Graham Kennedy: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading In Committee Third Reading 
Graham Kennedy: Tariff (Malaysia Free Trade Agreement) Amendment Bill — Second Reading In Committee Third Reading 
[Volume:664;Page:12149] 
Dr KENNEDY GRAHAM (Green) 
: 
 I appreciate the comments of the previous speaker my colleague Stuart Nash in acknowledging the concerns of the Green Party. In fact I think that both the debate on the New Zealand - Hong Kong China Closer Economic Partnership Agreement and all the stages of the debate on the Tariff (Malaysia Free Trade Agreement) Amendment Bill have been with the singular exception of the contribution from John Hayes very constructive indeed. I welcome that from all other National Party colleagues not the least of whom is Chris Tremain. I make the point however that nothing I have heard—and I have listened very closely to everything that has been said in the debates on both the Hong Kong and Malaysian agreements—changes our view with regard to the current manifestation of trade policy. 
In the second reading John Hayes simply said China’s exports have increased by $860 million and that is fantastic. We recognise that that is a significant thing but it is not everything. Chris Tremain admonished me to steer clear of theoretical models and I appreciate that. I assure him that I shall not do that but that I shall add a touch of practicality now and again to it to satisfy him and his constituents. But after Chris Tremain offered that admonishment he basically spoke in tones of awe—and we can speak in tones of admiration but not of awe—about Zespri. That was his contribution. Cam Calder said the free-trade agreements boost exports create jobs and increase income. That is true but it is not the total story. Tim Macindoe mentioned the environmental protocols morris dancing and Asian students in his electorate. I know that very well having been to Waikato University recently and spoken to students at the Pacific college. Tim Groser said that free trade is not a religion though he none the less spoke in papal tones and now and again unctuously. 
I just make the point that everything that the Government members have said is focused on exports. At no stage did they really address the issue of the effect on the domestic New Zealand economy which is only one of the things that we are trying to get this House to focus on. The Government is being either blind or wilful and it is not focusing. 
On the point of style I just say that at least my colleagues Tim Macindoe Chris Tremain and others offered their derision in tones of good humour; that is appreciated. That cannot be said for John Hayes whose patronising attitude was rendered in supercilious tones. It was quite different from the attitude of the other speakers. I will not reduce the dignity of the House any further by responding in kind though I could. 
On the note of whether we are going to competitively Google—or be Googly competitive—on this thing I just offer the response that I actually studied Ricardo back in the 1960s; John Hayes and I are much the same age. I know Ricardo’s theories very well indeed; in fact we can go from Ricardo through Smith Mill Malthus Marshall Jevons Keynes Samuelson Hicks and Friedman—yes Friedman—to understand the theory of economics and the theory of trade. I suggest that John Hayes goes through all of those people as well. It does not stop with Ricardo; it only began with Ricardo. 
And in fact having completed that stony pilgrim’s path John Hayes should then by invitation from me investigate the whole theory of ecological economics which is where the Green Party is coming from. If we recognised each other’s theoretical framework with dignity and explored it perhaps we could have a reasoned dialogue. I think that every member except for the chair of the Foreign Affairs Defence and Trade Committee will be prepared to do that. I invite members to study these people whom they can Google: Tim Jackson Herman Daly Peter Victor Robert Costanza and J R McNeill. Then they will understand ecological economics—both the domestic dimension of it and the free-trade dimension. 
All of that is simply to say the Green Party having just been misrepresented requires a reiteration of its policy. The Greens are not against trade which is what Mr Hayes was misrepresenting. We are against unsustainable trade; we are against unfair trade. The Government’s trade policy rests on a commitment to a neo-liberal—yes neo-liberal—free trade. Globalised free trade is the manifestation of the problem of the globalised economy. The case for free trade rests on the assumption that trade is voluntary. This is getting at what Mr Hayes suggested we do get at. Both parties must be better off than before the voluntary act. When trade is based on the absolute advantage enjoyed by the countries in terms of the commodities in question this is self-evident. But the Ricardian theory of comparative advantage also justifies trade even when one country may have an absolute advantage over another in all goods. The theory is that the combined production of all countries trading is greater than if they produced separately and each country stands to gain individually even if not to the same extent. That is the Ricardo theory. This theory derives from the fundamental tenets of neo-classical economics I say again for the benefit of Mr Tremain. 
The Green Party considers those tenets to be dangerously obsolescent requiring refinement with a new approach that reflects the economic conditions of the 21st century. Specifically let me make a number of points. First the extra combined production from free trade cannot in fact be achieved without extra resource inputs. There is also the increase in the depletion rate of the natural resource base from which the product is made. What trade economists mean when they say no extra resources is simply no additional labour or financial capital. Neo-classical economics omits natural capital from its theories. 
Second the extra transport costs associated with free trade are not included in the theory. International transport is energy-intensive often subsidised. Its external costs are omitted from the pricing. Sea trade emits 0.8 billion tonnes of carbon dioxide 3 percent of anthropogenic emissions. That is expected to grow threefold by 2050. The same is expected of aviation and surface freight. 
Third free trade assumes the cost of specialisation to be negligible. But in fact it requires retraining and perhaps physical relocation. As specialisation shrinks the economic sectoral breadth of the country’s job choice narrows. This comprises a loss to human welfare. The invisible hand has narrowed the freedom to choose. 
Fourth although free-trade agreements have withdrawal clauses such that New Zealand can theoretically opt out if trade becomes disadvantageous this assumes that specialisation is reversible. But in fact the retraining and relocation of a furniture maker to enable that person to become a dairy sharemilker apart from being socially traumatic may be irreversible for social communal reasons. 
Fifth the specialisation resulting from free trade bequeaths a narrow range of sectoral products country by country making each country vulnerable to the vagaries of the global economy. Taking the argument to the extreme if New Zealand were to narrow its sectoral breadth—and that is what Mr Hayes and perhaps even Mr Groser are suggesting—to become a national dairy farm surrendering its capacity to maintain our other economic activities it would become a milk colony to the global economy. 
Finally much international trade is pursued in the name of choice to ludicrous lengths. When marginally different varieties of ice-cream biscuits and crackers pass east and west across the Tasman in the night such activity not only defies consumer rationality but also in an age of climate change defies basic common sense. 
There are both theoretical and very practical moral and environmental reasons not to pursue free-trade agreements in the current form that they manifest. For that reason the Green Party will oppose this bill.