Wednesday, 9 April 2008

Peters on trade (updated)

Winston Peters has come out against the trade deal between New Zealand and China. This article from the New Zealand Herald outlines Peters's argument. The article says
Mr Peters said NZ First wasn't necessarily against trade deals, but the China FTA did not go far enough to address a $3.6 billion trade deficit.
But why do we want to "address" the trade deficit? There is nothing wrong with a deficit or a surplus. Why we would want to import the same amount of goods as we export to any particular country is not clear. Should the South Island of New Zealand force the North Island to "import" as many goods from the South as its "exports" to the South? Imports of goods between any two countries will be determined by the demand in each country for the goods of the other country, why should these demands be the same? Even if it is believed that balanced trade for the economy as a whole is a good thing, it doesn't follow that we need have balanced trade with very country we trade with.

The article goes on
"Just over two decades ago the trade doors to New Zealand were thrown wide open in the vain hope that the rest of the world would reciprocate but that has still not happened.
But we don't need the rest of the world to reciprocate for trade to make us better off. We gain more if they do reciprocate but we still gain if they don't.

The article goes on
Other reasons he outlined for opposing the deal were:

FTAs with both Thailand and Singapore had resulted in a worse imbalance of trade.
Again why do we care?
China's low wages and labour standards made it difficult for local firms to compete;
It doesn't matter what the difference in wages is as long as the difference in productivity is greater. So long as the New Zealand-China productivity difference is greater than the New Zealand-China wage difference New Zealand workers can, and will, compete.
The provisions allowing 1800 Chinese workers into New Zealand outside normal immigration channels;
Xenophobia aside, the problem is?
providing up to 1000 young Chinese with working holiday visas without any reciprocal arrangement for young New Zealanders;
And the problem is?
increasing levels of food imported from China which was threatening domestic sale of New Zealand primary goods.
Either locals will buy the imported goods or they won't. If they don't, no problem. If they do, it must be because they prefer them to the local substitutes and so consumers are better of. Local producers can either start producing better goods that the local consumers actually want, or export them - if they can - or both. Competition benefits the local consumer. This looks like an argument for New Zealand producers being able to dump crap products on the local market that they can't sell overseas.

Update: Not PC comments on a report of the Peters statement here.


Heterosexual middle class white male said...

So Minto is not alone on this.

No more blog posting on this please. If you're annoyed, use the mainstream media.

Pete Murphy said...

If you think a trade deficit isn't a problem, you need to take a close look at what has happened to the U.S.

Pete Murphy
Author, Five Short Blasts

Paul Walker said...


You miss my point. Whether the trade deficit for the economy as a whole is a problem - and I don't really think it is - is a separate issue from whether a trade deficit with a particular country is a problem. Its not clear at all why the latter deficit is a problem even if the former is.

Paul Walker said...

Heterosexual middle class white male said

I would point out that having Minto and Peters on the same side of an issue must mean their case is lost.

The mainstream media is for small middle class non-white females.