Could the Provincial Growth Fund threaten New Zealand’s free trade credentials?
Regional Economic Development Minister Shane Jones today confirmed that some Provincial Growth Fund expenditure may qualify as agricultural subsidies, meaning it would need to be reported to the World Trade Organisation, says ACT Leader David Seymour.
“Jones said he had sought advice from MFAT about the legitimacy of his spending. This would be the first time New Zealand has reported such subsidies to the WTO in 25 years.
“It would be incredibly embarrassing if the Government had to report this expenditure, especially given David Parker travelled to Europe in January seeking to limit the agricultural subsidies of other countries, and Jacinda Ardern’s recent trumpeting of free trade.
“Subsidies for agricultural products are tightly restricted under WTO rules and for good reason. They stand in the way of free and mutually-beneficial trade; they create inefficient domestic industries by coddling producers; and, they represent wasteful spending and require higher taxes to support them.
“The Fourth Labour Government scrapped all of New Zealand’s agricultural subsidies in the 1980s, resulting in more productive, profitable and innovative producers.
“In his typical, blustering fashion Jones said he had no intention of complying with the international trade body’s rules.
“NZ First has always harboured a deep desire to return us to the Fortress New Zealand of the 1970s.
“If Shane Jones is determined to continue making such payments, he’ll be sullying New Zealand’s international reputation as a free and open trading nation.
This exchange in question time yesterday doesn’t give any confidence that Jones is taking WTO requirements seriously:
David Seymour: Has the Minister had advice in any form that some of his provincial growth fund expenditure may have to be reported to the World Trade Organization as it qualifies as agricultural subsidies—the first time New Zealand would have reported such subsidies in 25 years?
Hon SHANE JONES: Yes. Naturally, advice has been sought from the foreign affairs department. However, given that the adjudication and the appeals of so-said international trade body are in a state of disarray, I’m not bothered by that at all.
Part of the pain of the ag-sag of the 80s was due to the axing of subsidies but I don’t know of any farmers who would want to go back to the bad old days when they were at the mercy of politicians and bureaucrats, focused on producing more rather than what markets wanted.
Free trade has made New Zealand stronger and protection from the WTO has helped when other countries have tried to use non-tariff barriers and other anti-trade measures against us.
As a small nation heavily dependent on trade, we need the WTO and the minister’s cavalier attitude to it and our reputation for free trade is yet another reason to question the PGF.