Time for more bipartisanship on trade By Sir Graeme Harrison Dominion Post – 24 October 2014

Bipartisan political support for trade is a strategic advantage for New Zealand writes Sir Graeme Harrison.

The recent election was fought in the centre and Trade Minister Tim Groser was speaking pretty much from the centre when he said a while back “globalisation is not a disease you catch, it’s a choice you make.”

Successive New Zealand governments have chosen, with the support of the electorate, to embrace globalisation. With some discordant voices to left and right, public and bipartisan political support for trade has been constant.  Wealth for New Zealanders has been created and much of that wealth has been redistributed through taxation and social policy.

It was Helen Clark, at first a reluctant convert, who said trade is our life-blood.

Deep involvement in the search for freer and fairer rules for international trade and investment – the process of trade liberalisation – has been a hallmark of New Zealand’s economic strategy for forty years or more.

Lockwood Smith initiated the Singapore negotiation that was launched and finished by Jim Sutton and expanded into P4 (with Brunei and Chile) by Phil Goff.

Jim Sutton initiated the China negotiation that was finished by Phil Goff and implemented by Tim Groser.

Phil Goff initiated the ASEAN negotiation that was finished by Tim Groser.

And Phil Goff initiated the Trans Pacific Partnership (TPP) with the United States in 2008.

Trade negotiations are not a blank cheque. Successive governments have pursued them because they can confer advantage to New Zealand, its businesses and workforce.

Improved trade rules can translate into huge benefits for New Zealand.  We saw this with the Uruguay Round in the 1990s, which laid the foundation for the significant expansion of agricultural exports and rising international commodity prices in the last decade.  We see the same with China today where exports have surged since the FTA was signed.

Each trade agreement needs to be weighed on its merits.  The devil is always in the detail.  There are opportunities to be exploited and risks to be mitigated. TPP for example is intended to go deeper into domestic regulation than earlier agreements.  That’s because business is now being done in new ways through complex supply and value chains requiring inputs, associated services, capital and people to move more freely throughout the region.

Competition today is less between countries than between alternative value chains. New Zealand is a small player in this game.  Our ability to participate depends on the extent to which we can integrate into the region and globally and develop greater flexibility in becoming part of these value chains.

To be able to do that TPP needs to be developed on the basis of consensus and a text brought forward by negotiators.  The issues are complex, even more so now as economies have become increasingly inter-dependent. There is a legitimate debate to be had about the transparency around the negotiation and the amount of information made available by governments.  The TPP text will be released once there is consensus amongst the twelve parties and then will be subject to the political process.

TPP is now at a critical stage and New Zealand’s interests are in the balance.  On offer is new access to previously highly protected markets especially in the United States and Japan and a raft of new rules to govern the way trade and investment are carried out amongst the twelve parties.  Some of these rules could, at least in theory, pose challenges for New Zealand but the Government appears confident that major changes to current policy settings will not be required.  Once parliament is back in business this is precisely where greater bipartisanship can be demonstrated – in the same way that Labour and National are standing side by side in New Zealand’s quest for a seat on the UN Security Council.

Economic opportunities are enhanced when politicians work together.   That applies regardless of the strength of a government in office because trade is beyond the three-year election cycle.

Trade is both left and right.  Today, as always, political leadership and bipartisan political support for the trade negotiating effort and for New Zealand’s response to globalisation are critical.