United States president Donald Trump's protectionist policies could plunge the world economy into crisis and lead to trade wars – or, led by Britain, nations will form new trade relationships and avoid global conflict.

Those differing views were delivered by two keynote speakers at the March Zespri Momentum Conference at Mount Maunganui.

The unapologetically depressing address by Michael Every, who is Rabobank head of financial markets research for the Asia Pacific region, came first – followed by Crawford Falconer, who is professor of International Trade at Lincoln University, saying New Zealand with its friends can have influence on world trade.

Michael believes President Trump's protectionist policies, while understandable from the US point of view, will undermine international trade that relies on the US dollar.

'The free trade which we have grown up with started at the end of World War 2 when the US was prepared to pump dollars into global economy to allow everyone else to trade. Up until 1945, the US was one of most protectionist countries in world.

'Now the entire foundation of global trade rests in the hands of Donald Trump.”

If the US dollar is no longer used to trade then 'we are going to see the global economy split into trading blocs, which use different currencies where political and economic interest come together to repeat the 19^th Century scenario of carving up the global pie”.

China could take on the role the US has played and the Renminbi could become the global trade currency. But to do so China would have to operate a trade deficit and Michael doubts that would happen.

Michael Every, Rabobank Head of Financial Markets Research for the Asia Pacific Region

Allowed to buy exports

Michael says there are other challenges ahead, particularly for New Zealand, and these include tariff and non-tariff barriers. 'The rules of the global trade game are first demand – do they want to buy your product? The answer with Zespri Kiwifruit is: ‘Yes'. The second is can you get the product to them in a condition they will want to eat? Once again the answer is: ‘Yes'.

'However, are they going to be allowed by their governments to buy or eat it at all?”

That could be the issue if New Zealand is forced to choose between backing China or the USA, says Michael.

Crawford says while changes in US policies, including around trade, tax and tariffs, will have impacts, he doesn't predict a huge appreciation in the value of the US dollar overnight.

'Rather than sit back and moan and complain, what we can do is change the dynamic. New Zealand can't do this by itself. It has got to work with friends to have big enough alliances that makes people in Washington change their view.”

Fear of missing out

He advocates using the 'fear of missing out” strategy through trade agreements with other trade partners, which would demonstrate that by not being part of them the US is missing out.

The world economy, Crawford says, needs a real leader that is in favour of advancing the international trade agenda and this may well be Britain, once the Brexit issue is settled.

'I think it is not unrealistic that Britain will have the capacity to become real leader for global trade and show leadership so other economies will flock to them.”

New Zealand should pursue free trade agreements strategically rather than country by country including what Crawford calls TPP-Minus – so Trans Pacific Partnership minus the USA. He also advocates the New Zealand government create 'swat” teams to tackle non-trade barriers imposed by countries we export to.

'We don't have to take a fatalist view of the future – of course we can make it work and New Zealand needs to make work more than anyone else.”

However, Crawford does caution New Zealanders should not be over optimistic about the way the world economy is going. 'But don't get lost in the level of abstraction. If you share the view that trade policy is important, then let MPs and the Government know about it

'Refuse to surrender to the fatalist, pessimistic view. There is a positive agenda to play for out there.”