Editorial: Free trade is the only option

OPINION: The gloom merchants and flat earthers who dispute the benefits of free trade agreements should examine a set of figures.

They are the figures showing the difference between New Zealand's trade with China before the FTA between the two came into force in October 2008 and after it came into force. In the year to October 2008, exports to China totalled $2.2 billion. In the next year, they were $3.5b.

At a time when New Zealand is being buffeted by shockwaves from the global economic crisis, the deal has buffered jobs and boosted incomes. The political parties that voted against it – NZ First, the Greens and the Maori Party – should hang their heads in shame.

Not all of the increase in trade is attributable to the deal. Export volumes have been boosted by a boom in log exports that will not continue indefinitely. But the figures demonstrate that comprehensive, well-drafted free trade deals make sense.

Now the Government has signed New Zealand's seventh free trade agreement, with Malaysia, and Prime Minister John Key has been invited to India by its prime minister, Manmohan Singh, to discuss the possibility of an FTA between New Zealand and the world's second most populous nation.

The FTA with Malaysia is a welcome development. In the past few years exports to Malaysia have increased about 80 per cent to $1b. The deal paves the way for further increases, eliminating duty on kiwifruit and dairy produce from next year, and tariffs on whiteware from 2016, and relaxing Malaysia's tough foreign investment rules. It is also expected to boost the number of fee-paying Malaysian students coming to New Zealand to study.

No-one would argue that negotiating free trade agreements country by country is the optimum way to reduce trade barriers but, in the absence of meaningful progress within the World Trade Organisation, it is the best way.

To provide opportunities for our young, healthcare for our old and access to the goods and services New Zealanders expect, this country has to be able to sell its products and services overseas. The alternative – pulling the bedclothes up over our heads and trying to shut out the rest of the world is not an option.

Free trade agreements are not a one-way street. The price of gaining access to overseas markets is opening up our markets to overseas competition. Inevitably this has consequences. Some industries have paid a heavy price for New Zealand's attempts to demonstrate the benefits of open markets to the world. Jobs have been lost and businesses have failed. Further losers are likely whenever a free trade deal is signed. Other countries with bigger, and in many cases cheaper, labour pools do some things better than New Zealand.

But since the closer economic relations agreement was signed with Australia in 1983, New Zealand businesses and workers have shown they have the ability and the nous to adapt and take advantage of new opportunities.

This Government, like its predecessor, is right to continue to back the resilience, resourcefulness and hard work of New Zealanders. Free trade is the way of the future; protectionism the way of the past.

- © Fairfax NZ News