Historically Incorrect: Labour's claim that it has always supported Free Trade simply isn't true. For two-thirds of its history, Labour regarded trade simply as a means to its end of transitioning New Zealand from economic colony to free and independent nation. The party's embrace of Free Trade actually dates from 1983, when Labour threw its support behind the CER agreement. Thirty-three years later, independence is as far away as ever - and the TPPA will not bring it any closer.
“LABOUR HAS ALWAYS BEEN a Free Trade party.” This is the bald assertion from a chorus of past and present Labour leaders desperate to escape John Key’s “anti-Free Trade” label. There is, however, a very large problem with Labour’s claim. It simply isn’t true.
Prior to 1984, Labour is much more accurately described as a party committed to ending New Zealand’s status as a cultural and economic colony of the United Kingdom. This mission necessitated a radical expansion of the range and sophistication of New Zealand’s exports. Obviously, such a policy also required that serious attention to be paid to the size and scope of protective instruments applied to imported goods by this country’s potential export markets.
By the same token, however, any broad expansion of New Zealand’s industrial base would require the development of its own array of protective instruments. For at least as long as it took new, export-oriented industrial concerns to become firmly established, the price of goods imported from their international competitors needed to be artificially boosted by tariffs.
Tariffs, and an import licencing system, were accordingly utilised by all pre-1984 Labour Governments. Not only was the system needed to protect infant industries, but it was also vital if New Zealand’s always vulnerable reserves of overseas funds were not to be frittered away on non-industrial imports.
To make the policy work, as the Second Labour Government made every effort to do between 1957 and 1960, a significant degree of state planning and co-ordination would be required. In June 1960, an Industrial Development Conference convened in Wellington to determine the way forward.
One of Labour’s “From Colony to Nation” mission’s strongest supporters, Industries & Commerce Secretary, Bill Sutch, recorded that:
“The conference recommended a Development Council, better regional distribution of industry, much more industrial research, an Industrial Finance Corporation, advisory aids to industry, the negotiation of bilateral trade agreements [and] various methods of promoting external trade.”
Not “Free Trade”, then, but trade as a means of advancing New Zealand’s economic independence: by expanding its industrial capability, diversifying its exports and making it less reliant on both foreign capital and the imported goods of New Zealand’s creditors.
Not surprisingly, Labour’s From Colony To Nation policies were met with fierce opposition from the National Party and its key backers. Farmers, importers, merchants and retailers had little to gain and great deal to lose by such a fundamental reordering of New Zealand’s economic and cultural priorities. It was from these groups, the most prominent beneficiaries of New Zealand’s colonial status, that the cry for Free Trade was most loudly voiced.
The commitment of Norman Kirk’s Third Labour Government to the From Colony To Nation mission was, if anything, stronger than the Second’s. Aware of the extent to which New Zealand’s limited industrial base remained overseas financed and foreign controlled, he was determined to establish a pool of domestic investment capital from which New Zealand could build its own future.
The precise nature of the vector which carried the Free Market/Free Trade virus into Labour’s ranks in the early 1980s is still not 100 percent clear. Part of the answer no doubt lies in the examples made of the governments of Chile’s Salvador Allende, Australia’s Gough Whitlam and the UK’s Harold Wilson, by the enemies of Democratic Socialism. The policies of the New Right governments of Margaret Thatcher and Ronald Reagan had, similarly, made it plain to New Zealand’s Labour politicians that democratic economic planning and the preservation of national independence were well-and-truly off the “Free World’s” political agenda.
What should not be overlooked, however, is the impact of the decision of the Bill Rowling-led Labour Opposition to support “CER” – the Closer Economic Relationship with Australia sealed by Rob Muldoon’s National Government in 1983. Critics of CER like Wolfgang Rosenberg struggled to make Rowling (his former student!) understand the consequences for Labour’s From Colony To Nation mission of facilitating Australian capital’s gradual take-over of New Zealand’s economy. To no avail. As the British colonisers were departing for Europe via the front door, the Aussies were being smuggled in the back!
Historically-speaking, Labour’s pro-Free Trade stance has been around for just 33 of its 100-year existence. If its dream of transitioning New Zealand from colony to nation still endures, then Labour’s opposition to the Trans-Pacific Partnership is, indisputably, the more natural fit.
This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 12 February 2016.