New Zealand, one of the world’s most aggressive promoters of trade liberalization, practises what it preachers in its own economy, says the World Trade Organization.
A WTO review of New Zealand economic policies concluded that the country’s radical mix of deregulation and subsidy cuts in the 1980s and 1990s has worked, at least from the viewpoint of the WTO’s free trade economists.
“The reform program has made New Zealand one of the most open economies in the world and has contributed to stable macroeconomic performance in the face of adverse external and climatic circumstances,” WTO director general Supachai Panitchpakdi said.
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And agricultural economic growth could have been even stronger if other countries were as liberal as New Zealand, he said.
“Barriers to New Zealand’s agricultural exports had been a major impediment to more rapid trade and economic growth.”
The WTO report noted that agricultural exports account for 60 percent of the country’s export earnings. Economic reforms have made the exports more competitive.
“As a result of economic reforms, which removed most public support for agriculture, the sector is now considered to be highly efficient,” the WTO said.
“The major remaining area subject to marketing controls, the export monopolies of producer boards, has been deregulated considerably.”
In fact, in 2001 the dairy export monopoly was ended and the two largest processors amalgamated into the Fonterra Co-operative Group. It does not have a monopoly, but will be processing 90 percent of the country’s milk production and will retain New Zealand’s quota share in foreign restricted markets, at least until 2007 or 2010.
The WTO did note that New Zealand law allows import levies to raise money for research, market development and promotion, and to purchase disaster relief insurance for domestic producers. It also said there is a potential for the country to use sanitary regulations to restrict imports.
However, the overall report was enthusiastic and the WTO said supports for New Zealand farmers are one of the lowest in the world at just one percent of production values.
“It is my strong sense that we all highly appreciate New Zealand’s liberal stance and active participation in moving the WTO’s trade liberalization agenda forward,” Panitchpakdi said.
“New Zealand provides a vivid example of the benefits of unilateral market-oriented reform.”
It is a founding member of the Cairns Group of exporting countries and regularly pushes that group, and countries like Canada, to take the plunge and move away from protectionism and farm supports.
