justhanging said:
I assume the "benefit" is the FTA? do we need it? this FTA is not necessary to save NZ's economy from imminent destruction. more likely, it is thought that the deal will enhance our economy.
This isn't about whether we need it, or imminent destruction of our economy if we don’t secure it, it’s about wanting it to improve our position and ensure our prosperity for future generations. For instance I'm sure we could survive without a FTA with China but unless we secure one with America we will be no better off.
I would prefer an FTA with Australia and America than China, but then beggars can't be chooses.
But I am sure this will improve our relations with China and increase our economic standing in the world via the trade that ensures, for not only will this give us a political bargaining chip to compromise with other countries such as the USA, but it should enhance our living standards and allow for greater investment opportunities.
For me this is a mater of probability.
justhanging said:
it's hard to be sure. FTA's are always meant to be mutually beneficial of course, but seldom turn out to be.
It’s always hard to be sure at first, because all of the possible variables are beyond our capacity of measure, but it’s about having a little faith in the market improving relative living standards. In economics it’s called “comparative advantage†which is often misunderstood or misrepresented by opponents of free trade. It was alluded towards as far back as Adam Smith's "Wealth of Nations" and argued further by David Ricardo.
This is not a new debate and there is loads of literature available online. Overall most of the evidence for it outweighs the cons.
It’s also debatable that FTA’s seldom turn out to be mutually beneficial. There will always be sectors of a countries economy that prosper while other sectors fold to the competition, this is true for both countries, but only focusing on the negatives will distort your perception of the process being undertaken and will not take into consideration the bigger picture. and
We must take into consideration how consumers will cause outcomes by their buying or abstention of buying. If so many are against Chinese goods then they will support NZ made instead.
But it's all about playing into our advantages while reaping the benefits of the other countries greater productivity.
Most of the time people cheery pick data to support their hypothesis that globalization and free trade is bad without looking at other developments occurring or only focusing on the short term upheaval created. We must remember that one of the main aspects of Capitalism is as Schumpeter called it “creative destructionâ€
It's all part of the process....
Now if our country was an infant industry then you might have a case against a FTA based on certain econometric testing using New Trade Theory models. But these are hotly contested and in this case our market has already been opened up, as far back as Douglas. The uncompetitive industries already washed away. We now have comparative advantage in many areas such as agriculture, which will greatly benefit us and cater to Chinas growing demand.
justhanging said:
NAFTA is a famous case in point. Mexico was supposed to prosper under NAFTA; in fact, it has become poorer. NAFTA has done nothing to improve living standards of Mexican workers, as far as I can tell. there have also been disastrous environmental consequences for Mexico since signing the pact.
Some of that is debatable and doesn’t take into consideration trends that were already occurring. Take Mexican corn farmers for instance, often sited as an example of failure. Read this:
http://wbln0018.worldbank.org/LAC/LACInfoClient.nsf/d29684951174975c85256735007fef12/026efe204f018bc885256f40006d1901/$FILE/TradeNote18.pdf
And why only focus on Mexico, America has lost loads of jobs in certain areas too, some are calling it the deindustrialization of America, but I must ask, where have these jobs gone? To other NAFTA members perhaps?
We need to discuss specific cases under FTA's and then compile them and form an overall assessment if this is to be a pragmatic discussion, otherwise it will turn into an exchange of straw man arguments.
But I am open and would like to see how NAFTA has caused more harm than good, especially for Mexico. Can you provide some unbiased data to support your position?
However to be fair, I do not dispute there will be pros and cons for each country participating in FTA’s and there will always be problems that emerge like intellectual property rights, bans on certain pharmaceuticals by one government that under another are legal. Various court cases will ensure, and various aspects will need to be ironed out in due course.
I envision a lot of media attention surrounding this if we secure an FTA.
There always be initial disputes, but overall I argue it will be a good thing in the long term, but then I support globalisation and free trade and while some will openly dismiss me as a proponent of the Bush Administration (which I am not) or in support of the Project For The New American Century (which I actually think is myopic and misguided in many respects) I still actually share the vision stipulated in America’s National Security Strategy 2006.
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