MANUFACTURERS IN BRITAIN

Press, Volume XCIII, Issue 27989, 8 June 1956, Page 12

MANUFACTURERS IN BRITAIN

Views Put Before Board

“TARIFF ON SOUND PRINCIPLES ”

(New Zealand Press Association) ‘ WELLINGTON, June 7. “The United Kingdom is both New Zealand’s greatest customer and her greatest supplier. As a customer and supplier of this magnitude, British industry regards the stability and prosperity of the New Zealand economy as of the highest importance to itself, r.nd a principal element in the maintenance of such stability and prosperity is a realistic tariff policy,” said Mr A. A. Shenfield at the Board of Trade hearing today. Mr Shenfield came to New Zealand for the hearing oh behalf of the Federation of British Industries, the National Union of Manufacturers, and the Associated British Chambers of Commerce. He said that if the expansion of industrial activity in New Zealand were to take place smoothly and economically, the cost structure of New Zealand industry must bear a reasonably close relation to that of industry in the countries with which New Zealand traded. “New Zealand will have to expand her exports, and a growing proportion of them will have to come from her secondary industries,” said Mr Shenfield.

“Hence it is necessary that upward pressure on the general cost structure should not be stimulated by a policy of over-protection.

Long Term Favoured

“The federation I represent takes the view that in this situation tariffs should be used as long-term measures and should not be subject to frequent adjustments to meet short-term difficulties.” Mr Shenfield said it was purely good business to Britain to see New Zealand establish and maintain secondary industries—provided they were truly sound. “The sound development of manufacturing in New Zealand can be in no way harmful to British industry,” he said. “It will produce more trade for Britain in New Zealand. It will enhance the wealth of this country, expand the employment of the people and create demands that British manufacturers will be able to satisfy.” Unsound manufacturing industries, however, would reduce the wealth of the Dominion and its capacity to buy British goods. The tariff principles exercised in New Zealand since the Ottawa Agreement had been, by and large, sound, and had benefited New Zealand. Mr Shenfield said that New Zealand's primary exports were vulnerable to selective buying on the British market. They were subject to competition that was keen in spite of the absence of any protective tariff in Britain. Although a person might be prepared to pay an extra £lOO for a mctor-car because of some apparent but not real advantage over another, the British housewife would not pay Id to 2d a pound more for basic foodstuffs for a whim. Marked Change Opposed “On the whole, the prosperity of New Zealand "has resulted from the fact that so far the tariff has been based on pretty sound principles,” he said. “For that reason, we hope there will be no significant change.” It was not enough for someone to say: “Here I have an industry. I need a tariff to survive. Therefore you must give me a tariff.” The question of diversification of industry was often misunderstood, said Mr Shenfield. True diversification meant that one industry could survive without another or if one industry ran into trouble the other would not inevitably do so. “Perhaps the greatest justification of a tariff in New Zealand has been that it may influence favourably the terms of trade,” he said. “The great prosperity of New Zealand has been in large part due to the development of terms of trade since the war.” I* was clear that all the justifications that had applied in New Zealand since the Ottawa Agreement had led in principle to a moderate tariff. A high tariff would not diversify industry in the manner he had suggested as the best one. Nor would it turn the terms of trade in New Zealand’s favour. “It would be like taking a large dose of medicine that would kill you instead of a small dose of the same medicine that would pick you up. Tariffs can be beneficial to domestic industry only up to a certain