David Parker plots a new approach to trade
Trade and Export Growth Minister David Parker says the Government will not shrink away from New Zealand’s leadership role on free trade - but it must be on our terms. Before heading to Apec, Parker spoke to Sam Sachdeva about taking on “the excesses of globalised capital” and avoiding a public backlash.
Befitting his status as one of Labour’s policy wonks, David Parker has been handed an array of challenging roles.
The economic development and environment portfolios, both areas where the Government has some ambitious plans, would be challenging enough, with the Attorney-General position adding more work again.
Yet Parker’s toughest role may be as Trade and Export Growth Minister, where he will be tasked with satisfying the scepticism of supporters regarding free trade deals while placating exporters and the business community.
Early signs have been positive, with a ban on foreign buyers fulfilling Labour’s pre-election pledge without jeopardising TPP talks and existing trade deals (with the exception of Singapore). Yet tougher obstacles may lie ahead.
FTAs 'sexy' but not enough
Under the previous National government, trade ministers Tim Groser and Todd McClay made a virtue of signing New Zealand up to as many free trade agreements as possible.
The Trade Agenda 2030 strategy, unveiled by McClay earlier this year, set a target of having 90 per cent of New Zealand’s exports covered by FTAs.
Parker is less convinced, saying of FTAs: “They’re sexy but they’re not the be-all and end-all.”
“Exports could go down and you could still meet that [90 per cent] target - FTAs are not the driver of investment in the new products and services that we need to sell to the world.”
He is equally scathing about a 2012 pledge to lift the export share of the economy from 30 per cent to 40 per cent by 2025, which was quietly abandoned.
“Isn’t that an epic fail? Nine years after they set a target of increasing exports from 30 to 40 per cent of the economy, they went back to 26 per cent, and to the end of the forecast period they’re still under 30 per cent.”
Parker argues the way to grow exports is not through FTAs, but increasing investment into productive sectors at the expense of “speculative land classes”.
“If you want to weigh your economy towards improved productivity, which drives the development of new products and services, you've got to invest more of the precious investment capital that we’ve got into those sectors, rather than putting it all in rental properties.”
One of the fears inside and outside New Zealand is that the new government possesses a protectionist streak which may lead to it stepping back from its recent advocacy role.
Parker has no intention of New Zealand giving up its leadership on trade; instead, he wants to add a focus on what some have referred to as “gold standard” deals, with environmental and labour protections on top of tariff and non-tariff barrier reductions.
“There are so many problems that cross boundaries these days: these seas of plastic that you see, the problem that we've got with climate change, there’s so many of these environmental problems that have an international dimension.
“If you can use trade policy in a way that aligns the economies of the countries of the world with overcoming those environmental challenges, then that’s a really good thing to do.”
More broadly, Parker wants to forestall public sentiments about inequality that have led to anti-establishment attitudes in other parts of the world, such as the Brexit vote in the UK and the election of Donald Trump in the United States.
Parker says there is well-founded concern in New Zealand and elsewhere that, to use American politician Bernie Sanders’ words, “the system’s stacked in favour of the interests of the super-wealthy one per cent of the world”.
"New Zealand’s a very attractive destination to have a bolthole in, and if you look outside the economics of this, you’ve got to ask yourself...what are the rights of New Zealanders, and we don’t think it’s right that we allow New Zealanders to be out-bid for what is intrinsic to being ours.”
“We’ve got to be very careful that we acknowledge that it’s true because it is true, and that we don’t allow ourselves to be subjugated in New Zealand to the interests of the one per cent around the world.
“That’s important for two reasons, one is that it’s not fair that we subjugate ourselves to the interests of the one per cent, and secondly, if we don’t deal with those issues, you get a backlash from the public which is sometimes misdirected.”
Labour is a liberal, outward-looking party, he says, but one that also wants to protect the country against “the excesses of globalised capital”.
“That’s in the societal interests of New Zealand, we don’t like those extremes of wealth...so we’re going to be pushing against them.”
That has manifested itself in the first instance through the ban on foreign non-residents purchasing existing housing - a policy that Parker says will primarily affect members of the one per cent looking for a safe haven.
“Given the insecurity in large parts of the world, and I mean security insecurity, and the environmental degradation and overpopulation in parts of the world, New Zealand’s a very attractive destination to have a bolthole in, and if you look outside the economics of this, you’ve got to ask yourself...what are the rights of New Zealanders? And we don’t think it’s right that we allow New Zealanders to be out-bid for what is intrinsic to being ours.”
He suggests the value attached to land may be stronger in New Zealand than elsewhere in part because of the influence of Maori culture.
“That proposition is true all of the way down the scale, from the most beautiful bay in the Bay of Islands to the most glorious station on the sides of the Southern Lakes of New Zealand, all the way down to the most modest house, that nonetheless is the most that someone else can afford to buy.
“I don't want anyone in New Zealand excluded from those opportunities by a competitor from overseas who happens to be wealthier than them.”
Keeping Kiwis in the loop
As part of avoiding any misdirected backlash, Labour proposed during the election campaign to set up a Trade Advisory Commission - made up of academics, unionists, and representatives from the business community and other sectors - to provide independent advice on the implications of potential FTAs being negotiated.
Parker says a commission will be set up by the Government, although a timeframe is yet to be set, arguing it is the best way to take account of public concerns.
“If you’re you’re more open about the steps you’re taking to protect the interests of New Zealanders against this perception - this truth actually - that one per centers around the world in various manifestations, personal ownership of land and also at times multinational behaviour, and we've seen through the Panama Papers some pretty egregious behaviour of some of those pools of wealth…
“If you have a trade commission that’s talking these issues through with civil society, they will both inform what it is that government should be doing in respect of those things and see that we’re doing things.”
Parker will face an early test of whether he can bring the public along with him.
Currently in Vietnam ahead of the Apec summit, it seems unlikely New Zealand will win wholesale change to the Investor State Dispute Settlement clauses of the TPP, which Prime Minister Jacinda Ardern described this week as “a dog”.
The signals from the Government to date are that it will swallow the proverbial dead rat and sign on the dotted line - a decision that will delight exporters, but likely anger ardent TPP critics who expected a stronger approach from Labour.
If Ardern and Parker do sign off on the deal, how the Trade Minister spins the result may determine whether any of that public backlash does find its way to his doorstep.