Putting fairness into free trade: Peter Conway provides a union perspective on international trade.

• Author: Conway, Peter

Unions generally support international trade. The first unions in England were also emigration societies which tried to manage the supply of labour--and hence its price--using an international dimension. Although there are strong arguments around food security, import substitution, and promotion of trade within borders, it is generally accepted that we need to trade on an international basis. The contentious parts are both the rules governing international trade and the relationship over many years between trade and development.

There is an issue of legitimacy about the WTO and trade rules. The Council of Trade Unions is involved in the Make Poverty History campaign, which involves 43 organisations, so far, in New Zealand combining on issues of debt, more and better aid, fair trade and ending child poverty. So there is a profound sense of unease about the image of powerful countries, with huge military might and influenced by massive multinational corporations, negotiating on trade rules. Of course, a lot of detail and counterfactual information is lost in the slogans. Poor countries can also be dictatorships riddled with corruption. Middle-class protestors at the G8 could be horrified if trade barriers really were all dismantled (as they demand) only to see millions of jobs lost in developed countries.

But although many would say communism is dead and capitalism is triumphant, there is no popular appetite for international capitalism. The international trade dimension of globalisation has become the new monster.

Simple formula

In a domestic context, to paraphrase the Ministry of Foreign Affairs and Trade and the government, their trade policy is a simple formula. New Zealand has already liberalised almost all tariffs (probably all gone by 2015), eliminated quotas, and has a very open economy. So if we can persuade other countries to do likewise, then we can only gain. We are a small exporting country reliant on access to overseas markets. We are investing in value-added applications which leverage off our considerable comparative advantage in agriculture, but we need to ensure that all the protectionist devices other countries use (such as tariff peaks, subsidies to farmers and so forth) are eliminated. In other words, it is a 'no brainer'.

Trade lobby groups such as the Trade Liberalisation Network argue that the average New Zealand family now spends $700 less a year on clothing than it did in the mid-1980s and that in the 1960s a new car cost a year's wages.

Prime Minister Helen Clark has described New Zealand's future as being: outward-looking, export oriented, and being positioned at the top of the market. There are big opportunities for small, smart, nimble, interconnected, and open nations like ours. (1) Added problem

In New Zealand, there is the added problem that so much has already happened. There seems to be little left to negotiate about. We have removed almost all tariffs. We have made huge concessions in the GATT negotiations in the interest of progress on agriculture. Foreign investment is effectively unrestricted, except for a small sector of land and fishing quota.

There is a fear among some in government and in trade and 'diplomatic circles' that New Zealand could 'miss out' on being included in some new regional trading bloc. From a distance Australia and New Zealand are seen as one market. But from close quarters that is not always apparent. Sometimes it seems as if MFAT wants to keep as many 'balls in the air' as possible and 'talk up' the value of any proposal in order to keep the liberalisation agenda moving wherever it can take hold. That also makes it very difficult to have an honest debate about the issues.

Clearly agriculture is a huge driver of successive New Zealand governments in terms of trade policy. There have been numerous strong, some would say exaggerated, claims made about what has been achieved so far. Typical of this is the statement by the Minister of Trade Negotiations, Jim Sutton, on 11 June 2003 in which he said that:

It is estimated that over the full implementation period of the Uruguay Round--that is, 1995 to 2004--New Zealand's agricultural export receipts will be cumulatively worth an extra $6 billion, compared to what they would have been without the round. In addition, all New Zealand's tradeable goods sectors have benefited from an increased ability to access world markets at lower tariff rates, which has resulted in tariff duty savings of $3 billion. This provides a total estimate of Uruguay Round benefits as being in excess of $9 billion over the 10-year implementation period. Most of those gains came to the agriculture sector, still one of the most heavily protected sectors in the world. He also said that the round had resulted in about 17,600 extra jobs. And unions do not ignore the value of jobs--say in dairy manufacturing--that flow from improved trade access.

Serious downside

But there is no analysis of the downside--the thousands of jobs lost in clothing or car manufacturing, and the loss of economic opportunities due to commitments made on cultural services, manufacturing and so forth. Agriculture, while still the backbone of our exports, provides only about 15 per cent of GDP and jobs including associated...