At a time when New Zealand needs the flexibility to respond to pressing domestic economic priorities, and with fresh questions being raised in Australia about the value of their free trade agreements, now was not the time to be signing away New Zealand’s economic sovereignty, Professor Jane Kelsey told a select committee this morning considering the ASEAN-Australia-New Zealand free trade agreement.

“The current crisis was largely generated, and was certainly fuelled, by light handed regulation of financial services operators. Now New Zealand is locking in the deregulation of financial services throughout South East Asia through this agreement.”

“While New Zealand may have reiterated its existing commitments under the General Agreement on Trade in Services (GATS), the ASEAN FTA has the potential to wreak havoc in East Asian countries that suffered a devastating financial meltdown just a decade ago.”

These agreements don’t come without a cost, and neighbouring Australia is now raising questions over the value of their free trade involvement, Jane Kelsey said.

In recently published analysis of Australian FTAs,* the Australian Parliamentary library found that despite the benefits being talked up, Australia’s FTAs have been followed by massively higher Australian trade deficits, and the anticipated gains for Australian exporters have fallen well short of estimates.

Professor Kelsey challenged the major parties to adopt a moratorium on further negotiations so their impacts on New Zealand could be better understood.

“These FTAs are expansive and complex and bind the hands of future governments in ways that are poorly understood and often unanticipated.  Yet the government has already signed the agreement, which renders the select committee process all but useless.”

“The implications of Free Trade Agreements are especially worrisome at a time of international economic crisis,” Jane Kelsey said.  “This is not the time to be signing agreements that tie the hands of governments and remove the flexibilities that are essential to respond to domestic priorities.”

* Australian paper: http://www.aph.gov.au/library/pubs/BN/2008-09/AustFreeTradeAgreements.htm