Foreign Minister Peters has a point. The NZ Prime Minister is getting hysterical & hot-under-the-collar about Trump's tariffs, seeing it in terms of some grandiose lessening of America's commitment to a "rule-based order" and retreat from free markets. Should the PM want to talk about such philosophical concepts, he's welcome to start applying for an academic job. Meanwhile in the real world, one would have thought that NZ actually faces a practical problem - how to make money and restore economic prosperity out of the Trump tariffs?
How can we turn this problem for the rest of the world into a great advantage for us? Here is a suggestion: do the new trade deal with the US that the White House is wanting. What can we offer? New Zealand is currently more protectionist that our PM pretends. We've banned all overseas investors from their freedom to buy residential property in NZ, and we've taken away the freedom of Kiwis to sell their houses to foreigners. So offer Trump's White House an exemption. Allow Americans unfettered free access to transfer capital to NZ for such a purpose. And drop all NZ tariffs on US goods to zero. Trade Minister McClay has admitted we actually do tariff US goods, at a rate of around 2%. Drop that to zero.
The aim of this deal would be to get our 10% US tariff lowered further, ideally to zero. NZ property sellers would benefit - they can make money. American buyers would benefit. Kiwi exporters to America would benefit - they gain a competitive advantage selling into the US compared to other exporters from around the world. We'd be seen as a friend to America. Trump can claim it as a victory.
The aim of this deal would be to get our 10% US tariff lowered further, ideally to zero. NZ property sellers would benefit - they can make money. American buyers would benefit. Kiwi exporters to America would benefit - they gain a competitive advantage selling into the US compared to other exporters from around the world. We'd be seen as a friend to America. Trump can claim it as a victory.
By contrast, the Kiwi PM's knee-jerk strategy of declaring the US the perpetrator of a "trade war", standing shoulder-to-shoulder with folks with names like "Ursula" from the EU, teaming up with her and European Union to fight protectionism, when its the most protectionist block in the world, is, well, bonkers. Winston Peters is right to be concerned about our PM's judgment.
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
1 comment:
Exactly. I believe the governments response is emotional rather than well thought out and reasoned. If the governments advisors have TDS then they probably feel satisfaction at "getting one over Trump". The reality is, they can't possibly win as already about seventy other countries are lining up for trade deals. You will see countries like the UK doing an about turn soon. Italy are at the table already as is the EU. Why is New Zealand always the outlier? I think our recent PMs and opposition leaders have very poor advisors regarding just about everything.
Post a Comment