John Roughan: Freezing cuts in tariffs puts us out in the cold

On reflection, Hong Kong was not a bad place to be for the beginning of the election campaign. It is a microcosm of the modern world, a glimpse of the free-trading future that excites some of us and alarms others.

It is still the issue underlying all at the vote next Saturday. The important divide in the politics of all countries now is between those who embrace integrated markets and those who want to keep the world at bay. I think we can put Labour in the first group with National, Act and United. The Greens, New Zealand First and the Alliance are definitely in the redoubt.

In his closing contribution to the Holmes debate this week, Winston Peters promised to "build a wall around New Zealand" against further immigration, particularly of the clever, capital-bearing Asiatic variety.

The Greens "can see no sense in carrying identical goods long distances in opposite directions at great energy cost". They want to protect our industry so that it can lead the world to ethical, energy-efficient, recyclable sustainability.

And Laila Harre admitted this week that the Alliance deserves the credit, if that is the word, for the freeze on tariff reductions two years ago.

Evidently it is thanks to Jim Anderton's old team that I came back from Hong Kong laden with made-to-measure garments that cost half to two-thirds the price of the same gear imported here.

Not so long ago an overseas jaunt was a chance to stock up on electrical goods, too. New Zealanders would trundle back with television sets, stereos and every boxed appliance they could pile on the cart. Often there was a used car following them by sea.

You might shudder to think how many New Zealanders could have caught the new technological wave if computers and cellphones had been locally assembled under licence as electronics used to be, and sold at protected prices.

That nonsense ended with the removal of almost all protection in the 1980s and 1990s. We were left with significant tariffs on just three big consumption categories - clothing, textiles and footwear.

And those, too, were gently but steadily being lowered in five-year phases until this Labour Government came along. Its decision to freeze tariffs early in its first year was, for me, one of the most dismaying decisions it has made, exceeded only by its steps to restrict choices in education.

There had been no mention of a tariff freeze on Labour's pre-election credit card and no reason to think the party was less than genuine in its commitment to an open economy.

Everything its leaders had said suggested they agreed that open borders were needed if national resources were to flow to genuinely competitive activities.

Yet suddenly Helen Clark was announcing the protection of machinists for the sake of our fashion designers, and that we no longer wanted to be among the leaders in world trade liberalisation. We wanted to preserve remaining tariffs so that we could negotiate them away. It is that stupid.

In Hong Kong you feel a little foolish being fitted out in the sweltering heat of a place that now has a higher income a head than we do, because you come from a country that gives power to people who want to compete with the wages of China.

But you are in good company. Americans are restocking their wardrobes there, too. They used to fear that free trade with Mexico would drive their apparel industries south. Now, I'm told, Mexican manufacturing is moving to China.

Now that it has been admitted to the World Trade Organisation, that vast country is an economic black hole. So far only the coastal provinces are developing. As they move up the ladder, low-wage industries will move ever inland.

The closer you are to the black hole, perhaps, the more intelligent your response. Hong Kong has seen virtually all its manufacturing disappear across the border and professes not to be unduly worried.

The machine shops might be in China but the designers, financiers, lawyers, marketers, insurers, reinsurers, dispatchers and carriers are still in Hong Kong. The city's main concern is that mainland Chinese are smart enough to see how wealth is generated and it is going to be hard to keep ahead of the play.

How smart are we? It would be comforting to believe Laila Harre that the tariff freeze was all the Alliance's doing because she and her ilk are going to be washed out of Parliament at this election.

They are polling pathetically low, even for a party deserted by its own founder. The left is discovering yet again that its adherents are loud in universities and media but lean on the ground.

Real people rightly distrust the idea that the country can afford any universal benefit merely by voting for it, and they become sensibly nervous when Ms Harre refers to their wages as "our collective resources".

But not so many people yet realise that the Greens share practically all the Alliance's social programmes as well as the nuttier conceptions of their own. If Labour was willing to stall our Apec tariff reduction programme for the Alliance, it would probably continue the freeze for the Greens.

The best we can probably expect is a Labour minority Government resting on Green support but free to enlist National votes when it matters. It is asking a lot of any party to help its rival to govern. But trade might not wait if Labour suspends its courage for a second term.