Open markets encourage investment, increase competitiveness, and allow for more consumer choice and product innovation in the dairy industry, said Fonterra’s Trade Strategy and Stakeholder Affairs Manager, Dr Francis Reid.
This was the message he delivered to an audience at the Semex Dairy Conference in Glasgow, ahead of Brexit – or the formal triggering of the UK’s withdrawal from the European Union, in March. He said that Fonterra and New Zealand were examples of the success of open market policy. His talk came amid warnings of a growing protectionist movement globally.
Dr. Reid spoke to New Zealand’s economic prosperity that has emerged over a period of economic liberalisation. He noted that in the early twentieth century the UK was NZ’s largest trading partner and the main market for NZ’s dairy exports. This changed when the UK joined the European Economic Community (EEC), also known as the Common Market, in 1973, which resulted in New Zealand losing its preferential access to the UK.
Dr. Reid told the audience that following the end of that close trading relationship, NZ suffered severe economic shock. Initially, to counter that, New Zealand adopted protectionist trade policies, including coupled subsidy payments for farmers and a highly controlled economy, to manage the risks that this change brought.
He said that eventually New Zealand opted to deregulate its economy, open its industries up to competition, remove subsidies, and pursue a policy of free trade. These policies have laid the foundations of New Zealand’s current economic prosperity and growth.
The message for a post-Brexit Britain, Dr. Reid told the audience, was that open markets and pro-competition policies drive economic growth. He said if New Zealand and the UK could establish an open trading and economic relationship post-Brexit, then both countries could build upon the relative strengths of each market, including their geographic proximity to markets in the Asia-Pacific region and the EU respectively. A good Brexit, for the UK and for the world, would help to halt the rise of protectionism, Dr. Reid said.
His presentation included trade statistics that surprised many, including that the UK is the world’s second largest net dairy importer, and that 98 per cent of these imports currently come from the EU.