Trade wars do New Zealand no favours


United States President Donald Trump’s decision to slap tariffs on aluminium and steel imports from other nations was not surprising in itself. What was surprising was the nature of the announcement. It was an announcement that completely flies in face of the countries that America wants to negotiate trade deals with. It flies in the face of earlier comments from Mr Trump that America could rejoin a favourable Comprehensive and Progressive Trans Pacific Partnership.

I am in two minds about it. On one hand I have no doubt that this is a very destabilizing act by Mr Trump and the United States Government, which will help to stoke international tensions a a time when the world is already stressed by North Korea, the ongoing conflicts in Syria, Afghanistan and Iraq. Complicating an already messy trade picture, it will put trade negotiators on edge trying conclude deals already in progress and delay the start of any new deals that are planned.

On the other, New Zealand, despite our small size and vulnerability to being buffeted by the actions of larger players, has options. It is for example among the priority non-E.U. nations that the United Kingdom is interested in concluding a trade agreement with and trying to loosen restrictions on New Zealanders movements in and out of the U.K. New Zealand could also consider trying to negotiate some sort of agreement with Russia, which is something that has come up under the previous National-led Government of former Prime Minister John Key and his successor former Prime Minister Bill English.

Having said all of that, there are reasons for New Zealand to be very concerned. We have a weak framework in terms of domestic law for coping with the demands that international trade partners place on us, whilst not necessarily being fair or proper in what we get back. We need to work on a set of checks and balances that prevent C.P.T.P.P. type monstrosities from going through without the support of the New Zealand tax payer who will have to live with any consequences of one. This work needs to be done before we negotiate any more and thus needs to start quickly. But with New Zealand First having decided to support the C.P.T.P.P., which it so vehemently opposed in opposition, only the Green Party seems likely to attempt such a Bill of Parliament and they do not have the numbers in the House of Representatives.

All in all, there is little if anything to look forward though if a trade war does start. Our geographical location counts against us in terms of cost of transporting materials. Our relatively small economic stature limits our clout in places such as the World Trade Organization, where New Zealand would need to go to settle disputes, and despite it certainly enhancing our reputation there is not a lot we can do if other nations play dirty.

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