Thursday, December 7, 2023

BLOG: US trade deal has big teeth

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Enthusiasm from a United States president about a free-trade deal with New Zealand would ordinarily be a cause for celebration.
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But when it’s Donald Trump in the White House a word of caution is in order.

The enthusiasm Trump brings to trade deals is similar to that of a shark approaching a beach of swimmers. He’s after his pound of flesh and what the swimmer gets out of the transaction … well.

It is not that long ago NZ had a trade deal with the US within its grasp in the form of the Trans Pacific Partnership. The dairy industry would have been the biggest winner out of that deal though even it was disappointed with the several decades it would have taken to phase out tariffs in the US market. Those gains went up in smoke when Trump removed the US from the TPP on his third day in office.

Since then the trade war with China has taken a painful toll on US farmers. The administration has ponied up US$28 billion in taxpayer-funded subsidies. The payments look as much about preventing votes in key states from floating away to the Democrats as they are about keeping farmers afloat.

In the 2016 presidential election Trump won the dairying state of Wisconsin by a mere 20,000 votes out of three million cast. With the 2020 presidential race looking just as finely poised it would be a gamble for Trump to open the door to any increase in dairy imports in a trade deal with NZ. At the same time any talks would see Trump’s negotiators push for an even better deal for US film and pharmaceutical companies than they got in TPP. It would inevitably see demands for tighter copyright laws and longer patents for US pharmaceuticals.

Emerging from her meeting with Trump in New York last week Prime Minister Jacinda Ardern chose her words carefully. While welcoming the president’s enthusiasm she added that trade negotiations can take a long time. Put another way: how long before it is safe to go back into the water?

Nigel Stirling

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