Free vs Fair Trade in the Pacific - Dr Ben Thirkell-White

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Dr Ben Thirkell-White (International Relations & Politics at Victoria University of Wellington) examines PACER-Plus, the free trade agreement currently being negotiated between the nations of the Pacific. See http://www.dosomething.org.nz/ for more info

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Free vs Fair Trade in the Pacific - Dr Ben Thirkell-White

  1. 1. Trade and Development in the Pacific<br />(A very brief primer)<br />Ben Thirkell-White<br />Victoria University of Wellington<br />
  2. 2. Trade and development 1<br />You can have growth with no poverty reduction<br />But it’s very hard to have poverty reduction with no growth<br />Growth comes from doing things more efficiently<br />One way is to specialise in what you are best at<br />‘Development’ is then built on more complete specialisation<br />Trade allows us to specialise worldwide<br />Do what you’re relatively best at<br />Trade for everything else<br />
  3. 3. Trade and development 2 <br />‘Not trading’ is generally about making it hard or expensive for foreigners to sell you stuff<br />Tariff barriers – tax on goods at a border<br />Non-tariff barriers – ban goods, usually for health and safety reasons<br />Freer trade takes away those barriers, so consumers can by the cheapest and best worldwide<br />Consumers may stop buying local produce, putting local firms out of business<br />But that’s OK because workers will find something else to do (and/or wage rates will adjust to reflect domestic productivity) and that will be something more efficient<br />
  4. 4. Is the Pacific different?<br />So, trade helps you to move everyone into the most productive sector (the one that gets you most international stuff per hour worked)<br />And it makes products (and services) cheaper<br />What’s not to like?<br />What if the resources in the businesses that go bust aren’t ‘redeployed more efficiently’?<br />Not enough ‘entrepreneurs’<br />Very small market so hard to create new business<br />Weak infrastructure<br />Capital flight, migration<br />What about the tax revenues from tariffs (Tax at border)<br />What about distributional questions – rich/poor, gender etc.<br />
  5. 5. Historical ‘unequal’ trade agreements<br />EUROPE<br />PACIFIC<br />AUS and NZ<br />LOMÉ CONVENTION<br />SPARTECA<br />
  6. 6. New arrangements<br />EUROPE<br />PACIFIC<br /> PICTA<br />AUS and NZ<br />EPAs (economic partnership agreements)<br />PACER PLUS<br />
  7. 7. More than trade?<br />Trade in services<br />Mode 3 – establishing businesses to deliver services (especially finance and education)<br />Could make it easier to get useful services like telecomms , financial services, transport<br />Potentially controversial as may create legal right to challenge regulations as discriminatory or unnecessary<br />May put domestic firms out of business<br />Mode 4 – movement of labour<br />
  8. 8. What has worked in the Pacific?<br />MIRAB – migration-remittances and aid-bureaucracy<br />Tourism – SITES<br />PROFIT – People management, Resource management (eg fisheries), Overseas engagement / paranationalism (fishing quotas, stamps, offshore companies), Finance, Transportation<br />For more information on Pacific development, see http://www.geoffbertram.com<br />

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