Posts Tagged ‘FTA’

Evaluating export growth.

datePosted on 09:55, February 3rd, 2014 by Pablo

Much has been made of the fact that since the entrance into effect of the bilateral Free Trade Agreement (FTA) with China in 2008, New Zealand exports to China totaled NZ$33.7 billion in the six years since then compared to NZ$9.9 billion in the period 2002-08. In 2007/08 before the FTA went into effect exports to China totaled NZ$2.5 billion, and in 2012/12 they were worth NZ$7.7 billion. That is more than 200 percent growth in six years, or more than 45 percent per year (Hat Tip: Kiwiblog)

Needless to say, pro-trade cheer leaders think that this is a great thing. And perhaps it is. But before we get too excited and proclaim the absolute benefits of this bilateral, a few questions need answering.

First, what is the volume and worth of imports from China during the same period? In other words, what is the state of the bilateral trade balance?

Second, has the FTA led to export commodity diversification or concentration?

Third, has the increase in bilateral exports led to an increase in employment in the export sectors affected?

Fourth, has there been a trickle down effect evident in the expansion of auxiliary industries and tax revenues derived from them and the export sectors involved?

Then there are subsidiary questions:

Has overall NZ GDP per capita and income distribution increased as a result?

Have occupational health and safety standards improved in the export sectors associated with the FTA?

These questions are important because they illuminate more precisely who has and has not benefitted from the FTA.

I invite readers to do a little research on these questions, using the government’s own sources as well as academic studies. The findings may come as a surprise, as oftentimes macro-statistics mask the meso- and micro-impacts underneath the “big picture.”

Not all is what it seems.