Trade is the way to change the fortunes of Middle America

10 Nov 2016

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History tells us that the path to power and prosperity is trade. You can’t grow your country’s wealth by trading with yourself; you have to go and get some other countries’ wealth to become more prosperous. This is absolutely true for New Zealand, where horticulture is an enormous contributor to our nation, being the fourth largest export.

The American people have given their President Elect a strong mandate to return the United States to economic vitality. Our trade with the US earns New Zealand over $5 billion a year, so the US market is very important to New Zealand’s prosperity. Horticulture only accounts for $200 million of that, but the US is a growth market for horticulture exports, a situation we believe will continue into the future.

Trade is, of course, a two way street. Free trade agreements recognise that where two countries agree to reduce tariffs and other non-tariff barriers, this will result in increased trade and affluence for both paries. The opposite can also apply, where if one country increases its tariffs and barriers, the other country is likely to follow suit, leading to reduced trade and a decline in prosperity.

During his campaign, the President Elect talked about imposing large tariffs on China and Mexico. The likely result would be those countries following suit and raising their tariffs on US goods, which would end up removing more jobs from the US as trade reduced. If that trend continued with other countries raising tariffs, the significant progress that has been made on liberalising trade in recent years will be stymied, and global trade, global prosperity, will decline.

So to you, Mr President Elect, I say that the way to ‘Make America Great Again’ is not to raise tariffs, but to use trade and free trade agreements as a pathway to increase and secure US jobs.

- Mike Chapman, CEO