The T words: Trade, Tariffs, Trump

The mainstream media in New Zealand presents the argument that New Zealand and the other countries involved in TPP negotiations over tariff-free trade/the best ways to increase corporate profits, represent the progressive way of the future. US President Donald Trump, in deciding to reintroduce tariffs, is going backwards.

Tariffs are an affront to neoliberalism and as such cannot be condoned by mainstream economists. All the more reason, even though it is Donald Trump who has raised the issue, we should go there. We should have the conversation we should have had in 1984 when our politicians decided, unilaterally, that tariff-free trade was the answer to the universe. Or at the least the question of why New Zealand couldn’t sell mutton to countries that already had their own sheep?

Our politicians removed most of New Zealand’s tariffs on imported goods and set about trying to convince the rest of the world to do likewise. Except the rest of the world, while agreeing in theory, were not so keen to embrace the neoliberal notion of tariff-free trade in practice. We are still trying, via the TPP and other agreements, to cajole them into doing this.

If he has done nothing else, Trump has highlighted the negative effects of tariff-free trade, albeit only on the US economy. What Trump has not done has been to look at the effects on people everywhere, and the environment.

The proliferation of cheaply-made, energy-sapping, emissions-increasing, non-biodegradable goods made by underpaid, under-protected workers. This is what our tariff-free trade agreements are desperately trying to protect. Heaven help any well-meaning government that tries to put a stop to it. The ISDS clauses in tariff-free trade agreements make sure that can’t happen.

So, tariffs, the way of the past, or the means to a better future? It depends on the motives behind the tariffs. If we put nationalism aside, tariffs have the potential to be a useful tool in a global context to rein in corporations, to protect all workers and the planet. For example, tariffs as a means of ensuring food sovereignty by protecting local producers supplying the domestic market, tariffs as a means of levelling the playing field for living wages and sustainable environmental practices. And tariffs as a means of encouraging local cooperative enterprises that benefit the local economy and enterprises that reuse and recycle.

Economist David Korten, President of the Living Economies Forum, suggests “A universal tariff on cross-border exchange, of 10 percent, for example, would provide a modest initial advantage for domestic sourcing of raw materials and consumer goods. Compensatory tariffs might be added to products from countries that do not maintain international standards of environmental protection, wages, health and safety standards, and social safety nets, thus encouraging higher standards for all people everywhere.”

This is a good starting point for discussions. Tariffs are about protectionism. But some things are worth protecting. In the words of former Prime Minister the late David Lange, “Let’s have a pause for a cup of tea.” Forget about our obsession with trying to get our exports into countries that don’t want them. Let’s take the time to look at the big picture – the one that includes everybody everywhere and the planet we all live on.