from the policy of unilateral tariff-cutting pursued for the past 15 years.
That policy has served us well, but it has run its course. From being the second-most-protectionist developed country in 1984, with all the costs and distortions that implied, New Zealand is now one of the most open.
Critics of the policy may say that we flung open the doors and half the economy fell out.
Even if that were true, and it is not, the damage is done. There is no going back.
Given the degree of protectionism New Zealand encounters in exports where it enjoys a comparative advantage such as agriculture and forestry, trade liberalisation from here is pretty much all upside for us.
Remaining tariffs are low, with very few above 5 per cent apart from in textiles, clothing and footwear.
Trade Minister Jim Sutton says that with tariffs so low, the economic impacts of further reductions would be very marginal. "It will make my job a bit easier to have some residual tariffs in place that can be negotiated."
Multilateral liberalisation through the World Trade Organisation was derailed in Seattle. Getting it back on track will be an arduous and protracted process.
That leaves bilateral trade deals, as with Singapore, and regional moves, like the talks on merging CER with the Asean free trade area. That is where the action now is.
As Asia 2000 executive director Tim Groser puts it: "Reciprocity is now the name of the New Zealand trade-policy game."
After a decade and a half of unilateralism, New Zealand might be thought to have few negotiating chips left. But Mr Groser, a veteran trade negotiator, does not think that matters.
"Even if we had all the protectionist barriers of old, the fundamental problem remains the size of the New Zealand economy."
Other countries are much more interested in a trade deal embracing Australia than one with New Zealand alone.
The new emphasis on reciprocity may be less pure than the unilateralism of old, but it is easier to sell politically.
Mr Sutton is candid on this point: "People worry about being exposed to competition that is too hot for them. If they can be protected, they like to be, even if it is damaging for the economy. It is helpful if you can point out the [tariff] reductions being made by the other party which will help them."
If there was any doubt about the magnitude of the perception problem the free-trade agenda faces, the "battle of Seattle" dispelled it.
<i>Between the lines</i> - Freer trade a two-way street from here
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