Seattle shambles shows need for better dialogue

By ALAN DEANS

Dyke Action and the Raging Grannies have had their 15 minutes of fame.

They are not flash-in-the-pan rap musicians - rather, they are two here-today-gone-tomorrow political protest groups that this week helped to disrupt the World Trade Organisation's meeting in Seattle. They deserve thanks.

How so? Right-minded people were outraged by the sight of teargas and baton-wielding police provoked by such groups.

But people should step back from the emotive scenes and examine the broader issues.

First, the meeting was hosted by a country that pioneered the democratic and capitalist systems that reasonable people know are the best way to ensure a stable and prosperous future.

Many of the demonstrators were ratbags, but they had a right to be heard. Many others on the streets, however, had reasonable cases to state and their viewpoints should be considered in improving the system.

US President Bill Clinton showed his political adeptness by saying that WTO members should discuss environmental and labour issues seriously as they improve global trade rules.

His words were designed to soothe fractious factions within developed nations who believe that their members have fared badly by the removal of trade barriers.

In particular, he was playing to US unions and greenies whom he wants to continue supporting his Democratic Party in next year's election. Whether issues such as saving dolphins and unionising workplaces are important to the developing world is another issue.

Many such countries simply want to attract foreign investment so their desperately poor people can get jobs, improve their health and education and lift themselves out of poverty.

Concerns about polluting factories rank lowly in such places.

The second issue is that protests prompt consideration as to why the WTO is under fire, to question what has happened in recent times and to consider what initiatives should be taken in the future.

Free-traders have nothing to fear from such an examination. Indeed, it serves to strengthen their cause.

Consider a report issued in America by the Heritage Foundation and the Wall St Journal. The Index of Economic Freedom concludes that nations that are the most open are the most prosperous over the long term.

It rates 161 countries on 10 factors of economic freedom, the most important being inflation and monetary policy. Others include trade policy, fiscal burden, Government intervention, capital flows, banking, wages and prices, property rights and the black market.

New Zealand scores third, behind Hong Kong and Singapore. Five of the top 10 are in the Asia/Pacific region, with the rest in North America and Europe. Bottom are Libya, Iraq and North Korea.

New Zealanders should feel proud that they are world leaders when it comes to economic freedom. The gains made during the past 10-15 years have been deep-seated and painful at times, but the nation has benefited enormously.

In recognition of this, the developed world pushed hard to have Mike Moore appointed as the WTO's top dog.

Domestic manufacturing has been hammered. The car industry is defunct, as are much of the electronics, textiles, clothing and footwear industries. But consumers pay less, have greater choice and taxes are lower.

Inefficient companies have gone, the fittest have survived and hot newcomers have emerged. Foreign interest is high.

The Labour/Alliance Government needs to remember this. While Labour supports free trade, it also wants to freeze tariffs at 2000 levels, raise taxes and increase Government intervention in business.

The result could be that the nation slips down the Heritage Foundation's scale and along a path of lower economic growth.

The report notes that New Zealand and Australia are bright spots in a region where other nations have weakened because of economic troubles.

"Like other former British colonies that have adopted the Anglo-American capitalist model, they have experienced the success that comes from establishing an institutional backdrop of economic freedom," the report says.

"Indeed, it is their policies of economic freedom that helped these countries successfully weather the Asian financial crisis."

The last point to consider is that the protests were a welcome distraction from a do-nothing meeting. The WTO is facing tough issues in coming years to dismantle agricultural trade barriers, an area in which New Zealand has plenty to gain. It must remain engaged.

Trouble is, many nations do not want to play ball. Europe is not interested in lowering its barriers because its farm sector would be hit hard and votes would be lost. Japan, too, wants to remain closeted.

The US says it wants more freedoms, yet continues to provide subsidies and impose tariffs in areas such as lamb and sugar.

The road ahead is long and steep. It can only be surmounted if a ground swell of people understands the benefits that lie at the end.

* Alan Deans is New York correspondent for the Australian Financial Review.