A Brexit lesson from New Zealand

Graeme Mackay
New Zealand flag

I had just arrived in Auckland, New Zealand, where my ship was refitting at HMNZS Philomel. It was a week before Christmas 1974 and I had been invited to spend Christmas Day with a family in Papatoetoe, a town some miles south of the city. A couple of days beforehand, wanting to get my hostess a small gift for her hospitality, I managed to get to a large department store shortly before closing time.

Before I found something suitable I had covered most of the store and couldn't help noticing some empty spaces on the shelves and display units and on paying for my purchases, with only minutes to closing, said to the assistant, "I see you're going to do a stock take after the store closes."

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Puzzled by my suggestion, I pointed to spaces from which I thought stock had already been removed but she explained to me that the store had the stock ready, it was just in a bonded warehouse awaiting the Government's permission for payment of the duty and its release!

When?

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"We have to wait until the country sells more abroad so that we don't have a trade deficit, we'll be told when the balance is ok – maybe another week. New Zealand can't afford debt."

I must admit that I was impressed. Never heard of any politician in the UK, then or now advocating such a scheme to sort out our deficit problems.

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This most necessary system was just one of the measures that New Zealand had to apply after Britain joined the European Union (EU), thereby losing its biggest by far export market and preferential trading partner. How necessary such measures were can be judged by just how exposed the country was to relying on the "Mother Country".

For the first decade after the end of World War II, 90 per cent of New Zealand's exports consisted of pastoral-farming products and the UK took over 65 per cent of this total. Although this was a peak, the New Zealand government didn't take fright until Britain's second application to join the Common Market, which, though being unsuccessful – De Gaulle said "Non" again in 1967 – pointed to a most definite shift in long-term UK policy.

Reliance on the UK, despite the increasing benefits of the New Zealand Australia Free Trade Agreement (1966) which removed some 80 per cent of tariffs and quotas, was still considerable in 1973. Making matters worse was the Oil Crisis of the same year and just as things got a little better, 1979 saw yet another Energy Crisis. The words "severe depression", are used to describe the state of the New Zealand economy between 1975 and 1985 and although statisticians may not agree to such a black picture, the Kiwis who lived through it describe it thus – and have not forgotten.

Major economic reforms in the 1980s, slowly at first, diversified and transformed the economy. The Closer Economic Relations Trade Agreement (1983) strengthened the country's ties with Australia and the fact that there has never been any rush to make this into a Customs Union, probably reflects New Zealand's growing self-confidence.

The country's top export destinations are China, Australia, USA, Japan and top import destinations China, Australia, Japan and Germany (2015). Britain comes soon after in both these lists but so again does Korea. Changed days!

On the evening of 29 March after watching Channel 4 News and allowing for the time difference, I thought to take a quick look to see if there might be any reaction to the triggering of Brexit in Auckland, by far New Zealand's largest metropolitan area with some 30 per cent of the country's population.

Judging the ideal source for informed comment would be the NZ Herald, a generally centrist news source which has the country's largest circulation of any newspaper, I'm afraid to admit that the first story that got may attention in the paper's International section was "Missing Indonesian Man found inside belly of a 7m python", complete with photo of the victim's dead, fully clothed body covered in the snake's digestive juices and yet to be removed from the eviscerated snake which the villagers had killed, presumably as it slept off its cumbersome meal.

Brexit or man-eating python? Who would not have done the same?

I did however find an Editorial in the paper's Opinion section more suited to the serious political and economic matter titled: "Brexit begins and NZ has work to do". Mm, maybe first in line to beat a path to London for a good deal? Not really, though positive to new relationships.

Firstly, the unnamed journalist suggested that Prime Minister Theresa May could well be in for a "torrid time" over the coming two years, at home – citing the House of Lords and demands from Holyrood as potential problems – as well as a determined Brussels, but expects that Brexit will be irreversible.

The main thrust of the article is to remind his readership of what it was like in New Zealand in the early 70s, comparing the situation 45 years ago, when New Zealand and other "Old Commonwealth" countries expected Britain's EU membership to be "for good". Yet if these same Kiwis are still alive:

"...they would have no regrets for the changes Britain's original decision made to New Zealand.

"It was a defining moment in our history, and not just in economic terms. The loss of a guaranteed metropolitan market for our farm products forced us to spread our trading wings, find new markets in Asia, Russia and the Middle East and set about trying to broaden our range of export products.

"In doing so we became truly independent, no longer a colonial economy and more inclined to shake off the emotional and cultural vestiges of the colonial relationship."

Adding a note of surprise regards the Brexiters new-found love for the Commonwealth after 45 years, the article advises the UK to follow the path that Australia and New Zealand took in establishing solid agreements with the likes of China.

As for New Zealand, it acknowledges that there may arise the odd problem in its access to the EU with what it currently puts by way of the UK but reminds us that solid contacts have been established with Brussels when New Zealand's Prime Minister, Bill English went there quite recently and the article concludes:

"We are all independent traders now"

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