New Zealand's foreign policy signals virtually no virtue

The war on Ukraine and more specifically the war on Ukrainian people is heart-breaking, revolting and has rightfully appalled most governments around the world. The response of many countries have been wide ranging sanctions. The Financial Times summarises many of them imposed by the US, UK, EU and other Western countries like Canada and Japan including:

• Travel bans and asset freezes for Russian and Belarus politicians and officials
• Bans and sanctions on banks, including prohibitions on trading and borrowing by financial institutions
• Bans on Russian companies raising finance and bans on trading with major Russian companies
  
• Restrictions on technology exports, including aerospace and telecommunications 

Australia has imposed its own series of autonomous sanctions, including banning exports of oil exploration technologies, prohibiting financial institutions from providing credit or loans to Russian financial institutions, military or petroleum companies. 

Even scrupulously neutral Switzerland has imposed asset freezes on certain Russian individuals. 

How about New Zealand? The Wall Street Journal has highlighted it for shame.

Well it has done the following: 

• a travel ban on Russian officials "involved with the invasion" (even though none could ever travel to New Zealand under current rules that prohibit entry to NZ for non-permanent residents/citizens without specific visas)
• Prohibit exports to Russian military and security forces
• Suspended bilateral foreign ministry consultations.

It's literally pathetic. Now the Government has since announced it will be looking to pass legislation to go further, but given NZ's foreign policy is awash with virtue signalling, this looks very much like very little virtue at all.  The constant declaring of what they might be thinking of doing is par for the course for this government led by someone who wants global acclaim.

Look at two of NZ's virtue signalling foreign policies:

• Anti-nuclear policy: This has achieved absolutely nothing to enhance the peace and security of NZ or anywhere else in the world. However, it is the height of virtue signalling against the US, UK and France.
• Climate change policy: NZ's contribution towards reducing climate change has infinitesimal impacts, but the Ardern Government wants to be "leading" global commitments to reduce climate change, regardless of the economic cost. It's a showcase designed to encourage others to go further, rather than to simply follow in concert with NZ's major trading partners, but in actual impacts it is almost "net zero".

Yet when a nuclear-powered sovereign state attacks another sovereign state, NZ is found wanting. Of course the Government rejected Gerry Brownlee's bill for multiple reasons.  Minter Ellison Rudd Watts gives various reasons for it being rejected.  

It concluded that "it is likely that the specific regime proposed would have achieved little more than political signalling (and some counter-productive signalling at that)". Yet that has been at the forefront of so much foreign policy to date.  The "counter-productive signalling" is being able to act outside multilateral organisations, but this is exactly what the problem is today. A Permanent Member of the UN Security Council is waging war, and multilateralism wont address this, as much as well-meaning NZ lawyers might think this is "counter-productive" they aren't likely to be victims of war waged by Russia, or indeed China. (Note the lawyers call Ukraine "the Ukraine", unfortunately). 

However the lawyers mainly opposed it because "if passed, the Bill would certainly have further complicated the regulatory compliance obligations of New Zealand exporters, importers and trade facilitators".  Do they seriously think Ministers would impose sanctions in some manner that doesn't take into account the impacts on those trading and investing in sanctioned countries? How is this remotely different to NZ having to impose sanctions mandated by UN Security Council Resolutions?

I'm not going to say Brownlee's Bill was perfect, but its timing deserved more attention. It certainly shouldn't have been rejected because moral equivocating Marxists like Teanau Tuiono think it might create "further risk of politicisation of sanctions rather than fairness and equity" (code for sanctions on regimes he quite likes). 

Now NZ sanctioning Russia would largely be symbolic, but it is also about plugging gaps in the global financial and trading system.  The New Zealand Dollar is apparently the tenth most traded currency in the world, so NZ does actually need to plug the risk that it will be used to subvert sanctions from other jurisdictions.  Fonterra has already announced it is suspending exports to Russia. 

Russia takes 0.49% of NZ's exports by value (27th place), slightly less than Egypt. Whereas about 0.97% of NZ's imports come from Russia (19th place), with NZ being a net importer from Russia. The main export is dairy products, the main import is oil products. 

There is no good reason to hesitate. If Switzerland... SWITZERLAND... which until recently refused to join the United Nations in order to remain neutral, can impose sanctions quickly, so can New Zealand.  

To say it can't do it quickly is of course a nonsense. The Ardern Government has demonstrated that when it sees urgency, it gets legislation drafted and passed under extraordinary urgency when it wants, and did so for Covid 19. It could get legislation drafted and passed in the coming week if it wanted to.

The difference is that the Ardern Government didn't plan to have to deal with actual war, war that shows the limits of the United Nations, war that was predicted for weeks in advance.  

It really does need to join the rest of the world, and quickly.

CER's last hurdle

The largest barrier to free trade between Australia and NZ looks like it finally has a good chance of being addressed according to the NZ Herald.

For decades now Australia has blocked imports of New Zealand apples on spurious grounds of biosecurity. I participated in a couple of CER bilaterals in the 1990s where this was the key issue (I was fighting for another sector) and Australia would never relent. CER offered no recourse if Australia kept blocking access other than the political ones. Naturally for NZ, access to Australian markets was far more valuable than for Australia to get access to another market the size of Melbourne (if you're generous).

So the WTO, hated by the Greens and the anti-free trade luddites, has proven its worth once again, by showing up the Australians for being protectionist hypocrites - calling for free trade in agriculture through the Cairns Group at the WTO, but unwilling to offer it to its closest trading partner.

It wont be easy, no doubt the socialist Gillard and farmer friendly Abbott will both reassure Australia's cosseted apple industry that they will appeal, but it's simple - you cannot block New Zealand apples under the excuse that they all contain fireblight and will ruin your precious crop.

So good on the WTO, it needs some words of support, especially since neither the President of the United States nor the "President" of the European Union nor the Prime Minister of Japan have any interest in free trade!

EU Wankers

While Britain has a burgeoning budget deficit, it is borrowing from future taxpayers to prop up part of the biggest group of welfare recipients in Europe.

According to the Daily Mail, EU Agriculture Commissioner Mariann Fischer Boel asked the ministers to approve an emergency grant of about £250 million in next year's EU budget to prop up the dairy sector.

The appropriate response is to tell her to where to stick the request.

However, do you see anger in the streets at these failed businesspeople, who have lived off of the back of taxpayers for years now, compared to bankers?

Fortunately the British government is not completely rolling over, but Britain should claw back cutbacks in spending to the EU - it should force the EU to slash its budget.

I remember the suffering and pain that New Zealand farmers went through when economic reality hit them in the 1990s, it's about time that European farmers, who have adequate warning of change, were given a small number of years to see subsidies eliminated.

Is Maori TV rugby bid a breach of WTO obligations?

New Zealand is bound by the General Agreement on Trade in Services to have no limitations on market access in the audio-visual services sector and no limitations on national treatment. This was a commitment signed up in 1994 under the previous National Government. It has effectively stopped local content quotas being introduced on television and radio.

Whilst there remain no limitations on market access, it is the commitment to no limitations on national treatment that is at issue here.

National treatment means that you treat foreign owned suppliers on an equivalent basis to domestically owned suppliers. In practice this means NZ On Air cannot discriminate between broadcasters on the basis of ownership, and it does not. However, it becomes a little more complicated when we talk about Maori broadcasting.

New Zealand limited national treatment for Maori broadcasting as follows:

"The Broadcasting Commission is 3)directed by the Government, pursuant to the Broadcasting Act 1989, to allocate a minimum of 6 per cent of its budget to Maori programming. From 1995 all public funding for Maori broadcasting will be controlled by Te Reo Whakapuaki Irirangi (Maori Broadcasting Funding Agency)."

However, Te Puni Kokiri is responsible for the money being given to the Maori Television Service to bid for the broadcasting of the Rugby World Cup free to air. Not Te Reo Whakapuaki Irirangi (commonly known as Te Mangai Paho). Indeed you might ask whether bidding for broadcasting a rugby match is "Maori broadcasting" but it is moot.

That limitation does not apply as the money has not gone through the right agency. So the exception doesn't work.

Is there a potential breach of New Zealand's WTO commitments?

The state granting funding to a broadcaster that would not be available to a foreign owned broadcaster, for the same purpose, would appear to be so. Subsidies, you see, are meant to have national treatment.

TV3 and Prime should be entitled to national treatment, and be eligible for the same funding for a similar purpose, but are not. Indeed, one could not even begin to argue that there was a process to allow them to apply for such funding.

The foreign owners of both broadcasters could, theoretically, get their national governments to formally complain to the New Zealand government of this breach. Indeed, they could go to a WTO Disputes Panel and thoroughly embarrass the government as a result.

Wouldn't this have been picked up? Well no. You see Te Puni Kokiri is hardly versed in trade agreements. The Ministry of Culture and Heritage, which is responsible, was not actually responsible for broadcasting policy and GATS at the time it was signed. It was the then Ministry of Commerce (now Ministry of Economic Development). The institutional knowledge about this is not located in the Ministry of Culture and Heritage nor TPK.

I also doubt whether anybody thought it was necessary to get Ministry of Foreign Affairs sign off on this funding.

So the Parliamentary Question is:

"Has the Trade Minister received any advice as to whether the Te Puni Kokiri funding of the Maori Television Service to bid for free to air Rugby World Cup broadcasting rights is in compliance with New Zealand's international trade obligations? If not, why not?"

Supplementary:

"How does the Trade Minister reconcile New Zealand's commitments to national treatment in audio-visual services with the granting of a subsidy to a New Zealand owned broadcaster to acquire broadcasting rights that could not and would not ever be available to a foreign owned broadcaster?"

UPDATE: This also applies to CER. New Zealand is bound to offer national treatment to Australian broadcasters. So there could be a breach of CER as well.

Remaining tariffs to stay for now

National is replicating Labour's trade policy with this announcement "Import tariffs will remain at their current levels until 2015 at the earliest, Trade Minister Tim Groser and Commerce Minister Simon Power announced today."

Admittedly they are low, a maximum of 10% now (that early agreement to freeze them in the first Labour-Alliance coalition quietly expired with that coalition), and the government has said they are subject to negotiation at a WTO round, or free trade agreements. Apparently 80% of the value of all imports is tariff free (oh the horror say the Greens, I expect), and there is already 100% tariff free trade with Australia and Singapore. Other free trade agreements will see tariff free trade with Thailand, Chile, Brunei, China and the remaining ASEAN countries over the next

This is understandable, it provides a small amount of leverage. After all, without tariffs what does New Zealand have to offer in trade negotiations? Particularly in a world with a US President with precious little interest in trade liberalisation (yes Bush actually was a positive force on free trade compared to Obama).

However, this isn't the point. Much work in the 1980s and 1990s demonstrated that tariffs are a deadweight cost on the economy, by increasing the prices of goods for consumers. There are benefits in abolishing all tariffs on all imports. Tariffs make clothes, carpets, some processed foods, shoes and some other products more expensive than they otherwise would be, to protect a few businesses from real market competition.

While the government may pursue free trade agreements with remaining major trading partners, the likelihood is that the US will go nowhere under Obama, neither will Japan under the new government, whereas the EU and South Korea would shut out agriculture - which frankly is the main point.

Meanwhile, New Zealand could instead be a free trade zone that is an example to the world, rather than retaining a few puny tariffs that simply punish New Zealanders.

It's time to have some courage - and to meet the commitment New Zealand made, as an APEC member economy, to have free and open trade with other APEC nations by 2010.

That would be a start.

Another reason to avoid Cadbury

Not only has it always been a sweet masquerading as chocolate, Opinionated Mummy shares my views on this, but is now pandering the the fatuous Fairtrade fad.

Let's not forget what Fairtrade is, a branded payment of more than the market price of a product to engage in a transfer to those who sell the product.

Yes people can choose Fairtrade, but with fair trade comes one assertion, one assumption and one deception.

The assertion is fair trade is good for people in developing countries. Paying people more than the market price for something is good for them. This of course encourages them to produce more, putting more pressure on the market price. You see, the market price is a signal of demand compared to supply. Interfering with that means overproduction, further distorting what people produce. It's basic economics, but it is hardly surprising the do-gooding left don't understand that.

The assumption is that free trade is bad. Of course free trade is comparatively rare in agricultural commodities. You can blame the EU first, US second, Japan third and others, but whilst attention is taken away from liberalising trade in agriculture with the Fair Trade trend, it means the gross distortions and subsidies seen in global trade in agricultural commodities continues. These are distortions that increased due to Barack Obama and which the EU shows precious little sign of confronting, largely because of the parasitical French.

The grotesque fraud is Fair Trade diverts attention from trade barriers that impoverish farmers in developing countries, but the economic illiteracy of the left continues to support this nonsense.

So what is the deception? That the premium paid for Fair Trade all goes to the poor farmers. Nonsense. Much of the premium is skimmed off, because Fair Trade products attract people who are less price sensitive, so everyone from retailer back can skim a little more off. It's a nice way of ripping you off under the guise of helping the poor.

You want to know more? Read this IEA report, which exposes Fair trade as being an wholly inappropriate way of helping the poor. Notably 50% of the revenue from Fair Trade levies is spent on the Fair Trade corporate brand itself on self promotion.

"50% of this income was spent on so-called educational activities and most of the remainder was spent on certification, licensing and product development. In fact, the educational activities involve campaigning and promoting the Fairtrade brand through Fairtrade fortnight, promoting Fairtrade schools etc. These are all activities that effectively promote Fairtrade’s own brand....It is most unusual for a charitable foundation whose objectives are to help the poor in under-developed countries to use such a large proportion of its revenues on activities simply designed to increase its own size. It would be surprising if Fairtrade customers were aware of this."

The Adam Smith Institute found that 10% of the Fair Trade premium actually got to the producer.

Indeed. If you want to help people in poorer countries you might do two things:
- Support campaigns for free trade, oppose politicians and lobbyists who oppose it; and
- Donate to charities with sound reputations for high quality development projects. Note, none have the initials UN attached to them.

Meanwhile, Cadbury now sells overpriced poor quality chocolate flavoured candy. I will be even less likely to buy it now.

Obama sticks a finger up New Zealand

The Obama Administration, true to form, has decided to subsidise dairy exports. Given the Bush Administration sought global agreement to abolish agricultural export subsidies (and the EU - meaning the French - didn't want to), it demonstrates a great leap backwards for international trade.

Yes, all you fawning cheerleaders of the great leftwing change merchant, he's basically told the efficient dairy industry in New Zealand to go fuck itself. Federated Farmers have already responded calling the US dairy lobby a "compost heap" (which has made Lindsay Perigo smile).

Ironic that Maryan Street is calling for strong protests, because I'd put a bet that she and the rest of the Labour caucus cheered Obama's election, despite his record in supporting higher agricultural subsidies being clear.

Yes, it shouldn't surprise. The Obama Administration is no friend of free trade, which means it is no friend of the economies of other countries. It's a friend of big fat taxpayer thieving mud rolling stinking pork - change you can believe in? Yep, if you believe in subsidising inefficient producers to screw US taxpayers, and efficient dairy producers the world over.

Thanks for nothing Mr President.

Obamaphile kiwis can go suck on...

This.

Yes the Obama administration has ceased discussions on a Free Trade Agreement with New Zealand. Of course the Green Party will be delighted, but the other parties in Parliament (with the possible exception of the Maori Party) should be disappointed.

There was little NZ media coverage when Obama supported a US$40 billion boost in agricultural subsidies back in May 2008, opposed by John McCain.

So he is playing to form, a form that too much of the fawning media ignored, because of the significance of his race. Now you're seeing that he is hardly a friend of the NZ economy, as he does not come from a background interested in free trade.

The negotiations were about a multilateral open trade deal that would include Chile, Singapore, Brunei, and hopefully reports that it is a suspension mean it is a temporary cessation.

My advice to John Key after the election that Tim Groser ought to be heading to Washington as soon as he can after the Obama inauguration can only be re-emphased.

Clint Heine expresses his disgust too.

UPDATE: The Standard ignores the Labour party (as Phil Goff was hopeful it could still proceed) and isn't disappointed at all, showing continued economic illiteracy. Apparently the Standard thinks you should be taxed for wanting to buy something that isn't Noo Zilnd made. How damned ignorant does someone living in an export dependent country have to be to oppose free trade?

Key's corporate welfare?

The NZ Herald reports that the PM is "not ruling out the option of helping Fisher and Paykel".

Which of course means using your money (or at the moment your future earnings) to prop up the company. How's your business doing? Could you do with some help?

Why not ask Santa Claus? After all, you'd think that's where the money is coming from.

Why should YOU be forced to pay to prop up one company? After all, you already do so.

You see if you want to buy a dishwasher or clothes washing machine or dryer from one of F & P's competitors, you'll pay a 5% tariff on top of the market price and GST. F & P's products don't face this (a bit less for countries where there is a free trade agreement like Australia).

So you're already doing your bit, by buying their products instead of facing the punitive tax on its competition or paying a tax for the privilege of buying the competition.

Here's a better idea. Cut company tax. Take the opportunity to drop company tax from 30% to 20%, giving all business a break, and have a substantially more competitive rate than Australia, the USA and most European countries.

Of course the quid pro quo should be simple, eliminate ALL forms of corporate welfare, all subsidies for marketing, R & D and the like. That means abandoning nonsense about building a broadband network that users aren't willing to pay for and telcos don't believe is a worthwhile investment. It means letting business be free to compete.

However, John Key appears more interested making you be a compulsory "investor" in F & P.

Oh and if you want ammunition for the left? Using taxes to prop up big business is just handing them it on a plate (though it's hard to beat the Clark government's support for Toll Holdings in buying the railways for well above market prices just before a recession).

EU to continue wrecking global dairy trade

It's hardly surprising, but that great wrecker of efficient agriculture, the European Union, has decided to restart subsidising dairy product exports. It also is refusing to reform subsidies in agriculture until 2013.

Not only does this mean ripping off European taxpayers to benefit the inefficient inferior producers of dairy products in the EU (ones that have a higher carbon footprint that those in New Zealand), but also dumping taxpayer subsidised products in other markets the EU has access to - when it restricts its competitors to the local market.

Don't expect leftwing activists to talk about European economic imperialism, don't expect them to call for an end to export subsidies in agriculture. No. The Bush Administration did call for this, made it the deal it was willing to strike with Europe at the WTO, but the wealth destroying French said no. You see you can talk about poverty and how sad it is that poorer countries find it difficult to trade out of poverty, but what the EU actually does is shit over the world in terms of agricultural trade.

A better move would be to slash subsidies and open markets, to help stimulate trade and use the recession as a chance to send a signal that inefficient farmers that don't produce what people are prepared to pay for should go to the wall.

No - other businesses and individuals struggling in the EU can go to hell, efficient farmers elsewhere in the world can go to hell - the politicians and mandarins in Brussels have said so.

Sadly the MEP elections later this year will only provide a small outlet to vent my anger at these scum - after all, with Bush almost gone, the likelihood that the Obama Administration - given the man's explicit support for higher agricultural subsidies - will pressure the world on trade - is not great.

Labour does good on trade

A free trade agreement with ASEAN is a good step forward, opening up access to relatively close and fast growing markets in South East Asia, and so congrats to Phil Goff for this. Indeed, the pursuit of a liberal open trade agenda is one of the few areas I'll give Labour credit for continuing, as it is a fairly bipartisan activity politically.

Now the Nats can build on this and take it further, as Labour has tended to ignore areas like audio-visual services and the like. I expect only the Greens, NZ First and perhaps the Maori Party will question it, because they share xenophobia about foreign made goods, and the Greens in particular find the idea of consumers and producers interacting voluntarily to be some breach of people's sovereignty!

Charles engages in anti-GM hysteria

One of the UK's biggest beneficiaries, Prince Charles, is in the Daily Telegraph today saying:

"What we should be talking about is food security not food production - that is what matters and that is what people will not understand.

"And if they think its somehow going to work because they are going to have one form of clever genetic engineering after another then again count me out, because that will be guaranteed to cause the biggest disaster environmentally of all time."

He gets hundreds of thousands of pounds of subsidies every year from Brussels, subsidies that prop up your farms against competition from more efficient farmers in other countries, from South America to Africa, Asia, Australia and New Zealand.

He's also a widely esteemed biologist and scientist of course, oh no that's right, he talks to plants and embraces a wide range of religions. Qualifications for the future Head of State to express such controversial views surely.

Hasn't this untrained bludger off of European taxpayers disqualified himself from being a future apolitical head of state often enough?

The left and the Greens cheers the end of Doha

Charming isn't it? The left cheers the end of the Doha WTO trade talks, preferring powerful economies negotiating bilateral preferential trade arrangements than a multilateral agreement to open up trade in primary products (primarily in Europe, Japan and the USA), manufactured goods (primarily in the richer developing countries) and services (also developing countries).

The benefits Doha could have brought to the world have been estimated in a range from US$84 billion a year to US$574 billion. It could have helped ease world food prices by freeing up the production and sale of food across the globe, and eliminating distorting subsidies, tariffs and non tariff barriers that hurt farmers in countries from Argentina to Gabon to Thailand to New Zealand.

Idiot Savant cheers on the collapse because, as usual, anyone rich is to blame and the "poor" countries (most with far bigger economies than New Zealand) were the "victims". He supports India and China holding things up, even though what both countries wanted was to restrict imports of agricultural goods whilst demanding the US and Europe open up, and to essentially inflate the price of food for their own people.

He then quotes George Monbiot, as if he is an authority on trade and agriculture, whose article says Mugabe is right in "democratising ownership of agricultural ownership", of course Monbiot didn't say Mugabe did it right because "He has failed to support the new settlements with credit or expertise, with the result that farming in Zimbabwe has collapsed." that's right. So after stealing the land, the fact the expertise went with the former owners who left, and that credit can't be printed is irrelevant to Monbiot the imbecile. He argues that we would all be better off with smaller farmers and that governments should intervene to require this. You see to the left free trade strangely means subsidised agriculture - a distortion Sue Kedgley perversely argues.

Speaking of which, the Greens are quietly cheering the failure of negotiations that could have given the New Zealand economy a boost - because after all, producers of wealth are really beside the point for the Greens. The Greens BLAME NEW ZEALAND, for treating services as being commodities bought and sold (which they are) rather than the "integral public infrastructure", which implies not that the Greens want the services delivered the best means possible, but that it must fit the socialist ideology of nationalised services that are effectively subsidised. The WTO of course doesn't require that anything be privatised.

The Greens give cop-outs for the EU, USA, India and China. You see WE were pushing things too fast, because funnily enough demanding that trade in agriculture be at least as liberalised as trade in manufactured goods (which was substantially liberalised through the 50s-70s) is "lacking credibility". The only good chance New Zealand has at influencing global trade collapses and it is New Zealand's fault.

Well we know where the Greens stand -they wanted it to fail, supported our trade enemies and rivals against agricultural liberalisation. Lied or is just plain stupid about free trade, when New Zealand's position was even shared by the UN Secretary General. The Greens prefer that Europeans, Americans, Asians grow their own food, even with heavy subsidies and can dump their products on foreign markets and shut out imports, and New Zealand can go to hell because, after all, that's "democracy and community".

The Green view of "community" is of course not people choosing what they want to buy at market prices, but the state "protecting" consumers from imports, protecting domestic producers, and taking from taxpayers to support who they think is good for the community. When in fact the best representation of the "community" are people making their own choices, not the state taxing, subsidising, banning or compelling them to do so.

The Greens call for an alternative. However what does that mean? There is only one alternative to a gradual process of liberalising global trade, irreversibly, and that is state intervention. The case for liberalisation is clear, it allows the most efficient producers of products consumers want to buy to thrive, whilst those who are expensive, inefficient (that means wasting resources, something the Greens claim to care about) and produce products that consumers would not otherwise choose to fail or choose to invest in other goods and services. Trade barriers put up prices for consumers, they hinder the growth and prosperity of producers, and often involve taxpayers being forced to pay for goods and services they may not consume - meaning overproduction of that which people don't want.

The Greens are happy New Zealand's GDP will grow by 1-2% less thanks to the failure of the Doha round. At best they are confused on trade, at worst they are traitors to the New Zealand economy who speak approvingly of the French position, which more than any other has undermined the EU dismantling its obscene Common Agricultural Policy. I expect they will cheer the status quo and the creation of more privileged trading agreements that shut out New Zealand - and hope that the mainstream media might actually quiz the Greens as to why they don't want New Zealand goods to have open access to foreign markets.

China and India helping to derail world trade talks

Associated Press is reporting that China and India are calling for INCREASES in agricultural protectionism, wanting the powers to increase tariffs if there is a significant increase in imports. They ironically have been seeking higher cuts in subsidies and protection from the EU and the US, whilst not wanting to reciprocate in opening up their own markets for agricultural or manufactured goods sufficiently.

WTO Chief Pascal Lamy has been trying to negotiate a deal that would include significant reductions in limits of EU and US spending on agricultural subsidies, while developing countries would cut manufactured goods tariffs by 20-25%.

Meanwhile, the French, Italians and Irish farmers, piggies supping at the trough of the EU Common Agricultural Policy are objecting to the modest compromise proposals.

If ever there was a time when the world needed to open up trade, and get rid of inefficient cost-plus subsidies and barriers to trade, it is now. European farmers have lived long enough off the back of the European taxpayers and consumers. Export subsidies should end immediately, quotas and other barriers to imports should also end, and existing subsidies phased out in a three year transition. Then, and only then, can European farmers deserve to not be called bludgers.

Fair Trade still isn't

Increasingly UK newspapers have taken to producing their own TV clips, which unsurprisingly are often smarter and more interesting than the BBC and commercial TV.

Today I present to you a piece from the Daily Telegraph as part of a series it calls "Holy Cows". It is presented by Sameh el-Shahat from Egypt, and it tackles just a couple of the myths of so called Fairtrade. For example, looking at how much of a margin is taken for fair trade and how much actually gets to the farmers, and secondly how fair trade is a distraction from the real trade agenda of free trade. Paying farmers a bit more for the raw commodity whilst maintaining high trade barriers that prevent them from selling the commodity processed is cheating them. I've said before there are many arguments against this well intentioned distracting fraud here, here and here. Oh and to some more liberal critics, yes this isn't a non-initiation of force, but it is fraud, and it assuages consciences while distracting people away from the real issue - trade protectionism. This of course, is deliberate, as much of the environmentalist/leftist end of the political spectrum actually supports that (OxFam notably doesn't).

The article is here

The video here

EU's Common Agricultural Policy exposed

I was recently linked to by "CAP Health Check" a blog that seeks to present as much information as it can about the European Union's dastardly Common Agricultural Policy (you know the policy of food sovereignty and food security that Sue Kedgley effectively has been endorsing). It seeks greater accountability and transparency about expenditure on EU farm subsidies. As someone paying for these (as well as a national from a country suffering from them), I'm rather keen to see it.

A sister site is Farmsubsidy which has some fascinating data, including google mapping the address where farm subsidies are received (so far only Sweden is complete). Go here, focus on Stockholm to see how many farm owners seem to be based in the downtown Stockholm - clearly struggling village producers. A similar map of the UK would have to include Clarence House London, as the Prince of Wales receives taxpayer subsidies for his farms. Nice. It shows the pony clubs in Denmark that receive over 255m Euro in subsidies. Ireland is the biggest per capita net recipient of farm subsidies, Luxembourg the biggest net per capita loser. However per farm the biggest recipient is Denmark, the lowest Malta (average UK farm gets more than the average French farm, because the latter are small and inefficient).

The UK gets 4.3 billion yes billion Euro in agricultural subsidies, but contributes 5.6 billion to the EU to fund agricultural subsidies, so is a net loser. What this means is that the average British taxpayer is paying 22 euros a year to subsidise farms outside the UK. The average UK farm gets around 12,000 euros a year, not bad really. 49% of the UK subsidies go to the top 10% of farms. 295 recipients get an average of over £500,000 a year in subsidies!! The biggest bludger last year was J & T F McFarlane getting around £552 000 (appears to be a Scottish beef farm).

Nice piece of work collecting data, and listing all those who make a living partly out of the theft of taxes from the rest of us through Brussels.

When left is right and down is up - the bizarre world of Sue Kedgley

Sue Kedgley reporting on the food conference she attended says "They argued that the main cause of the crisis was that food production in much of the developing world has been decimated by three decades of globalization and free trade liberalization policies. Previously self sufficient countries had been unable to compete with heavily subsidized, cheap European and American food and so small self sufficient agriculturalsectors collapsed in country after country, leaving developing countries dependent on imports and food aid."

Ok - now read that again. "three decades of globalization and free trade liberalization policies" (sic, what's those AmericaniZations Sue?)? Huh, might have missed that one while the EU Common Agricultural Policy was subsidising domestic production and exports and shutting out imports, the US doing a less protectionist version, Japan doing even worse on rice, and South Korea, EEA zone members all doing anything BUT free trade liberalisation and in most cases resisting efforts at the WTO to encourage multilateral agricultural trade liberalisation.

Then she goes on "New Zealand is seen, thanks to our flag waving for free trade liberalization policies, as ‘an enemy of the third world’ and a slave of America and Europe." which she didn't correct, because she thinks it is true too. If only Europe and the USA were slaves for free trade liberalisation in Agriculture.

Seriously, Sue is either:
1. Stupid.
2. Manipulatively lying or
3. Mentally deranged.

You cannot say something is what it isn't without being one of those. So which one is it?

Anderton is right

No I haven't gone mad, Jim's learnt something.

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He once would have been a part of the lunatic left, now he's damning the Green Party's silly call for Fonterra to charge people less than the international market price for milk according to the NZ Herald.

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Check this quote "It might make the handwringing Greens feel good to say this sort of banal statement but what are they really asking for?" ..."The only sustainable way to price goods is by international markets. Anything less and you are on a slippery and unsustainable slope."

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Bloody hell. How can you disagree with that? That was Jim Anderton, the man who fought Rogernomics, who set up the New Labour Party and the Alliance.

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Then he says "The only sustainable and sensible way to help Kiwi households meet their food bills is to grow the economy and provide better pay, more jobs and tax relief such as Working for Families."

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Besides Working for Families (which isn't tax relief, it's middle class welfare), he's right again, a growing economy and tax relief is the best way to help Kiwi households. We'd disagree on the government's role in that obviously, but it shows how distant the Greens are from mainstream politics and reason.

UN Secretary General demands free trade in food

According to the NZ Herald UN Secretary General Ban-Ki Moon has come out at the UN's Food and Agriculture Organisation conference on the right side of the argument about world trade in food.

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He has argued forcefully for:

- An end to export restrictions (so that producers can sell freely to willing buyers, incentivising them to produce more);

- An end to import tariffs and restrictions on food imports (so that consumers in importing countries do not have their prices inflated by protectionism);

- An end to subsidies for biofuels, so that agricultural production for food isn't disadvantaged relative to biofuels;

- Eliminations of taxes that discriminate against farming.

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It's not everything (subsidies for agriculture should go too), but it would go a long way towards easing the problems in world food trade. Even solidly leftwing Brazilian President Lula da Silva has called for the end to agricultural subsidies he said the world would not be facing the food crisis "if developing countries had been stimulated in a free-market context". "The solution - Lula went on - is not protectionism which would slow down demand. The solution is to increase food supply, open up markets and wipe out subsidies in order to meet increasing demand. And for this a radical change in ways of thinking and acting is required".

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He's quite right.

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Far better than the ravings of Sue Kedgley who has gone to argue the opposite at the same conference. Will the mainstream NZ media question her as to why she went to an international conference to argue for policies that hurt the NZ economy and which developing country governments oppose? What credibility does this raving lunatic have?

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Meanwhile Mugabe has gone to spread lies, and has been snubbed by the Italian government and the US (but will NZ do it?). Iranian President and homophobic Islamist nutcase Mahmoud Ahmadinejad has used the FAO meeting to say Israel will disappear and claimed some conspiracy on food and oil prices. I continue to wonder if Jim Anderton, leading the NZ delegation and Sue Kedgley will speak out against these two tyrants.

Greens support European Common Agricultural Policy?

A bizarre new ideology is being pushed by the Greens - it's called variously "food democracy" or "food sovereignty" or "food security".

Sue Kedgley has spoken about this, with a combination of hysteria and banality that sends the mind boggling. Take a few quotes:

"food commodity markets have become a magnet for speculators and traders fleeing Wall street. Commodity speculators are pouring billions of dollars into commodities and grain futures –betting on the future of grain. They don’t actually buy or sell a physical commodity, like rice or wheat, but bet on its price movements. As food has been turned into a distant tradable commodity, a form of capital, to be traded and speculated upon, grain prices have soared, putting food stocks further out of poor peoples reach. "

So it's new that food is a tradable (sic) commodity. Not only that she thinks futures are a "bet" over nothing, when they are trading a contract to trade a commodity. A stupid neo-leftwing misinterpretation of what all those "rich folk" do, like the notion that share trading is about nothing at all -when it is about owning businesses.

She goes on with the typical "big bad corporation" vs "poor little country" nonsense saying "So we have an extraordinary situation where agribusiness giants like Cargills and Monsanto are making record profits while countries like the Philippines and Bangladesh can not afford to buy the rice they need because prices are so high. " Well Sue, countries don't buy food, people do. Both the Philippines and Bangladesh have suffered due to price controls and trade restrictions by their own governments. You might note that the trade in rice is particularly heavily distorted because countries like India ban exports, and others like Japan virtually ban imports, restricting very efficient producers like Vietnam and Thailand from being able to increase production to meet global demand.

but Sue doesn't support free trade.

She loses the plot completely here "This brings me to another major underlying cause of the present crisis -- the so-called trade liberalisation agenda or theology that global institutions like the World Bank and the IMF –and of course our government --have been pursuing for decades, and forcing on developing countries." Why is this a cause of the crisis Sue, since trade liberalisation in agriculture has yet to seriously occur? Well...

"Free trade is based on the premise that food should be grown and produced wherever in the world it can be produced more cheaply. If another country can grow something more efficiently we will no longer grow it here because it is inefficient. " No Sue, is it based on the premise that producers and consumers should be free to choose what they sell and buy according to mutual voluntary interaction.

Then she really loses it "The WTO enforces this through global trade rules that require countries to open up their agricultural markets to global competition and forbid them from protecting them from cheap imports, as this is seen to distort or interfere with the mysterious workings of the free market". Well in case you didn't notice Sue, open trade in agriculture doesn't exist. The EU, Japan, USA and some developing countries are against it - so how are you blaming something that doesn't exist? What do you think the current round is all about? Complete nonsense, it's no wonder you find the free market mysterious, since you can't even identify when it doesn't exist.

"No one has ever been able to explain to me why the leading flag wavers for free trade, Europe and American, are allowed to continue to heavily subsidise their own farmers, while preventing other developing countries from subsidising their own" Um Sue, they are not the leading flag wavers for free trade, New Zealand and Australia are. There is no free trade in agriculture, and developing countries continue to subsidise and protect their own agriculture too. However, you're either stupid or making it up by now.

"The result is that dozens of developing countries that were once self sufficient have become huge importers of food, and now find themselves at the mercy of a global market and skyrocketing food prices." Well dozens is an exagerration, but the fault is not free trade Sue. It doesn't exist in agriculture you imbecile.

Then she quotes the Minister of one of the biggest offenders of all "The French Agriculture Minister Michel Barnier commented recently, that food is not simply a matter of trade and food cannot be left to the laws of the market alone, neither to financial speculators. “The answer to food insecurity is not brutal liberalisation of trade, but the development of agriculture all over the world and not only where it is profitable to produce it.”

Excuse me? So Sue Kedgley effectively supports the view of a man who defends European agricultural policies that shut out producers from NZ and developing countries from European markets, that subsidise European producers to NOT produce (hiking up prices), that subsidise European food producers and exports undermining producers in other countries. The Common Agricultural Policy is economic and environmental vandalism, but Kedgley is too stupidly attached to statist collectivist ideology to know better. She is effectively siding with the enemies of New Zealand farmers. Thanks Sue!

Then she starts being a bit creative with the facts "Many countries are now giving top priority to food security, increasing agricultural productivity and self sufficiency. The Philippines, which has been rationing rice, has announced its intention to move from being one of the worlds biggest importers of rice to being self sufficient within five years. " Actually Sue, it is not one of the best places for growing rice given its geography, but the high price is making it more economic. Much land is government held and is being set free, and very poor infrastructure (mainly roads - those evil roads) has been a reason for poor production.

Now it's make up facts time "Many countries are openly flouting WTO rules and are putting controls over food prices, exports and imports, introducing agricultural subsidies and creating food reserves –none of which is permitted under WTO. " She doesn't say what countries, and it is an out and out lie, since agriculture is not part of most countries commitments to the WTO. She ignores that price controls do nothing to encourage production or attract more imports. She's far too stupid to know that interfering with trade does far more to reduce supplies and increase prices than not doing so.

So she argues for a "national food security strategy", something she admits Jim Anderton says is loopy. Her Maoist type solution includes "We want all primary school children to be taught how to grow, harvest and prepare food. We want to grow edible trees in every school in New Zealand, and on parks and reserves as well. " See she'd rather your kids grew tomatoes than traded them, and she wants edible trees (!) growing in public places, and we can watch the fruits being plundered as soon as they emerge.

"We want to encourage a much greater uptake of fair trade food, so that when we buy imported food we know that we are supporting, not undermining, their local farmers." Or paying more for the same product, so we can buy less of other food. Why should there be "fair trade food" when prices are getting so high? Oh no, she can't link the two can she?

"We want to encourage a similar turning away from industrial, petroleum dependent food towards local food production. " In other words, LESS food production. That'll do wonders for prices then.

Sue Kedgley is dangerous. Dangerously stupid. She supports the obscene system of subsidies, protectionism and trade barriers that has exacerbated food production in developing countries, but more importantly has undermined the New Zealand economy for decades. She doesn't give a damn that this damages the economy, she thinks we can be self sufficient like North Korea. She advocates moving from efficient mass produced food to quaint locally produced high price, low production food. Nice for some, but it means some will starve, as there will be LESS food. She'll want price controls then, and that means there is even LESS incentive to produce.

The economic illiteracy is scary, this is from the same party that would rather Fonterra sell cheese, butter and milk well below market price than let farmers profit from the best dairy prices in ages. This foolishly forgets that if domestic prices were controlled, there would be shortages because what farmers would sell domestically if they could get more money exporting?

Food sovereignty, democracy, security, whatever term you wish, is a shroud for protectionism and statism. It is the notion that people don't know what is best for themselves, that the decisions of millions and millions of people aren't right, the idea that people should pay a lot more or less for something than what others are prepared to pay, or taxpayers should be forced to pay for production or consumption. It is the wishful thinking of arrogant planners who can't stand that the results of those millions of decisions means things aren't perfect for everyone, so think their little brains can change something and make it better.

High food prices are partly the fault of the biofuel fetish, driven by many environmentalists. That should end, at least in the sense that government subsidies or incentives should end for it. A bigger problem is how the subsidies and protectionism of the EU has stifled production elsewhere, how trade restrictions hinder production and the ability of farmers to benefit from high prices and respond to them, and the ability of consumers to source the best prices available.

Given Sue Kedgley doesn't understand futures trading, and doesn't even realise that trade in agricultural commodities doesn't come close to open and free trade, you can't expect much intelligence to come from her on these matters. In fact the nonsense she is spouting simply makes things worse.