October 5, 2009 11:00am by David Farrar

Twyford on Trade

Green co-leader Metiria Turei struggled to articulate her party’s position on trade in a tough interview with Guyon Espiner on Q&A this morning. She didn’t answer Espiner’s questions on whether or not the Greens supported CER or the China trade agreement.

Labour’s approach to the China agreement is unequivocal:

1. New Zealand’s long term prosperity relies on our firms successfully selling into international markets, particularly in the dynamic East and South Asian economies. We owe it to future generations.

2. China is becoming a super power. Trade (and political, diplomatic, cultural and people-to-people) engagement by NZ and other countries is a necessary part of bringing China into the international community, and fostering its commitment to international law and mulitilateralism.

I’m really pleased to see an unequivocal position on this – especially as it comes from Twyford, who is on the left of the Labour caucus.

Personally I’ve always been of the view that boycotting trade with China because they don’t share our views on labour, human rights and the environment is not tenable. Chinese workers deserve jobs just as much as workers anywhere else.

Yeah, and I have always wondered how anti-trade people who complain about Chinese workers getting $2.50/hour, think that it is better they get $0/hour by being unemployed.

Trade liberalisation can harm (for example by reducing the policy space to protect infant industries, or forcing countries to open up sensitive sectors to foreign competition) but it can also help (for instance by getting rid of rich-country protectionism that damage the livelihoods of farmers in poor countries and New Zealand).

Overall trade liberalisation has been hugely beneficial. Some FTAs are better than others. The US-Australia one was very disappointing and did little. The NZ-China one on the other hand was very good, in my opinion.

Not only is trade the only way that a small isolated country like New Zealand can prosper, it is also one of the most important ways the world’s poorest nations can work their way out of poverty. Trade is not inherently good or bad. It depends how the rules are written, who the winners and losers are, and how trade-offs are managed.

Trade has the potential to list far more people out of poverty than aid.

I don’t quite agree that trade is not inherently good or bad. Trade is inherently good. That is not to say all rules around trade are good, but trade is good and natural and in fact we all trade many times a day.

I also would not frame trade rules as having winners and losers. In most cases you get winners and winners. Lowering tariffs is generally beneficial to a country, regardless of whether other countries do the same. Sure there may be political losers, but in the medium to long term reducing barriers produces economic winners on both sides.