The Chaos Ladder

Dr Eric Crampton
Insights Newsletter
11 November, 2016

As Game of Thrones fans will remember, while it’s tempting to see chaos as a pit, chaos can also be a ladder.

As the latest season of America’s Game of Thrones reached a climax more shocking than the Red Wedding, New Zealand should look to potential opportunities.

The main threat seems to be the collapse of global trade. Candidate Trump remained very vague on the details about everything, leaving room for him to be less than totally terrible, as Oliver Hartwich explains, except on foreign relations.

On immigration, Trump wants walls to keep out low-skilled foreign workers. On trade, he wants tariff walls to keep out cheap foreign goods. The Trans-Pacific Partnership Agreement is effectively dead, and NAFTA is up for renegotiation.

And so the main opportunity is building robust international trade agreements without the United States. The case for it was good before Trump; it is critical today.

It was very clear during the TPPA negotiations that rather a few negotiating partners had very weak commitments to free trade. America wanted to protect its dairy sector, and so New Zealand’s access was limited; America also wanted to foist lengthy copyright terms onto the rest of the world. Canada could not imagine doing away with supply management in dairy, and so they were worse than useless at the table.

If America pulls out of international trade and starts building tariff walls, Pacific countries committed to free trade must have real trade agreements with each other. Free trade agreements aren’t about locking in rules around intellectual property – they never should have been. They are about knocking back tariffs, preventing sneaky non-tariff barriers, and blocking governments from discriminating in favour of local politically preferred suppliers.

New Zealand and Australia have a common market. New Zealand and China have a free trade agreement. It is time to build a real free trade area for the Pacific, limiting negotiations only to those countries actually interested in free trade. Then, expand it by inviting other countries to join on the terms already negotiated. Instead of having Canada around the table trying to wreck the deal while protecting supply management, invite them to join a large common Pacific market, on our terms, and showing them the benefits to Canadian manufacturing if they do. That changes the political calculus.

We are going to have some chaos. It does not have to be a pit. Let’s look for the ladders.

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