Lamb row the litmus test of free trade

Between The Lines
By Brian Fallow


The decision President Clinton is due to make next week on whether to approve barriers to lamb imports into the United States is bound to be seen in this part of the world as a litmus test of US sincerity as a proponent of free trade.

And if the United States is not to be relied on to lead the trade liberalisation agenda, who else is?

Something of a tide seems to be running against free trade.

In the United States, despite enviably strong growth and low unemployment, the perception that trade liberalisation costs jobs and benefits other economies at America's expense is evidently widespread enough for Congress to have twice refused to grant the Clinton administration fast-track negotiating authority.

Without it trade negotiations with the United States are doomed to be all foreplay and no climax.

Academic experts like Professor Michael Plummer can point out that inward investment into the United States has matched US investment going out, and that unemployment is well below what used to be considered its natural rate, but Ross Perot's "giant sucking sound" still resonates.

In Asia, Professor Plummer says, the liberalisation model is also being questioned.

Tides turn, of course, and he believes Asian governments will return to a liberalisation track in a few years, but it is too politically sensitive right now.

Europe with its high levels of unemployment is likely to continue to be protectionist.

The prospects of China's accession to the World Trade Organisation, which at one point looked possible this year, have receded as bombs and spies poison Sino-American relations.

It is a dispiriting environment, and liable to get worse as disputes like the trans-Atlantic row over hormone-treated beef come to a head.

But New Zealand cannot afford to allow cynicism to colour its own trade policy.

It has to push for whatever progress towards free trade can be achieved, wherever it can be achieved, and regardless of whether its own interests are at stake. Chairing Apec this year clearly gives it more opportunity to do that.

After New Zealand's thoroughgoing unilateral trade liberalisation of the past 15 years, moves toward freer trade globally are all upside from its point of view.

The converse is also true. It is not just a choice between progress and the status quo. Protectionism, as the US lamb affair may demonstrate, can make things worse.

For New Zealand the stakes are high. The trade figures out yesterday recorded the worst annual deficit for more than 14 years and import growth continues to outpace exports.

The economic recovery is lopsided and will be hard to sustain unless the export sector does better.

A chance would be a fine thing.