Friday 12 February 2016

Labour's Choice: Free Trade, Or Free Nation?

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.


Robert M said...

Although Labour, New Zealand and the Department of Foreign Affairs managed to avoid the conclusion for 108 years since New Zealand grudgingly accepted Dominion status in 1907 the nation has little alternative now but TPPA and developing an economy of trade and tourism with Japan, USA, Canada, Australia, SE Asia and Latin America. Even in 1908 the Great White US Fleet and the emerging naval power of Japan and Russia represented the actual reality rather more than the inchoate Labour Party desire to remain attached to the British apron strings and the supposed future dominance of the Chinese matriarcy.
The free trade agreements carved out during Helen Clarks tenure by Goff, Grosser and MFAT with China et al were hardly free trade given that China is a military dictatorship alligned and dependent on Russia still easily the main nuclear strategic and tactical missile threat to the USA. The main Chinese arsenal their aircraft carrier and their SU 30-34 planes, Mach 4/5 AA missiles, advanced anti ship and land attack missiles with speeds in the range of Mach 4-8 Growlers, Sizzlers and Club 54s are supplied at the choice and will of Moscow central and the main Chinese naval power operates out of Russian enclave bases on the Chinese coast in which the Chinese Navy are not even allowed to change a lightbulb on their Russian supplied Kilos . The Russians train the officers and supply the weapons and may also be responsible for both the Malaysian aircraft losses in 2013, both may have been hit by Russian missiles in an attempt to destabilise the obviously nasty and unstable Malaysian regime.
There is probably more potential in meat, lamb farming and tourism than generally thought. I have opposed dairy conversions and Islamic immigration for the last decade. The Elworthy period as head of Federated Farmers was the most extreme fundamentalism of all the aspects of Rogernomics and my view is that maintaining any humanity in the countryside required some less direct and more intelligent subsidy scheme than Muldoons. We should still have twice as many sheep as we have got and TPPA offers the prospect of much higher return on meat products right around the Pacific Rim and in the USA. In other words their is the potential to make 4 times as much from meat as currently if we decouple from the Silver Fern deal.
Auckland and Queenstown in the 1990s and Wellington ten years ago offered a fairly sophisticated and fast bar scene attractive to advanced Europeans and New Zealand under John Banks, Celia Wade Brown and the shrinking violets of the National caucus building our own version of the Reeperbarn, Bournemouth or Brighton seems to be exactly what they dont want, but which I favour.

Anonymous said...

The problem is, if all your trading partners go in for a Free Trade agreement, then you have to join. Or you are at such a huge trading disadvantage, you can't sell you stuff, or afford to buy others' stuff.
Helen pointed this out.

Also, the centralized planning of the economy was extremely slow, inefficient and conservative. Remember trying to get a phone connected by the old Post Office? I do!

Muldoon opposed the computerization of the Civil Service, as he feared it would destroy jobs. He was partially right - it did end a whole industry of paper based clerical staff (as gone as Downton Abbey's footmen!) - But it created a much larger computer industry.

This centralized planning may have been possible when we had Britain as a guaranteed market - but it wasn't possible once Britain joined (what is now) the EU. The Oil Shock(s) didn't help, either.
That's the contradiction of the Left , at that time. They wanted to be more independent from Britain, but economically depended on her for their way of life.

Plus the rise of the 'Asian Tigers' added much more competition in the trading world.
(And opportunity).

It will never be the 70s again. Though that way of life was clearly on the way out, even then.

Nick J said...

Obvious off the cuff responses to Keys comments that NZers would get are;
"There is no such thing as a free lunch".
"We want fair trade".
"Free for who? "
These sound clip retorts are so bloody easy and obvious. Come on Labour. Get lippy.

greywarbler said...

Robert M
You come across as spraying firepower in a wide arc. What opponent can stand against your onslaught? Perhaps more paragraphing would assist digestion through breaking the ideas into smaller portions. Is trade always connected with defence and armaments,'butter for guns' perhaps? Though we brought in cars as well as growing numbers of guns didn't we.

Was there a conclusion or suggestion in there? Does anybody win at the end of the story? I like happy endings if possible please.

A O said...

"The problem is, if all your trading partners go in for a Free Trade agreement, then you have to join. Or you are at such a huge trading disadvantage, you can't sell you stuff, or afford to buy others' stuff. Helen pointed this out."

Well, they should stop calling these things “free trade agreements” because no one willingly agrees to being coerced to supposedly trade freely.

bob said...

I'd like to know what it is you have against free trade Chris. After all we are talking about transactions between willing parties which benefits both of them. Contrast this to your ideas which often involve removing money from those who earned it by force if necessary, and then wasting it, as everyone knows that's what happens when people spend other people's money on other people.

Guerilla Surgeon said...

Robert, would you provide a link for your information about Russian bases in China? They must be pretty damn secret because I can't find anything about them on the Internet. Except for the occasional wacko site. I can't see what your point is about China using Russian weapons. They pretty much have to, though they don't like it. They are setting about developing their own weapons as I understand it although still purchasing and building under license from Russia. Difficult to do anything else, because the West has an embargo on selling them weapons. I'm sure they'd occasionally like to buy American stuff :-).
Anonymous – you realise that most of the so-called Asian Tigers were pretty much centrally planned economies right? Not that they banned private enterprise or anything extreme like that, but the government pretty much decided who to subsidise and who not. And they were fiercely protective of their fledgling industries – imposing very large tariffs, some of which still exist today. Some of these of course may disappear with the TPPA. Some not, at least not for years.
I don't know why all you conservatives and libertarians keep perpetuating the myth of free enterprise. Unregulated capitalism has never done a great deal and quite probably never been in existence ever.

Anonymous said...

Chris, the history of the Labour party and international Free trade is interesting but will not convince Labour of anything. Why ? simply because they are not listening.
They have convinced themselves that if they get government then they will fight to overturn some objectionable clauses in the TPPA and carry on being full members of the TPPA.
There are 12 nations in the TPP and Labour have to convince 11 of them to agree to labours position, it will never happen and I believe Labour know it to but they believe that all New Zealanders are stupid and if Labour say it enough times they will convince the New Zealand electorate and they will be elected.
Most people who read that last paragraph will smile at its content but I am afraid that the current leadership of Labour are that shallow, misguided and bereft of political savvy that they cannot see the 'policy from the politics'.
The anti TPPA protest movement have been White-anted.

Bushbaptist said...

US perspective on the TPPA:

peteswriteplace said...

NZ has only been a REAL independent nation since WW2 - so its history is not very long anyway. TPPA white-anted? We will have to accept the TPPA eventually, but can demand some changes to suit us. So don't be too tough on Andrew Little. He is a realist and wants to lead a Labour govt. Compromise is the art of government.

Brendon Harre said...

Chris I have an interest in the 19th and early 20th century progressive political and economic period. This was a period where the masses worldwide struggled against various forms of elite -the class system in the UK with the landed gentry at the top, in the US it was the robber barons and so on.

What the masses wanted was that governments stopped favouring the elite. They wanted crony capitalism to be reformed and made fairer. They wanted a Square Deal before they wanted a New Deal.

Muckraking journalists, novelists and social movements pushed this democratic progressive agenda.

Chris in my opinion the movement against the TPPA has more similarities with this history than it does from a domestic nationalisation economic history.

The variation in the TPPA case is that the economic trading opportunities for the masses will be minimal, compared with say the Corn Law reforms (the original free trade political/economic battle) which did assist the working class and at the expense of the landed gentry elite. The the main effect of the TPPA will be to force governments to bend to the will of a corporate elite. That governments will ignore their duty to serve the masses.

What the TPPA will do is make it harder for a progressive politician like Theodore Roosevelt to break the power of corporates -Trust busting, to address corruption and excessive market power, to implement laws wrt to food and medication to ensure they are healthy to the public, to implement sound environmental policies -such as creating National Parks for the public not private benefit.

The public is worried about the sovereignty effects of the TPPA because they can feel that the corporate elite is gaining control over their lives, their destiny. That hard fought battles about democracy, representation and having governments make laws for the ordinary person not the elite are being overturned.

Chris I see this battle as being about progressive for the masses versus conservatism for an elite. Not socialism versus capitalism.

If you listen carefully to anti -TPPA speakers, such as Senator Elizabeth Warren in the US -I think you will see they have more in common with Theodore rather than Franklin Roosevelt.

According to wiki, Warren voted as a Republican for many years, saying, "I was a Republican because I thought that those were the people who best supported markets".[18] According to Warren, she began to vote Democratic in 1995 because she no longer believed that to be true....

Guerilla Surgeon said...

Bob-for money that you earn that is taken by force is not simply earned by you. It is earned with the help of stuff that is paid for by the money that is taken by force if necessary. Like roads , like waterworks, like electricity. You expect all this stuff to be paid for by voluntary contributions in some way? Like that's going to work :). You've been reading Ayn Rand again haven't you?

Wayne Mapp said...

There would be very few even on the Left who would now oppose CER.

And you would be well aware that the autarkic approach to the New Zealand economy had reached its limits by 1984. Change was necessary. There might be debate about the details, but not about the broad thrust. Having said that, I guess 25 to 33% of the NZ population do not buy the need for the changes of 1984. And like you, seem to hanker back to an earlier time. Hence the use of the epithet "neo-liberalism". Only people on the far left (as opposed to the centre-left) use that term. And when I see it, I know that persons position on just about every political issue.

Coming back to CER, yes it has meant that the New zealand economy has become, in a variety of sectors, part of a broader Australasia economy. This is generally not to our disadvantage. In any event there are still very significant differences between the two economies. New Zealand's completive advantage lies in different areas to that of Australia. We still have our own currency. For the last few years we have been starting to close the gap with Australia.

Chris Trotter said...

Dear God, Wayne! A nation whose financial system is completely dominated by that of its much larger neighbour cannot be called free or independent.

Wolfgang Rosenberg predicted with great precision in 1982 what would happen to the New Zealand economy as a result of CER. Unfortunately, his former student, Bill Rowling, didn't listen.

Thirty-three years later the Australians treat New Zealanders with that special kind of contempt reserved for the poor little bugger who runs the company's branch office out in the sticks.

When they're ready they'll "suggest" we join them in an Australasian Federation.

And you, Wayne, like the good Vichy politician that you are, will tell us it's all for the best.

Guerilla Surgeon said...
informative. Capitalism at work.

pat said...

It may be true that a majority of Kiwis do not oppose CER, particularly in the form it has been practiced until recently, after all there are around half a million expats there that didn't end up in our unemployment statistics these past decades...that doesn't mean that they support all the consequences of that agreement or even the balance of costs/benefits nor does it mean they will continue to sup[port it as it changes and as the consequences of the power imbalance become increasingly evident.

Our supposed "big brother" Australia at roughly 8 times our size in economic terms now owns (and extracts the profit from) all our major trading banks, half of our grocery distribution, hardware , media the list goes many NZ businesses have returned the favour?...sweet bugger all, and most that have tried have been sent packing.

Extrapolate that performance to the TPPA...not one country 8 times our economic clout, 11 countries 190 times our economic clout operating in a homogenized super market slanted to the large corporate will not end well no matter how many PR dollars you spend on it Wayne, can only fool some of the people some of the time..... and more and more people are objecting to being treated like fools.

Anonymous said...

This country has two histories...Before 1984 and After...Muldoon said New Zealand the way we want it...Well with Douglas, Bolger, Richardson and so on NZ is literally f****ed for the workers ( so for most)...and it used to be a place of beautiful possibilities...

Anonymous said...

With free trade comes the right not to trade (migration and housing).

Jh said...

Brendon Harre said...
Chris I have an interest in the 19th and early 20th century progressive political and economic period. This was a period where the masses worldwide struggled against various forms of elite -the class system in the UK with the landed gentry at the top, in the US it was the robber barons and so on.

What the masses wanted was that governments stopped favouring the elite. They wanted crony capitalism to be reformed and made fairer. They wanted a Square Deal before they wanted a New Deal.

Muckraking journalists, novelists and social movements pushed this democratic progressive agenda.
And then you decided people should all live in an ethnicless utopia but to overcome resistance you had to control the universities, the government and the media and let in many people's to break the political power of the people who beleved they were *the people*.

Jh said...

Wouldn't this TPP thing have made sense if we had a talk about what was for sale before we have a garage sale?
Recall John Moore's guest blog on Liberation "Left-wing xenophobia (supporting the sale of the Crafar farms). The people are denied a say, apart from talk back radio or puny letters to the editor. Again and again we are blitzed by politicized comment without right of reply as progressives and property developers hold the media in their palm.

Guerilla Surgeon said...

"progressives and property developers hold the media in their palm."

Don't know much about property developers, but you must have a different definition of progressive from me if you think that the press somehow defers to them rather than your business Roundtable types.

Jh said...

Progressives or property developers would characterise the main blogs and news outlets?
The advertisers call the tune. Who does the Chamber of Commerce side with?

Guerilla Surgeon said...

Again, I'm not quite sure what you mean by progressives. Advertisers are not progressive in general. They tend to be conservative. As does the Chamber of Commerce. As it is your statement makes no sense. And I think you've probably misused the word characterise, but I can't be bothered checking.

Loz said...

New Zealand's exports to China increased 279% from between 2006 & 2011... a phenomenal growth, always accredited to the bilateral free trade agreement. However, in the same period Australia's exports to China increased 329%... without a free trade agreement. In fact, most countries experienced an astronomical growth in exports to China - Puerto Rico had a 910% growth, Nicaragua 3093%, Ecuador 565%, Columbia 808%, Venezuela 345%, and Bolivia 488%. New Zealand's booming exports to China represent little difference to the average export increases from Latin America (250%) or Africa (224%).

If New Zealand's trade growth with China had nothing to do with any Free Trade Agreement, it would be valuable to consider the results of Free Trade Agreements signed ith other nations.

New Zealand's FTA with Malaysia was signed in 2009 and it took a further six years to regain the level of goods exports that had existed prior to the agreement. Similarly, 2010, the year before the FTA was signed with Hong Kong, represented the highest level of exports to the territory than any year since. Australia only entered into an FTA with China at the end of 2015 and its exports are falling.

It would appear that none of the Free Trade agreements entered into over the past decade can be accredited with any export growth at all. The assertion that there is any benefit is little more than a statement of faith.

jh said...

Mr Carr's call has not found much support among the NZ Labour Party - Immigration spokesman Ian Lees-Galloway said slashing immigration would cause more harm than good.

However, he did believe it was being badly managed: "Immigration is good for New Zealand but it's being poorly managed. There is a lot of pressure on Auckland. We need stronger incentives to encourage new migrants to move to the regions and set up businesses there.",,

Apparently Lee's-Gallaway reads Pundit and Public Address.
Now, one could debate the issue as Michael Reddell has been requsting; that will never happen unless the media coalition ("NZR"/Hosking-Farrah-Slater) allows it.

jh said...

But wait a golden boy of rugby says we should change the flag and we should follow. As though he is one of us (but he isn't).