Editorial: Essential to keep eye on high prize

In all the talk of economic transformation it can be hard to sift the wheat - solid, practical proposals - from the chaff. A seminar in Auckland last week in preparation for next month's "Catching the Knowledge Wave" conference, came up with several solid grains. One suggestion was an immigration policy that aimed for a population of five million by 2005. Another was a re-allocation of education spending to increase levels of literacy and numeracy in schools. But the first resolution on its list was the most exciting: New Zealand should reach a bilateral trade agreement with North America within two years.

By the end of the week business and political leaders in New Zealand had heard a great deal more about the benefits of free trade with the United States. Former Canadian Prime Minister Brian Mulroney, here at the request of Sir Anthony O'Reilly, attested to the benefits as well as the political challenge of leading his country into the North American Free Trade Agreement. It is easy to contrast the advantages of a country living on the border of the United States with one far away in the South Pacific, but Mr Mulroney exemplified that calibre of leadership which does not allow difficulties to distract its eye from the prize.

It is a lesson our Trade Minister, Jim Sutton, might take. Commenting on the prospects of a North American pact, Mr Sutton noted that Nafta excluded dairy products, for one thing. "Any agreement we enter into needs to be comprehensive," Mr Sutton said. Does it? New Zealand probably has much more to gain than the US does from any deal permitting free trade in non-farm products between the two countries. We have few tariffs against industrial goods anyway.

Farm products, of which dairy are our most lucrative export earner, will remain vital to New Zealand's economy for as far ahead as anybody can see. Their easier access to markets such as North America must remain a vital objective of New Zealand trade efforts everywhere. The question is whether that objective can be better served inside a free trade agreement than without one.

Let's not be too hard on Mr Sutton. It would be folly for a Trade Minister to set aside dairy products before any negotiation. But it is also too early to be worrying that Nafta is less than a perfect trading community. Sadly, agriculture is a glaring deficiency in most free trade agreements. Rich countries like to feel they can feed themselves and their farmers frequently can exert political pressure far exceeding their votes.

Protectionist sentiment is as strong in the US as anywhere. The new President, while he seems personally enthusiastic for trade liberalisation on all fronts, has yet to get from Congress the negotiating mandate that was withdrawn from President Clinton after the extension of Nafta to include Mexico. Nevertheless, Mr Bush at Quebec a few months ago put his power strongly behind a push for a free trade agreement spanning Latin America too. Mr Mulroney came to tell us it will not stop there.

New Zealand needs to position itself to be among the next wave of liberalisation emanating from the North American economy. One thing we need to do is rid ourselves of the ridiculous nuclear posture. It is idle to pretend it does not get in the way of everything we try to do in Washington. It has surely served whatever purpose it had. The Cold War has ended, nuclear weapons are no longer routinely carried on US surface vessels, the 1987 ban serves only to satisfy residual anti-American sentiment in our politics and the US knows it. Naturally it colours our reception there. The US needs reliable allies in the cause of world stability more than it needs free trade agreements with smaller markets.

The largely technological trend known as "globalisation" is bypassing trade barriers and giving liberalisation a remorseless logic. But the backlash witnessed at Seattle and everywhere global trade conferences are called, has yet to be faced down. Mr Mulroney has shown that far-sighted leadership can do it. Politicians with no greater goal than re-election are unlikely to provide the courage or the foresight that points the way to prosperity.

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