Fiddling while free trade burns

By Rod Oram

Between the Lines


An Apec effort to win over hearts and minds to the cause of economic liberalisation got off to a shaky start yesterday in a seminar held for an invited list of trade, business and community leaders to discuss public attitudes to liberalisation and how best to mould them.

The big surprise was how relaxed many of the participants seemed to be about the hostile - or at least deeply sceptical forces - ranged against them. They saw a problem but not a huge one.

They should worry more, for they are fighting an uphill battle. The benefits of freeish trade and investment are real but diffuse. The immediate payoff of more, better and cheaper goods is nice but easily taken for granted. The longer term benefits of greater investment and sophistication in the economy can be elusive or flow to only some people.

In contrast, the pain of liberalisation is very specific, localised and immediate as some people lose their livelihoods. A tendency to weasel words only rubs salt into the wounds. There was talk yesterday of "adjustment effects" and "major life challenges".

For New Zealand's Apec advocates, the biggest challenge is this correlation revealed in a study for the seminar: the more developed the economy, the more vocal the opposition to imports and foreign investment.

A study of public attitudes in three countries concluded that New Zealanders were more outspoken about the negatives and sceptical about the positives of liberalisation than people in Thailand or the People's Republic of China.

This should be no surprise. First, the best way to sell people on reform is to provide them "security" and "peace of mind", panellists suggested yesterday - acknowledge the pain and find ways to alleviate it. Second, accentuate the big long-term benefits such as economic development.

New Zealand has failed on both counts over the past 15 years of reform. As recently as last year when car assembly ended in Thames, the Government threw a magnificent $110,000 at the problem with another $40,000 still to come, both sums contingent on the community matching them with their own funds. Thames was left largely to sort out the mess for itself.

And as for the benefits, yes, we got the cheap and good imports but the bigger long term benefits are eluding us because foreign investment has gone into land or existing businesses. We've seen very little of the infusion of capital, technology and management skills which are contributing to economic development in other Apec countries.

Apec is rich with promise. In many ways its agenda of freer, easier and more secure trade and investment is ideal for New Zealand's predominantly small companies. But there's a very long way to go yet to figure out how to maximise the benefits and to sell the public on them.