05/11/2017
Alex Eastwood-Williams
Opinion
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Why we SHOULD be 'Russian' into seeking free trade with Russia

The new government is facing what the New Zealand Herald have described as its "first international crisis", after European Union ambassador Bernard Savage condemned the government's plans to reopen trade negotiations with Russia, Belarus and Kazakhstan. 

Quoth the article, 

At a briefing on Tuesday in Wellington, Savage said any moves made towards thawing relations with Russia would be viewed in a "very negative" light.

Reopening trade negotiations with Russia, which have been on hold since 2014 despite being near completion at the time, was a concession that the New Zealand First party managed to ensure was included in its coalition deal with Labour. 

National, meanwhile, seem hell-bent on not upsetting the EU, considering that relationship "more important" to the national interest for reasons that in my view betray the ousted government's naivety where trade and foreign policy was concerned:

National Party foreign affairs spokesman Gerry Brownlee said the Government must tread cautiously to avoid the coalition policy on Russia tainting more important relationships.

The new government isn't perfect and I'm hardly Jacinda Ardern's biggest cheerleader - even on foreign policy there are signs of serious deficiencies - but the decision to reopen trade negotiations is not only a good decision, it's a long overdue one. 

Let's consider the facts:

The "let's not upset the EU because they might give us a trade deal maybe even though it's been 30 years and there's still no sign of one" crowd argue that New Zealand's trading relationship with the European Union is of utmost importance because it's our third largest export market. 

Of course, that's only a half-truth. 

Yes, we do export $8 billion worth of products to the European Union and yes, as a bloc they are our third largest export market. But there's a rather large elephant in the room and it's something that National and other purveyors of pro-EU globalism seem rather reluctant to admit:

Of the $8 billion of exports to the EU, $3.1 billion are to the UK. And in 2019 the UK will no longer be part of the EU.

Furthermore, despite former Prime Minister John Key's ill-fated attempt to support Britain remaining shackled to an anti-democratic, economically destructive institution, the UK will be negotiating its own trade deals in future and New Zealand will be very high up on that list.

The near-certainly of the UK trade deal stands in stark contrast to the pipe dream of an EU trade deal, considering the bloc's inherent desire to protect its agricultural sector from more efficient countries like, well, New Zealand. 

Here's another statistic they won't mention: We import more than the EU than we export to them - we import $11.5 billion worth of products from the EU.

Of that number, $2.2 billion are from the UK - in other words, with the UK post-Brexit we will be a net exporter, whereas with the EU after Brexit not only will we continue to be a net importer, but they will export to us almost double what we export to them.

And that's not even taking into account our main cash cow (if you'll excuse a very deliberate pun). In terms of dairy exports, the EU are not a customer - they're actually our biggest competitor. In fact they're due to overtake us as the world's largest dairy exporter soon.

Not only is the EU not nearly as valuable to New Zealand as its promoters would have us believe, but the fact is that in trade negotiations it should be us who have the upper hand considering how imbalanced our trading relationship is. 

By contrast, before the implementation of trade sanctions on Russia in 2014 (it would take another whole article for me to explain why the sanctions were a flawed idea, but suffice to say I'm not in favour of sanctioning Russia in the first place), Russia was the fourth largest dairy importer in the world. In other words, they (quite literally) can't get enough of what we're selling. 

As far as I'm aware, we don't import a lot from Russia (hell, we even make our own vodka) which means that a trade relationship with them would be of considerable value to our economy - and it would certainly go much further toward putting a dent in our current account deficit than trading with the EU does. 

And even if you're not persuaded by the economic benefits of trading with Russia, as any first year International Relations student could probably tell you: Countries with strong trade ties are highly unlikely to drop bombs on each other.

In other words, for all the hysteria about how Russia might (maybe, somehow) be a threat to our national security, the reality is that commerce will do much more toward securing a better and more peaceful relationship with the Russian Bear than trade sanctions and isolation ever will.

As for the EU, while Ambassador Savage can spit the dummy and curse our sovereign decision as much as he wants (not that the EU have any concept of national sovereignty), he would do well to remember that the EU gain more from us than we gain from them, and that maybe he shouldn't be biting a hand that feeds it $9 billion a year (excluding the UK) in export revenue. 

In fact if I was advising Winston Peters, our new foreign minister, not only would I tell him to ignore Savage's misgivings, but I would advise that when negotiations with the EU resume, they should be resumed in mind of the fact that we're a net importer of European goods.

As such, should we threaten to treat EU exporters the way they treat our exporters I suspect we might find them a little more forthcoming not only on producing a free trade deal, but on allowing our small South Pacific country the freedom to choose its own friends.

We've given the European Union more carrots than they could ever need and they continue to treat us with contempt - I think it's time we bring out the stick.