‘NZ Not for Sale’ campaign to oppose trade agreement

Media release New Zealand Not For Sale Campaign

The New Zealand Not For Sale Campaign will be formally launched in Christchurch on November 11, in conjunction with the launch of Professor Jane Kelsey’s book on the Transpacific Partnership Free Trade Agreement.

The NZ Not For Sale Campaign has been set up to oppose the Transpacific Partnership because it is against New Zealand’s best economic, environmental and social interests.

“The trade agreements we already have are linked with high international debt, job losses, asset stripping, risky speculation, increasing sales of land to overseas owners, running down public assets and services, and loss of tino rangatiratanga and national sovereignty’’, says the Campaign Secretary, Dr Christine Dann.

Hillary Clinton comes bearing poisoned chalice for NZ

By Murray Horton

CAFCA 

As if 2,000 earthquakes haven’t been enough punishment for Christchurch, now we’re going to have Hillary Clinton visiting us (and Wellington) this week.

A major focus for her NZ visit  will be the negotiations which are well underway for the US and a number of other countries to join an expanded Trans-Pacific Strategic Economic Partnership (currently comprising NZ, Chile, Brunei, and Singapore, and known as the P4 Agreement), with 2011 as the target to seal the deal. This will be used as the backdoor means to secure a US/NZ Free Trade Agreement.

Trans-Pacific Partnership: NZ jumping onto a sinking ship

by Murray Horton

CAFCA

Talks started in Melbourne today for the US, Australia, Peru and Vietnam to join an expanded Trans-Pacific Strategic Economic Partnership (TPP, currently comprising NZ, Chile, Brunei, and Singapore, known as the P4 Agreement), with November 2011, when the US hosts APEC, as the target to seal the deal. This will be used as the backdoor means to secure a US/NZ Free Trade Agreement. Already the Americans have said that they see this as more than a mere free trade deal but as a vehicle for broader Asia/Pacific economic integration, which has enormous political implications. Alarm bells should be loudly sounding.

Asia Economy: The Coming Fury

by Walden Bello

from Foreign Policy in Focus

9 February 2009

For over 40 years now, the cutting edge of the region's economy has been export-oriented industrialization (EOI). Taiwan and Korea first adopted this strategy of growth in the mid-1960s, with Korean dictator Park Chung-Hee coaxing his country's entrepreneurs to export by, among other measures, cutting off electricity to their factories if they refused to comply.

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Making the World's Poor Pay: The Economic Crisis and the Global South

by Adam Hanieh from Socialist Voice 28 November 2008 The current global economic crisis has all the earmarks of an epoch-defining event. Mainstream economists-not usually known for their exaggerated language-now openly employ phrases like "systemic meltdown" and "peering into the abyss." On October 29, for example, Martin Wolf, one of the top financial commentators of the Financial Times, warned that the crisis portends "mass bankruptcy," "soaring unemployment," and a "catastrophe" that threatens "the legitimacy of the open market economy itself....The danger remains huge and time is short."

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Asia Economy: The Coming Fury

by Walden Bello from Foreign Policy in Focus 9 February 2009 For over 40 years now, the cutting edge of the region's economy has been export-oriented industrialization (EOI). Taiwan and Korea first adopted this strategy of growth in the mid-1960s, with Korean dictator Park Chung-Hee coaxing his country's entrepreneurs to export by, among other measures, cutting off electricity to their factories if they refused to comply. The success of Korea and Taiwan convinced the World Bank that EOI was the wave of the future. In the mid-1970s, then-Bank President Robert McNamara enshrined it as doctrine, preaching that "special efforts must be made in many countries to turn their manufacturing enterprises away from the relatively small markets associated with import substitution toward the much larger opportunities flowing from export promotion." EOI became one of the key points of consensus between the Bank and Southeast Asia's governments. Both realized import substitution industrialization could only continue if domestic purchasing power were increased via significant redistribution of income and wealth, and this was simply out of the question for the region's elites. Export markets, especially the relatively open U.S. market, appeared to be a painless substitute. The World Bank endorsed the establishment of export processing zones, where foreign capital could be married to cheap (usually female) labor. It also supported the establishment of tax incentives for exporters and, less successfully, promoted trade liberalization. Not until the mid-1980s, however, did the economies of Southeast Asia take off, and this wasn't so much because of the Bank but because of aggressive U.S. trade policy. In 1985, in what became known as the Plaza Accord, the United States forced the drastic revaluation of the Japanese yen relative to the dollar and other major currencies. By making Japanese imports more expensive to American consumers, Washington hoped to reduce its trade deficit with Tokyo. Production in Japan became prohibitive in terms of labor costs, forcing the Japanese to move the more labor-intensive parts of their manufacturing operations to low-wage areas, in particular to China and Southeast Asia. At least $15 billion worth of Japanese direct investment flowed into Southeast Asia between 1985 and 1990. The inflow of Japanese capital allowed the Southeast Asian "newly industrializing countries" to escape the credit squeeze of the early 1980s brought on by the Third World debt crisis, surmount the global recession of the mid-1980s, and move onto a path of high-speed growth. The centrality of the endaka, or currency revaluation, was reflected in the ratio of foreign direct investment inflows to gross capital formation, which leaped spectacularly in the late 1980s and 1990s in Indonesia, Malaysia, and Thailand. The dynamics of foreign-investment-driven growth was best illustrated in Thailand, which received $24 billion worth of investment from capital-rich Japan, Korea, and Taiwan in just five years, between 1987 and 1991. Whatever might have been the Thai government's economic policy preferences — protectionist, mercantilist, or pro-market — this vast amount of East Asian capital coming into Thailand could not but trigger rapid growth. The same was true in the two other favored nations of northeast Asian capital, Malaysia and Indonesia. It wasn't just the scale of Japanese investment over a five-year period that mattered, however; it was the process. The Japanese government and keiretsu, or conglomerates, planned and cooperated closely in the transfer of corporate industrial facilities to Southeast Asia. One key dimension of this plan was to relocate not just big corporations like Toyota or Matsushita, but also small and medium enterprises that provided their inputs and components. Another was to integrate complementary manufacturing operations that were spread across the region in different countries. The aim was to create an Asia Pacific platform for re-export to Japan and export to third-country markets. This was industrial policy and planning on a grand scale, managed jointly by the Japanese government and corporations and driven by the need to adjust to the post-Plaza Accord world. As one Japanese diplomat put it rather candidly, "Japan is creating an exclusive Japanese market in which Asia Pacific nations are incorporated into the so-called keiretsu [financial-industrial bloc] system." China Masters the Model If Taiwan and Korea pioneered the model and Southeast Asia successfully followed in their wake, China perfected the strategy of export-oriented industrialization. With its reserve army of cheap labor unmatched by any country in the world, China became the "workshop of the world," drawing in $50 billion in foreign investment annually by the first half of this decade. To survive, transnational firms had no choice but to transfer their labor-intensive operations to China to take advantage of what came to be known as the "China price," provoking in the process a tremendous crisis in the advanced capitalist countries’ labor forces. This process depended on the U.S. market. As long as U.S. consumers splurged, the export economies of East Asia could continue in high gear. The low U.S. savings rate was no barrier since credit was available on a grand scale. China and other Asian countries snapped up U.S. treasury bills and loaned massively to U.S. financial institutions, which in turn loaned to consumers and homebuyers. But now the U.S. credit economy has imploded, and the U.S. market is unlikely to serve as the same dynamic source of demand for a long time to come. As a result, Asia's export economies have been marooned. The Illusion of "Decoupling" For several years China has seemed to be a dynamic alternative to the U.S. market for Japan and East Asia's smaller economies. Chinese demand, after all, had pulled the Asian economies, including Korea and Japan, from the depths of stagnation and the morass of the Asian financial crisis in the first half of this decade. In 2003, for instance, Japan broke a decade-long stagnation by meeting China's thirst for capital and technology-intensive goods. Japanese exports shot up to record levels. Indeed, China had become by the middle of the decade, "the overwhelming driver of export growth in Taiwan and the Philippines, and the majority buyer of products from Japan, South Korea, Malaysia, and Australia." Even though China appeared to be a new driver of export-led growth, some analysts still considered the notion of Asia "decoupling" from the U.S. locomotive to be a pipe dream. For instance, research by economists C.P. Chandrasekhar and Jayati Ghosh, underlined that China was indeed importing intermediate goods and parts from Japan, Korea, and ASEAN, but only to put them together mainly for export as finished goods to the United States and Europe, not for its domestic market. Thus, "if demand for Chinese exports from the United States and the EU slow down, as will be likely with a U.S. recession," they asserted, "this will not only affect Chinese manufacturing production, but also Chinese demand for imports from these Asian developing countries." The collapse of Asia's key market has banished all talk of decoupling. The image of decoupled locomotives — one coming to a halt, the other chugging along on a separate track — no longer applies, if it ever had. Rather, U.S.-East Asia economic relations today resemble a chain-gang linking not only China and the United States but a host of other satellite economies. They are all linked to debt-financed middle-class spending in the United States, which has collapsed. China's growth in 2008 fell to 9%, from 11% a year earlier. Japan is now in deep recession, its mighty export-oriented consumer goods industries reeling from plummeting sales. South Korea, the hardest hit of Asia's economies so far, has seen its currency collapse by some 30% relative to the dollar. Southeast Asia's growth in 2009 will likely be half that of 2008. The Coming Fury The sudden end of the export era is going to have some ugly consequences. In the last three decades, rapid growth reduced the number living below the poverty line in many countries. In practically all countries, however, income and wealth inequality increased. But the expansion of consumer purchasing power took much of the edge off social conflicts. Now, with the era of growth coming to an end, increasing poverty amid great inequalities will be a combustible combination. In China, about 20 million workers have lost their jobs in the last few months, many of them heading back to the countryside, where they will find little work. The authorities are rightly worried that what they label "mass group incidents," which have been increasing in the last decade, might spin out of control. With the safety valve of foreign demand for Indonesian and Filipino workers shut off, hundreds of thousands of workers are returning home to few jobs and dying farms. Suffering is likely to be accompanied by rising protest, as it already has in Vietnam, where strikes are spreading like wildfire. Korea, with its tradition of militant labor and peasant protest, is a ticking time bomb. Indeed, East Asia may be entering a period of radical protest and social revolution that went out of style when export-oriented industrialization became the fashion three decades ago. Walden Bello is a Foreign Policy In Focus columnist, a senior analyst at the Bangkok-based Focus on the Global South, president of the Freedom from Debt Coalition, and a professor of sociology at the University of the Philippines. Sources 1. Hisahiko Okasaki, "New Strategies toward Super-Asian Bloc," This Is (Tokyo), August 1992. Reproduced in Foreign Broadcast Information Service Daily Report: East Asia Supplement, Oct. 7, 1992. 2. "China: the Locomotive," The Straits Times, February 23, 2004.

Rising Prices Reinforce Need for Food Security Policies

by Martin Khor

from Institute of Science in Society

15 July 2008

The new key to food security is self-sufficiency, not trade, and policies are needed to expand local food production and invigorate the agricultural sector particularly in developing countries.

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Rod Donald was right

Chinese free trade deal will cost human rights and environment

from Green Weekly 16 April 2004 Like a free lunch with Roger Douglas, there is no such thing as ‘free trade’ with China. “Business will go out of business, workers will be put out of work and Labour will lose the support of labour,” said Rod Donald. China’s labour standards make Dickensian sweatshops look enlightened with the number of work related deaths per year equivalent to the population of Greater Wellington. The list of human rights violations are long and include; exporting goods made by bonded and prison labour; prohibiting strikes; repressing attempts to organise unions apart from one government controlled entity; and not ratifying international conventions eliminating forced labour and guaranteeing workers the right to organise. “Free trade means we’ll be forced into a ‘race to the bottom’, as our own labour and environmental standards will be compromised, and our trade deficit with China will balloon past the present $1.3 billion,” said Rod.

China FTA - A win win situation for the bosses

The bilateral Free Trade Agreement with China, as well as being generally quarantined from New Zealand Regulation, has a "national treatment" penalty provision. "Each party shall accord to investments and activities associated with such investments, with respect to management, conduct, operation, maintenance, use, enjoyment or disposal, by the investors of the other party treatment no less favourable than that accorded, in like circumstances, to the investments and associated activities by its own investors." This could set the scene for compensation to be paid to Chinese investors for any restrictions are put on their investment, with the proviso that unless these restrictions "may be reasonably justified in the protection of the public welfare, including public health, safety and the environment". As this slim escape clause does not mention employment law, it is probable that the indentured Chinese work teams that NZ employers want to bring here, will be working at grossly inferior rates and conditions to New Zealand locals. It works the other way, like for example Air New Zealand employing Chinese stewards. New Zealand employers will be able to pay much less for these contracts, relying on the brutal enforcement of low wages by their Chinese contractor. The bulk of the money will go to the contractor and not the workers. As the bosses like to say: “a win win situation”.

Making the World's Poor Pay: The Economic Crisis and the Global South

by Adam Hanieh from Socialist Voice 28 November 2008 The current global economic crisis has all the earmarks of an epoch-defining event. Mainstream economists-not usually known for their exaggerated language-now openly employ phrases like "systemic meltdown" and "peering into the abyss." On October 29, for example, Martin Wolf, one of the top financial commentators of the Financial Times, warned that the crisis portends "mass bankruptcy," "soaring unemployment," and a "catastrophe" that threatens "the legitimacy of the open market economy itself....The danger remains huge and time is short." There is little doubt that this crisis is already having a devastating impact on heavily indebted households in the US. But one of the striking characteristics of analysis to date-by both the Left and the mainstream media-is the almost exclusive focus on the wealthy countries of North America, Europe, and East Asia. From foreclosures in California to the bankruptcy of Iceland, the impact of financial collapse is rarely examined beyond the advanced capitalist core. The pattern of capitalist crisis over the last fifty years should alert us to the dangers of this approach. Throughout its history, capitalism has functioned through the geographical displacement of crisis by attempting to offload the worst impacts onto those outside the core. This article presents a short survey of what this crisis might mean for the Global South. World trade drops This crisis hits a world economy that-for the first time in history-is truly global. Of course exports and the control of raw materials have always been important to capitalism. But up until the 1970s most capitalist production was organized nationally. Throughout the 1980s and 1990s both production and consumption began to be organized at the international scale. Today, markets are dominated by a handful of large companies operating internationally through interconnected chains of production, sub-contracting, and marketing. Almost every product we consume has involved the labor of thousands of people scattered across the globe-from the production of raw material inputs, research and development (R&D), assembly, transport, marketing, and financing. At one level this interconnectedness of production suggests that human beings have become one social organism. At the same time, it continually runs up against a system organized for the pursuit of individual, private profit. This interconnectedness has taken a very particular form over the last couple of decades. The world market has been structured around the consumption of the US (and, to a lesser extent, European) consumer. Goods produced in low-wage production zones such as China and India-using raw materials mostly sourced from other countries in the South-are exported to the US where they end up in the ever-expanding homes of overly indebted consumers. Control of this global chain of production and consumption rests in the hands of large US, European, and Japanese conglomerates. This structure helped to fracture and roll back national development projects across the globe. Coupled with the debt crisis of the 1980s, export-oriented models of development were imposed by the International Monetary Fund (IMF) and other financial institutions on most countries in the South. Many of the elites of these countries bought into this development model as they gained ownership stakes in newly privatized companies and access to markets in the North. The ever-expanding consumption of the US market is/has been predicated on a massive rise in indebtedness. US consumers were encouraged to take on vast levels of debt (through credit cards, mortgages, "zero-down" financing, etc.) in order to maintain the consumption levels that underpinned global demand. The dollars that enabled this growth in debt came from financial instruments that were purchased by Asian central banks and others around the world. These institutions lent dollars back to the US where they were channeled to consumers through banks and other mechanisms. The US real estate market was just one of the financial bubbles that permitted this treadmill of increasing indebtedness to continue. People could continually refinance their mortgages as real estate prices went up. But with the collapse of this bubble, global world demand is suddenly drying up. Because of the interconnectedness of world trade, this will have a very severe impact on every country across the globe, particularly in the South. One measure of this is a relatively obscure economic indicator called the Baltic Dry Index (BDI). The BDI measures the cost of long-distance shipping for commodities such as coal, iron ore, and steel. From June to November 2008, the BDI fell by 92 percent, with rental rates for large cargo ships dropping from $234,000 a day to $7,340. This massive drop reflects two factors: the reduction in world demand for raw materials and other commodities, and the inability of shippers to have their payments guaranteed by banks because of the credit crisis. Falling commodity prices also demonstrate this drop-off in world trade. Copper prices, for example, have fallen 23 percent in the past two months. Chinese consumption of the metal, critical to much industrial production, has fallen by more than half this year. ArcelorMittal, the world's largest steelmaker, stated on November 5 that its global output would decline by more than 30 percent. The World Bank (which has consistently underestimated the severity of the current downturn) is now predicting global trade volumes to shrink for the first time since 1982. Social dislocation This drop in world trade will have a particularly devastating impact on those countries that have adopted export-oriented models of development. This model was heavily promoted by the World Bank, the IMF, and most economists over the last couple of decades. As global demand shrinks, countries reliant on exports will be faced with collapse of their core industries and potential mass unemployment. This will place further pressure on wages as new labor reserves augment already large levels of unemployment. Standard Chartered estimate, for example, that Chinese exports could tumble to "zero or even negative growth" in 2009. JP Morgan Chase is predicting that Chinese exports will fall 5.7 percent for every one percent drop in global economic growth. This is not just a matter of getting by on smaller levels of still positive growth. China needs to create 17 million jobs a year in order to deal with the large numbers of farmers moving from the countryside to urban areas. Even if growth drops from 11-12 percent annually to 8 percent, the country faces potentially huge social dislocation. Already, workers in China are protesting in the millions as their factories close and owners abscond with unpaid wages. A collapse in world trade is not the only potentially devastating threat this crisis presents to the global periphery. Like the 1997 Asian Crisis, the rapid withdrawal or repatriation of foreign funds from stock markets and other investments in the South could cause the meltdown of currencies and the collapse of industries already reeling from slowdowns in trade. A quick survey of a few countries demonstrates the deadly mix of capital outflows, high inflation, and drops in export earnings: In Pakistan, foreign-currency reserves have dropped more than 74 percent in the past year to about $4.3 billion. The country is teetering on the edge of total collapse and urgently requires $6 billion in order to pay for imports and service its existing debt. The dire situation of foreign outflows led the German foreign minister to state on October 28 that the "world has just six days to save Pakistan." (At the time of writing it looks like Pakistan will get this money in the form of loans from the IMF and/or countries of the Gulf Cooperation Council.) India has seen its foreign exchange reserves drop by 17 percent since March 2008. Over $51 billion left India during the third week of October, the largest fall in eight years. The Indian textile industry, which makes up the second largest component of the country's labor force after agriculture, exports 70 percent of its product to US and European markets. It is expected that textile and garment orders will decline by at least 25 percent over the winter and mass layoffs have already begun. On October 29, the Association of Chambers of Commerce and Industries predicted that companies in seven key industries (steel, cement, finance, construction, real estate, aviation, and information technology) would need to cut 25 percent of their workforce. These patterns are repeated across the globe. Mexico, Turkey, Indonesia, Brazil, Argentina, and South Korea, as well as the poorer countries of Eastern and Southern Europe, face collapsing growth rates, capital flight, and declines in the value of their currencies. In many cases, these problems have been exacerbated due to a proliferation of low-interest loans taken by individuals and companies that were denominated in foreign currency (such as Swiss francs, Euros, and dollars). These loans initially offered a better interest rate than the domestic currency but, as local currencies have dropped in value, the amount of money required to be repaid has increased dramatically. Business Week estimates that borrowers in these so-called emerging markets owe some $4.7 trillion in foreign-denominated debt, up 38 percent over the past two years. This is the reassertion of a debt crisis from the 1980s that never really went away, but only partially subsided. IMF returns This unfolding social crisis has returned the IMF to center stage. Typically, the IMF lends to those countries facing potential collapse and, in return, demands the fulfillment of stringent economic conditions. The scale of borrowing is already immense: Iceland ($2.4 billion), Ukraine ($16.5 billion), and Hungary ($15.7 billion) have been extended loans. Pakistan, Serbia, Belarus, and Turkey are likely candidates in the near future. The conditions that come with this latest round of IMF lending have been particularly opaque. The policies that Ukraine is expected to pass, for example, are not yet known despite the fact that the country has essentially agreed to accept a $16.5 billion loan. Hungary has already agreed to cut welfare spending, freeze salaries, and cancel bonuses for public sector workers, but the final details of the deal have not been made public. Iceland was required to raise interest rates to 18 percent with the economy predicted to contract by 10 percent and inflation reaching 20 percent. We can certainly expect that the conditions attached to loans in the poorer countries in the Global South will be much more stringent than those imposed on these European countries. There is little doubt that these countries will face massive job losses, intense pressure to privatize public resources, and the slashing of state spending on welfare, education, and health in the name of "balanced budgets." Whether these attacks on the social fabric are successful, however, will ultimately depend on the level of resistance they face. Authoritarian state On October 11, a meeting of progressive economists in Caracas, Venezuela, issued a statement warning that the dynamic of this crisis "encourages new rounds of capital concentration and, if the people do not firmly oppose this, it is becoming perilously likely that restructuring will occur simply to save privileged sectors." This is an important point to understand: capitalist crisis doesn't automatically lead to the end of capitalism. Without effective resistance and struggle, the crisis will eventually be resolved at the expense of working people-particularly those in the South. This could be one of the most serious crises that capitalism has faced in living memory. But we should not be fooled into thinking that the system will somehow be reformed or its contradictions solved through peaceful and orderly means. The most likely immediate outcome is a hardened, more authoritarian state that seeks to restore profitability through ratcheting up repression and forcing people to accept the loss of jobs, housing, and any kind of social support. In the South, this will inevitably mean more war and military repression. If this is not prevented then the system will utilize this crisis to restructure and continue business as usual. This is why resistance-both at home and abroad-will be the single most important determinant of how this eventually plays out. In Latin America, for example, attempts to restrict capital flight, place key economic sectors under popular control, and establish alternative currency and trade arrangements are important initiatives that point to the necessity of solutions beyond capitalism. In the Middle East, popular resistance to the political and economic control of the region has undoubtedly checked the extension of US power. Any displacement of crisis onto the South means playing different groups of people against one another. For this reason, the ideological corollary of war and military repression abroad is likely an increasingly virulent racism in the North-directed at immigrants, people of color, and indigenous populations. This means that for activists in North America the question of global solidarity and resistance to racism must be a central priority of any effective fight-back Any attempt to turn inwards or dismiss international solidarity as less important in this phase will be disastrous for all working people across the globe.