Trade war hurts the people: former New Zealand PM

"Any trade war hurts the people of both the economies. The costs of goods go up. The cost of living goes up. Inflation usually is driven when cost is rise, and that of course hurts people. So there's nothing to be gained by actually promoting increased tariffs as a retaliatory mechanism. And in that perverse way, small countries sometimes can benefit, because where these tariffs increased on things that we are trying to sell as well, it may give more countries chance. "

                                                                   -- Jenny Shipley, former New Zealand Prime Minister

A file photo of former New Zealand Prime Minister Jenny Shipley. [Photo: AP/David Karp]

The Boao Forum for Asia Annual Conference 2018 has kicked off in south China's Hainan Province.

The forum, scheduled from April 8 to 11 in the town of Boao in Hainan, has the theme "An Open and Innovative Asia for a World of Greater Prosperity" this year.

It will focus on four main areas, namely "Globalization and the Belt and Road Initiative," "An Open Asia," "Innovation" and "Reform."

Our reporter Zou Yue earlier caught up with former New Zealand Prime Minister Jenny Shipley, who supported China during the WTO negotiations, to talk about area integration, free trade, and trade conflict between China and the U.S.

Q: Let's talk about integration first. New Zealand is not an Asian country per se. But it has benefited a lot from Asian integration. How would you describe New Zealand's experience?

A: Well it has been a huge benefit. New Zealand has the first free trade agreement between New Zealand and China. That is a relatively recent step in terms about working with Asia. So before ways being close to the ASEAN, and Australia, and New Zealand, tries to stay a line with East Asia and Southeast Asia, partly because of that Pacific Rim. It's been hugely successful, in the case of China-New Zealand two-way trade. It's gone to 20 billion dollars in the two-way trade and it going very close to 30 now. To the mutual benefit of people…

Q: Is this a learning curve for you or a new way in the first place?

A: Well, New Zealand and Australia have had integration for over 40 years. New Zealand talent flows freely, New Zealand goods and services flow freely, effectively it is giving a 5 million-person market in New Zealand, and nearly 30 million-person market in Australia, and joined up experience, and yet we are completely independent and geopolitical too.

Q: And that makes a lot of economic sense, for both?

A: Well it is a good experience for people. It's economically beneficial for both populations.

Q: But there is a talk, and also conceptions of trade wars: the US now prefer bilateral trade agreement, of course New Zealand, Japan and others considering they are all regional trade pact. And China is also initiating RCEP, China's initiated of trade rules. What do you think the trade rules will be looking like in the future?

A: Well bilateral and multilateral agreements are useful. New Zealand though has always supported the WTO's framework, and the tragedy in this conversation is that we haven't been able to get successful WTO rounds. We everyone benefits from globalization and open trade. And the more recently situation is that people are taking their own decisions, rather than relying on the WTO, to sort out these disagreements.

Q: And do you think this will stay fractured down the road?

A: Well I certainly hope and I know New Zealand's position that the WTO stance. We supported strongly China coming into the WTO. I think that New Zealand is the first country in the world, the western country, to support succession. And it is very important that if you have a dispute. You can take it. New Zealand talked the United States, to the WTO, and when a case on lamb. The US was protecting their lamb industry. We said it was unfair, we talked the case in one and then enforced the negotiation that allowed the tariffs to be dropped and proper trades are pursued.

Q: But unfortunately protectionism in the US is on the rights, and we've seen the trade disputes recently between China and the US. How do you think this will go down the road and how will this affect Asian economy and world economy?

A: Look, it is very dangerous. Any trade war hurts the people of both the economies. The costs of goods go up. The cost of living goes up. Inflation usually is driven when cost is rise, and that of course hurts people. So there's nothing to be gained by actually promoting increased tariffs as a retaliatory mechanism. And in that perverse way, small countries sometimes can benefit, because where these tariffs increased on things that we are trying to sell as well, it may give more countries chance.

Q: So what do you think the Asian countries should do to bend together and send the message to US about this?

A: Well, regional integration matters and I think the Belt and Road, which will bring more integrated economic relationships, is promoting free trade in a positive way, but relying on the WTO as the backdrop is the safest way forward.