There is no doubt at all that international free trade creates global wealth and raises living standards for all countries involved. It allows nations to benefit from the natural advantages and skills of others, and it allows consumers to enjoy a greater choice of goods and services at lower prices.
For a small country like New Zealand with a small domestic market, international trade is even more important. That’s why this country has embraced free trade from the earliest of times.
The Australian gold rush in the 1850s resulted in a thriving trade in foodstuffs and a fledgling export wool industry. Refrigeration opened up a lucrative meat export market with England. The first refrigerated shipments were sent in 1882 and with prices set by inter-governmental agreement, New Zealand’s living standards rose to amongst the highest in the world.
That arrangement lasted for some 70 years – export price guarantees were not removed until 1955 and it took almost another twenty years before Britain joined the EEC. The resulting slump in New Zealand exports was compounded by the 1974 oil shock, which together caused a dramatic fall in living standards from third in 1953 to 22nd by 1978.
Recovery was slow in an economy that was heavily regulated and protected. For example to protect the dairy industry, a doctor’s certificate was needed to purchase margarine, and to protect the wool industry, nylon carpets were banned. Even freight was regulated to protect the railways, with trucks prohibited from carrying goods for more than 30 miles.
The need to export our way to recovery commenced with the signing of the free trade Closer Economic Relations agreement with Australia in 1983. The Lange Labour government focussed on removing import protections and reducing tariffs.
Over the years, successive governments have prioritised trade deals, including with Singapore in 2001, Thailand in 2005, the Trans-Pacific Strategic Economic Partnership with Brunei, Chile, and Singapore in 2005, with China in 2008, the ASEAN agreement with Australia, Brunei, Myanmar, Malaysia, Singapore, the Philippines, Vietnam, Thailand, Laos, Cambodia, and Indonesia in 2010, with Malaysia in 2010, and with Hong Kong in 2011.
A deal with Korea has been negotiated and a number of others are under active consideration including with Russia, Belarus and Kazakhstan, with India, with the Gulf States of Bahrain, Oman, Kuwait, Saudi Arabia, the United Arab Emirates and Qatar, with the European Union’s 28 member states (and over 500 million consumers), and, of course the 12-country Trans-Pacific Partnership agreement or TPP.
The TPP is a proposed Asia-Pacific regional free trade deal between New Zealand and Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, United States, and Vietnam.