Dialogue: Freer trade key to economic wellbeing

By STEPHEN JACOBI*

In shanghai this week, Apec leaders found themselves staring into a serious economic recession and took steps to restore confidence and give direction.

Apec's twin themes of trade and the response to terrorism have generated new public interest in opportunities open to New Zealand to advance its economic interests internationally.

As well as condemning terrorism in the strongest terms, Apec leaders, among them Prime Minister Helen Clark, gave a strong boost to the launch of a new round of trade negotiations in the WTO. Helen Clark also held positive meetings with US President Bush, Secretary of State Colin Powell and US Chamber of Commerce president Tom Donahue, at which the prospect of a new free-trade deal with the US was actively discussed.

Time will tell whether the Shanghai accords are sufficient to shore up global confidence in this time of crisis. But beyond the usual Apec fanfare, ill-fitting clothes and solemn declarations, what's in it for ordinary New Zealanders?

The answer is simple - a potentially stronger New Zealand economy.

The recent Knowledge Wave conference was the latest reminder that New Zealand needs to do more than just muddle on through if we want to continue to grow and develop jobs for this generation and the next.

Any formula for success must include increasing New Zealand's share of international trade. That implies a strong role for New Zealand in any moves to open new markets and bring down the barriers to trade.

In the past we've tended to take for granted that New Zealanders appreciated the need for our exporters to have access to the wider world. Now there are new concerns: the impact of globalisation, a perceived loss of sovereignty, the effects of trade liberalisation on sensitive domestic industries, as well as on the environment, and labour standards.

These are serious matters and deserve serious debate. A new organisation, the New Zealand Trade Liberalisation Network, has been set up to provide some answers.

The network is aimed at encouraging public support for policies that will accelerate economic growth and social development. Driven and led by New Zealand's leading export interests, the network is an incorporated society which will work towards enhanced wellbeing resulting from trade liberalisation.

Better public support for trade is vital - so too is support from business.

Mike Moore's confirmation that the November WTO ministerial conference will proceed requires a more coordinated response from New Zealand business. During the Uruguay Round, business interests were consulted by the Government, largely on a sectoral basis. The coming negotiations will be even larger in scope. The Trade Liberalisation Network has been set up to provide a vehicle for developing business input into the negotiating process and making joint submissions to the Government where necessary.

Trade liberalisation is not something you do just because it's good for you. Ultimately it's about jobs. Trade liberalisation helps companies expand overseas business by removing barriers to trade. Trade rules ensure these barriers cannot be arbitrarily put back again.

In recent years, several high-profile manufacturing companies have moved their operations overseas.

Among the reasons given have been the impact of tariffs and non-tariff barriers in overseas markets, which can make manufacturing in New Zealand uncompetitive.

Rural New Zealand is undergoing a boom as agricultural exports expand. The reason is not just farmers' skill, good weather and the competitive exchange rate - trade liberalisation under the Uruguay Round has expanded market access and reduced export subsidies. Jobs are being created, not only in agriculture but in a range of downstream supply and service industries.

New Zealand's closer economic partnership agreement with Singapore is drawing attention to the potential for increased business between the two countries. Much of this growth is taking place in non-traditional industries and, importantly, in the services sectors.

New Zealand is a small market - too small to consume all we produce; too small to allow companies to generate a high enough volume of sales to develop competitiveness; too small to provide the capital our companies need to expand. Trade liberalisation seeks, through negotiation, to bring down the barriers to international trade, to expand the size of the domestic market and create a larger space for our companies to operate in.

The US baseball player and philosopher Yogi Berra once said that "the future ain't what it used to be". This is particularly true for New Zealand. If we are to improve our economic wellbeing, we need to support trade liberalisation, to participate actively in trade negotiations whether in the WTO, Apec or with individual countries like Singapore, Hong Kong or the US and thereby to integrate ourselves more firmly in the global trading system.

* Stephen Jacobi is executive director of the New Zealand Trade Liberalisation Network.