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THE DRIVING FORCE OF NEW ZEALAND TRUCKING
A global trade war sparked by US protectionism could have a significant impact on NZ’s exports
GlobaIl trade war would hurt NZ
by Ken Shirley Chief Executive
Road Transport Forum NZ
T’S KIND OF IRONIC THAT IN THE SAME aluminium into the US has predictably triggered an international week as the Labour-New Zealand First Government does backlash and a promise of retaliations that some are predicting a complete backflip and signs the TPP – well, in fact, a could develop into a full-blown trade war. The United Kingdom,
slightly amended version known as the CPTPP – the Trump the European Union, China, Japan and others are all considering
Administration in the United States goes off in the other direction and announces the imposition of tariffs on aluminium and steel imports.
Now, on their own, aluminium and steel are not proportionally a major part of NZ’s total exports, although for those companies affected of course this IS a big deal. However, there is a much bigger game that’s playing-out here that we need to keep an eye on.
At a time when the global economy is becoming more connected by trade and investment flows, which have been proven to raise global living standards, it’s disappointing that protectionism has begun to raise its ugly head.
NZ has been a major beneficiary of the strong growth in global trade over the last few decades, but persistent trade deficits and a growing political movement towards isolationism in the US and protectionism in other parts of the world have seen anti-trade tensions grow.
Needless to say, it is in the domestic political interests of the Trump Administration to keep fuelling this fire and that seems to be the US president’s primary interest at this stage.
The decision by Trump to impose tariffs on imported steel and
reprisals and the goods they can whack tariffs on to punish the US. Unfortunately, while the protagonists of such a trade war would be large economies, it would actually be the smaller producer nations, like NZ, that would be caught in the crossfire and would
have to deal with some of the worst consequences.
Larger economies can rely on a huge domestic consumer base that can insulate them from loss of access to international markets. Hundreds of millions of consumers in the US or Europe and over one billion in China is “a lot” of people to sell stuff too. In fact, there is a legitimate economic philosophy for this so-called
autarky, which is based on the benefits of being self-sufficient. Unfortunately for a small, outwardly facing country such as NZ with a tiny domestic consumer base, autarky is not a viable option. A trade war would pose considerable problems for us – while
being largely out of our control.
With access to key markets coming at a considerable cost
it would mean that our exporters, particularly in the primary sector, would be competing on an uneven playing field, with local in-country producers selling an inferior product.
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