New Zealand is about to become the first Western nation to conclude a free trade agreement (FTA) with China. I have to admit that I have mixed feelings about it.
In general, I’m not a big fan of FTAs, since they’re usually little more than a mechanism for mega-corporations to take over more of the world, while trampling everything from workers’ rights to consumer protection along the way, as they gradually erode value from the victim country.
Admittedly, this attitude has come about from watching the USA conclude FTAs that always advantage the US and disadvantage the supposed “partner”.
And yet, it’s not really that simple.
New Zealand already has about the most open, least regulated economy among OECD nations. Despite their constant bleating about the burdens they face, businesses in New Zealand have it far better than most of their counterparts in the rest of the OECD.
New Zealand also has a very light tariff regime, meaning they don’t put up much of a barrier to trade as it is. Most Chinese trade with New Zealand wouldn’t be affected by an FTA because basically there already are no barriers. Put another way, there won’t be a huge surge in Chinese-made goods.
What New Zealand hopes to gain is greater access to China for agricultural products, still the mainstay of the NZ economy. But Prime Minister Helen Clark has also rightly pointed out that the way forward is to produce high-value products and commodities, rather than trying to compete with China for low cost, low value goods—a battle we’d lose, with or without an FTA.
An FTA with China, then, poses little real risk, and potentially a good benefit—exactly the opposite of an FTA with the US. But the timing couldn’t possibly be worse.
With China cracking down on dissidents of all kinds, using brutal repression in Tibet and even reportedly harassing gay people in cities with Olympics events, China is reminding the world that it’s still an authoritarian dictatorship. The argument has always been that greater economic integration with China will encourage and hasten the arrival of freedom and democracy in China, but lately they’ve been reminding the world of how far away that goal is.
China will become the dominant power in this region with a decade or two. Among world economies, its rivals will be the US and the European Union—and it’s not certain what order they’ll all be ranked. So it makes sense for a small, isolated nation dependent on world trade to do what it can to keep and expand its access to world markets. And maybe New Zealand’s independent, multilateralist nature in world affairs will mean it has a great voice with China than the size of the trade relationship might predict.
So, while I realise that this FTA could prove to be a good thing, I’m still uneasy about it. China’s behaviour in recent weeks certainly hasn’t done anything to ease my concerns. I hope the FTA can help begin the process of change leading to freedom and democracy in China. That outcome is something no pundit—or blogger—can even begin to predict.
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