Tuesday 14 November 2017

A Very Lucky Escape.

Brave Faces At Danang: David Parker and Jacinda Ardern field questions from the news media at the meeting of Apec in Danang, Vietnam. What the new Labour-led government needed more than anything else from this meeting was what they came home with - Time.

THE TRANS-PACIFIC PARTNERSHIP (TPP) is not dead, but neither can it be said to be in the rudest of health. Considerable last-minute diplomatic scurrying was required to save the Japanese government from a humiliating loss of face. Negotiations, accordingly, are said to be “continuing”. Nothing, however, should be expected before February 2018 – at the earliest. Which means that, for the moment at least, Prime Minister Jacinda Ardern and Trade Minister David Parker, like Canada’s Prime Minister, Justin Trudeau, have taken possession of the commodity they most needed to bring home from Danang – Time.

The situation into which Ardern was flying aboard the RNZAF’s Boeing 757 at the end of last week offered no guarantee that such precious time would be on offer. Danang was fraught with multiple dangers: economic, diplomatic and political.

As the leader of a small trading nation, New Zealand’s prime minister simply cannot affect a take-it-or-leave-it attitude to something as big as the TPP. The inescapable truth confronting Ardern (as it has every one of her predecessors) is that this country’s status as a first-world nation is inescapably contingent upon earning sufficient overseas currency to import the sort of lifestyle to which most Kiwis believe themselves entitled. Bluntly: faced with the choice of announcing whether her government is “in” or “out” of a major trade agreement; no New Zealand prime minister can say “out” with impunity.

All of the official advice the Prime Minister has received to date on the TPP will have kicked-off from that position. Certainly, it will have been the argument reiterated by the Ministry of Foreign Affairs and Trade (MFAT). It will also have been the lustily repeated refrain of this country’s major exporters. Likewise, from what might be called the “globalisation lobby” imbedded in NGO-land, academia and the media.

Taken together, a very large and intimidating crowd to say “no” to!

Even larger and much more intimidating, however, are the nation states determined to see the TPP (or, as it has rather tendentiously been re-named, the Comprehensive and Progressive Trans-Pacific Partnership – CPTPP!) ratified and implemented. The agreement’s principal cheerleader (now that the USA has withdrawn) is Japan, whose diplomatic reach proved to be more than long enough to secure Justin Trudeau’s return to the negotiating table. (It may have been Canada’s wish to walk away from the TPP-11 altogether, but Japan’s “arguments” were clearly “persuasive” enough to cause its prime minister to have second-thoughts and turn around!)

If Canada, with 36.3 million people and the second-largest economy of the remaining TPP signatories, couldn’t make it all the way to the departure lounge at Danang, then what were the odds of little New Zealand making it even as far as the door? New Zealand political leaders have only to review their country’s diplomatic, military and economic experience with the USA between 1984 and 2010 to gain some appreciation of the costs associated with taking a “principled stand”. World headlines last only a few days – their consequences can last for decades.

And then, of course, you have to come home.

It is probable that the National Party was hoping more earnestly than Professor Jane Kelsey and the entire New Zealand Left that Prime Minister Ardern would take a “principled stand” on the TPP. Had she stood up and said “no”, not only would she have felt the full wrath of Japan and its allies, but, from the moment her feet once again touched New Zealand soil, she would also have felt the full blast of a searing political firestorm.

The Urgent Debate in Parliament, which Speaker Mallard would have no choice but to grant the National Opposition, would only be the beginning. Day after day, the voices of exporters, business leaders, bank economists, business journalists, media commentators, academic experts and the globalisation lobby would be ringing in the Labour-NZ First-Green Government’s ears.

The Prime Minister and her Cabinet colleagues would then have just two political options: either back-down, or double-down.

If they backed-down, then Ms Ardern and her government would stand exposed as a bunch of juvenile attention-seekers who simply had not thought through the consequences of their irresponsible actions. It would be a full-scale debacle from which they could not recover.

But, doubling-down would be even worse. By adopting a sharp-edged, radically left-wing, stance on international trade at both the diplomatic and domestic levels, Ms Ardern’s government would rapidly find itself re-positioned among the world’s “nutty” nation states. Inevitably, New Zealand would find itself drifting, economically and diplomatically, under the influence of China and Russia. For an overwhelming majority of New Zealanders, this would represent an unmandated repudiation of everything their country stands for. Politically, it would be unsurvivable.

To Ms Ardern’s and Mr Parkers’ no doubt immense relief, both of these catastrophes have been avoided. They have had a very lucky escape.

This essay was originally published in The Press of Tuesday, 14 November 2017.


Guerilla Surgeon said...

I hope that an agreement can be made that is acceptable to the Greens and to New Zealand first, rather than relying on the vote from National to get it through. That would be a dead rat indeed. And do far more harm in the long run than making some acceptable changes.

David Stone said...

Hi Chris
If the neoliberal settlement is ever going to be unsettled then "exporters, business leaders, bank economists, business journalists, media commentators, academic experts and the globalisation lobby" are going to be upset; and they are going to complain vociferously. If the fear of their disapproval is a barrier to acting against their perceived interests then it's never going to happen is it!
This reads like your not expecting much change out of this government; "Fiscal responsibility" prevails. Neoliberalism lives on.
The hope (Pollyanna strikes again) would be that they foresee the agreement failing without them having to be noticeably instrumental , and can give it all the time it wants to do that.
When changes have been made to win Jane Kelsey's approval of the deal would be a good time to accept it.
Cheers David J S

Michael Smythe said...

Meanwhile, Jacinda has explained the position first had: https://www.facebook.com/jacindaardern/videos/10154837993337441/?hc_ref=ARSKi5laGrGrvGd-iKyLzdh2itIHgll-u6VHnsHN4BnHNq_34JWMK4kjDCLXNc5nwZo&pnref=story

Kat said...

Yes, some people just seem to attract luck. Isn't NZ lucky to have such a lucky bunch running the show and with any luck the luck won't run out.

On the other hand the 'Queens Gambit' is a classical opening chess move with predicable counter moves. I would say the PM and her Trade Minister have opted for a positional game. Smart move.

countryboy said...

You write @ Chris Trotter

" The inescapable truth confronting Ardern (as it has every one of her predecessors) is that this country’s status as a first-world nation is inescapably contingent upon earning sufficient overseas currency to import the sort of lifestyle to which most Kiwis believe themselves entitled."

And what do we 'export'?
New tech'?
Puffs of fresh air?
Hills and valleys?

If you're reading this and you're in doubt let me enlighten you.
Sure, there's wool too and timbers and arguably our best minds but what we export most and in abundance is FOOD.
Who will soon be in dire need of 'foods' soon? Humans living cheek by jowl in polite cities, that’s who. Never mind the poor hapless bastards well used to starvation and misery. They don’t have any money anyway. They just have to rely upon our good human nature ... like Big Jizz brownlee can offer Bahahahaha ahah aha aha ahahhahahaha aha a a a a a a a ahahhahaah..... Can’t breath, can’t breath.....

I mean, really. It’s fucking obvious isn’t it?
So why does Jacinda never mention the beastly NZ farmer and their legendary reputation for high-volume, high-end food production? She just left them to flounder in Blue toxins squirted out by Natzo’s every time they lift their leg?
Even your erudite , to the country born, self can’t quite cough up the Farmer Earns The Export Revenue hairball you, yourself mention above! Hilarious !
You just leave the NZ farmer to be parasitised by the Natzo’s and any political opposition to that is voiceless and invisible. Truly hilarious.
Adern wants to revolutionise NZ / Aotearoa? Go get the Farmer away from the dreaded Natzo’s. It’s easy too. Just offer up a plan which leads to financial security, and give them immunity from foreign owned bank swindlers. Then? Then you will see a new dawn in NZ. A truly, profoundly quite good future.
Until then? We’re fucked. Unless, of course, someone invents a new tech that means the end of the need to eat.
iFull? A smart phone app that makes us believe we’re full as, and not about to die of starvation.

Frit said...

You seem awfully pragmatic about our status as a trading nation and the need to engage now that repercussions are delivered to your doorstep. Fair?


greywarbler said...

It might be time for a spical unit within farming to deal with small family farms, and assist if they want to amalgamate on buying equipment etc. And to cut down the foreign investors.

Here are some figures:
New Zealand’s diverse market economy has a sizable service sector, accounting for 63% of all GDP activity in 2013.[17]
Large scale manufacturing industries include aluminium production, food processing, metal fabrication, wood and paper products. Mining, manufacturing, electricity, gas, water, and waste services accounted for 16.5% of GDP in 2013.[17]

The primary sector continues to dominate New Zealand’s exports, despite accounting for 6.5% of GDP in 2013.[17]

(My note - most of our GDP is in the service sector, and primary sector exports dominate, in volume, but actually only earn 6.5% of GDP. So the country is being rorted by farmers telling us that they are the bulwarks of our economy. What effect would this low-income milk production have on our productivity figures?.)

Other figures from Wikpedia table on right.
GDP US$186.4 billion (2017, PPP)[2] (conversion says NZ$268.72 billion)
Gross external debt
NZ$232.8 billion (100.7% of GDP) (FY 2014)[12]

Exports NZ$61.722 billion (FY 2013)
Imports NZ$59.076 billion (FY 2013)[9]


David Stone said...

Grey W

I think the comparison of export earnings to GDP can be very misleading. The GDP figure covers all transactions within NZ over a 12 month period. This adds every transaction together even though the value exchanged i.e. money, may circulate around the community (economy) dozens of times in a year as it facilitates one transaction after another. The year's export earnings are only counted once. Hence $60B odd could easily be all the value making up a GST of $180B , it would only have to rotate around the local economy 3 times. I expect most of it circulates much more frequently . That only 6.5% of GDP accrues to the sector that produces most of export earnings is hardly a statistic to beat farmers over the head with. Countryboy might argue that this shows the non farming sector consumes 93.5% of their earnings.
Think of what you use and consume every day in your normal day to day living that has come from overseas, and how much was made here as you go through the day. That will give a better idea of what exporters provide than GDP figures.
Cheers David J S

Chris Morris said...

David is correct.
All those overseas goods that NZers expect are paid for by foreign exchange not GDP. About a third of every wide screen TV is from dairy products.
It is inconvenient facts like this that need to be reiterated every time people use the "farming is only xx% of our GDP.