Sunday 20 April 2008

Beijing: Clark's gold(en?) medal

by ROD ORAM From Sunday Star Times Sunday, 13 April 2008 With questions from UNITYblog. Rod : The very best thing about the free trade agreement with China is the overwhelmingly positive response from business leaders. No question about this. Rod: For the first time in more than a decade they are actually excited and ambitious about a big opportunity that will improve New Zealand's fortunes. If they follow through with bold strategies and excellent execution, they will start to solve our two biggest economic problems, one external and one internal. Rightly, the government is cautious about the impact of the FTA. It estimates it will generate some $350m a year in trade benefits plus a further $115m in tariff savings. This, though, would be an easy target to beat if business got serious about using the FTA to help New Zealand overcome its weak external performance... Similarly, the FTA could help overcome a serious internal weakness in our economy. As a tiny country far from our main markets, we are drastically short of the people, capital and plants we need to grow faster in more productive, less inflationary ways. By more productive, does Rod mean more exploitative? By less inflationary, does Rod mean less wage increases? Rod: The impact of inbound investment from China will be far greater. It already totalled $1.66b as of March 2006, and much more is expected. For example, the Chinese state electricity grid company is reported to be planning a joint bid with Cheung Kong Infrastructure, a Hong Kong company, for the Wellington electricity lines business being sold by Vector. Will the new Chinese bosses be able to run this contract with cheap indentured Chinese labour, outside New Zealand Labour Laws? Rod: The FTA will have a big impact on our internal economic constraints if New Zealand businesses grasp the opportunity of doing more with China in two ways. The first, is by investing there to get access to the country's abundant industrial resources. Once approved, New Zealand companies will be treated like domestic ones. Will the Chinese workers of these New Zealand companies also be treated in the same brutal manner as they domestic ones? Rod: So far only Fonterra, Nuplex, Skellerup, Glidepath and a handful of other companies have invested in China. Their commitment totalled $333m as of March 2006, the latest figures available. But the FTA will help open up China to many more businesses by giving them a bit more comfort and predictability. Will this greater comfit and predictability for business, be at the experience, of greater discomfit and insecurity for workers, here and in China? Rod: For example, Icebreaker, the Wellington-based clothing company, buys around one-third of the New Zealand merino clip. The wool is processed and made into garments - 1.5m last year - in a cluster of very large, high-technology plants in Shanghai, owned by overseas companies. Has anyone in the government ever investigated the conditions and pay of those working for Icebreaker in these Chinese plants? Do they even care? Rod: That's a very challenging business model that eludes most New Zealand companies. But if more of them began to see such opportunities, they would be far less gloomy than they are currently about their prospects in this tightly constrained domestic market. What are the domestic constraints Rod Oram says makes NZ companies gloomy, why doesn't he mention them? Could these constraints be environmental protections, union rights, labour laws, or safety regulations? Rod: Such a very rare sense of optimism emanated from the 190 business people who travelled with Prime Minister Helen Clark to Beijing for the FTA signing. Travel always works wonders for changing perceptions. The trip might change business perceptions of the prime Minister. Many of the delegates would have seen her up close for the first time. They would have appreciated her deep knowledge of many NZ businesses, her keen interest in their ambitions and strategic issues and her excellent skills communicating and negotiating on their behalf with foreign leaders. Why is a so called Labour Prime Minister negotiating on behalf of business, rather than on behalf of the workers who voted for her? When did our Prime Minister last show a keen interest in the ambitions and strategic issues important to workers? Or ever use her excellent skills communicating and negotiating on their behalf with anybody? Could it be that our Labour Government is only labour in name? Rod: A senior European trade diplomat who saw her in action on a New Zealand trade mission to India in October 2004 once told this columnist that Helen Clark was the best politician he had seen play that role, with the exception of the-then finance minister of Ireland. Our free trade agreement with China is testament to that. But does anyone know who Rod Oram is comparing Helen Clark to? Is this mysteriously unnamed finance minister of Ireland an extreme neo-liberal rightwing fanatic?

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