The big and the small, past and future

In politics there is the big and the small, the past and the future. Most Prime Ministers prefer the big and the future but usually spend much of their time on the small and the past.

John Banks is in the small category, an engaging but diminishing figure who pulled one too many swiftie. The issue in the Sky City and Kim Dotcom donations to his 2010 mayoral campaign is not as Key puts it, whether he complied with the law. It is how much he obfuscated.

Banks is for now a suppurating embarrassment to Key and National. The famous high bar Key’s ministers had to clear has dropped from ethics to legality. Ethics, Key said airily last Monday, “have a wide definition”. Banks would agree. Most wouldn’t.

But Banks is small beer: he slashed Rodney Hide’s Epsom majority from 12,882 to 2261 last year and took ACT down to 1.07 per cent of the party vote. Hypothetically, ACT could smuggle the presentable David Seymour in as candidate in the next Epsom election (by- or general), hoping National voters might go along. But that would need National bosses (some of whom have never wanted ACT in Epsom) to play ball when presentable Colin Craig’s 2.65 per cent Conservatives are at hand.

On Friday Key slipped away from the Banks bonfire of vanities to the comfort of a New Zealand United States Council (of businesspeople) conference on the Trans-Pacific Partnership (TPP) economic integration talks.

The TPP would expand the P4 (the closer economic partnership between Brunei, Chile, New Zealand and Singapore) to include Australia, Malaysia, Peru, the United States and Vietnam — with Canada, Japan and Mexico now also keen.

Note: “economic partnership” and “economic integration”. This is not about trade as we knew it: tariffs and quotas and subsidies, which block imports or dishonestly price exports. Economic integration reaches far deeper into sovereign policy, so deep there is real doubt New Zealand (or any other country) can fully sign up.

New Zealand knows about trade. Two decades back we went cold turkey from one of the “free” world’s most closed economies to one of its most open. Swags of well-paid manufacturing jobs evaporated, widening income inequalities and making many people worse off. But prices of consumer goods — cars, clothes, TVs and so on — plummeted, making almost everyone better off.

That point was made repeatedly on Friday: a trade agreement doesn’t just boost exports of goods and services, lifting country income; it lifts economic wellbeing through cheaper imports. This is a well-established economics maxim, though it says nothing about fair distribution of the gains, now a sore political point in many countries.

By the old trade measuring stick New Zealand would gain from expanding the P4 into the TPP and even more if it eventually includes east Asia, notably China, as a number of speakers mused, and substitutes for, or revives, the stalled Doha World Trade Organisation (WTO) multilateral trade negotiations — especially if Key’s insistence on free trade in agriculture is met.

But is the economic calculation so unequivocal for all countries in the case of economic integration agreements, the future the TPP envisages?

United States Ambassador David Huebner spelt out that future with a bluntness not normally associated with diplomacy. A tariff and subsidy agreement would, he said, be appropriate to eighteenth- or nineteenth-century conditions. TPP must be a “gold-standard twenty-first-century” deal, covering today’s complex economic integration issues of intellectual property (IP), investment and behind-the-border matters. Behind the border governments make laws and purchasing rules (including, for example, Pharmac), run state-owned enterprises and operate regulatory commissions and otherwise limit foreign enterprises’ freedom.

The more advanced an economy is, the more Heubner’s matters matter to it, particularly investment and IP. Hence Huebner’s blunt message; he was talking up the future.

Key’s agriculture sticking point (which Canada flatly rejects) sounded more like that of a less-advanced economy — past more than future.

Then he underlined the past: “If we had to make a phone call for support, it would go to Australia, the United States, the United Kingdom and Canada. That is the reality of our history.”

Of course, the great majority of us, including Maori, are kin to those countries’ inhabitants. But our future population will include a far higher proportion of east and south Asians, for whom the “reality of history” is different — witness China’s thuggish treatment of blind dissident Chen Guangcheng and his family. That Asian proportion has quadrupled in the past 20 years.

The reality of history is that it is not the future. Murray McCully got it more nearly right in his speech, emphasising his China connections and the advantages of an independent foreign policy in a rapidly changing world.

McCully is not the next big future thing. Like Banks, he is small and nearly past. Now, for the future…