External Trade Policy May Soon Be Revised

Press, Volume XCVI, Issue 28321, 5 July 1957, Page 8

External Trade Policy May Soon Be Revised

(From Our Own Reporter)

WELLINGTON, July 4.

It is probable that within a few months New Zealand will have a completely revised external trade and marketing policy, aimed at removing the disadvantages under which this country now suffers in international bargaining. After the experiences of the recently-returned trade delegation, the feeing is widespread in primary production circles that this country should have:

A Goyernrrfent department taxed with keeping a close watch on markets overseas, with discretion to act as needed to sell our exports under the

most favourable conditions, and That this department should be headed by a Minister of External Marketing, with powers to correlate the activities of his department with those of others in the national interest

The signs are now apparent that the trade mission, even though it could not be described as a complete success, achieved two important goals. The first of these was that it opened the eyes of-mission members to the facts of international marketing life.

The second was that it firmly united the various factions in New Zealand exporting. The size of the delegation enabled all to see for themselves, with the result that a unity is developing which previously was hard to find. Open' Market Price

Some members appeared to lose sight of the fact that the price obtained by New Zealand goods on the United Kingdom market was not in fact fixed by either the United Kingdom or the New Zealand Governments, but an open market price. But these see clearly now that Great Britain' has become the world’s residual market, open to any country not able to sell all its produce at a higher price elsewhere. Two questions thus become of paramount importance: how mu ch New Zealand produce can be sold at a reasonable price in the United Kingdom? And how much can be sold at a higher price, but possibly at the expense of some “favoured nation” treatment, to some other country? Very many nations today exercise Government control of exports and imports for the dual purposes of protecting their own agriculture and preserving a balance of payments. . Members of the mission saw this at first hand, and realised fully at what disadvantage New Zealand was at present operating. * In France, for instance, the wholesale price of domestic butter is more than 6s a pound, while in Britain New Zealand butter is retailing for half that amount. Yet New Zealand butter is denied free entry into France. Every country on the Continent which is in any way a substantial consumer of butter enforces restrictions against the entry of butter from other countries. The salesmen of the New Zealand Dairy Products Marketing Commission are powerless under these conditions, though obviously a wonderful market exists in the absence of controls.

The plan today is to get out and sell to other countries, and to do so with ‘ the backing and active assistance of your Government. In the day of t the bilateral agreement, New ‘Zealand’s overseas salesmen are now left without an argument. Example of Denmark

One need only quote the example of Denmark, which has been much more successful than this country in selling to states other than the United Kingdom. Since the war, Denmark has painstakingly negotiated reciprocal trade agreements with other countries which take Danish butter in return for their own manufactured or other goods. Under her present policy, New Zealand finds difficulty in doing

this. A number Of departments, including Industries and Commerce, Agriculture and External Affairs, carry out different aspects of the promotion of external trade. There is interchange between these departments, but too often it does not go far enough. A Continental country today goes for both sides of a bargain. In return for, say,- an order for rail-cars, earthmoving equipment, hydro-electric or geothermal gear she will let in a measured quantity of the ordering nation’s exports. New Zealand buys a great deal of heavy machinery and electrical gear—but cannot use these purchases to establish markets. When New Zealand wants this equipment she advertises for competitive tenders. This means almost invariably that the lowest tenderer gets the co’htract. There is no provision for the possibility that, whereas the lowest tenderer may have no intention of buying New Zealand exports, another tenderer with a price very little higher may be prepared to open her barriers to New Zealand butter, wool, or meat. Possibilities in Japan There are signs that New Zealand is doing her utmost within her present policy to sell produce. A recent instance is the decision to send representatives of the wool, meat, and dairy industries to Japan. Two years ago, after the visit of a Japanese trade delegation to this country, New Zealand almost signed an agreement with Japan, but was dissuaded from doing so because of the Dominion’s close trading relationship with Great Britain. Japan joined G.A.T.T. in August, 1955, but New Zealand was one of the 14 member nations which elected not to accept mutual G.A.T.T. obligations with her.

Since then Japan has made no approach to New Zealand. But very recently Australia moved for an agreement with Japan. This was not easy for Australia to do, for the memory of Japanese atrocities on the Burma-Siam railway lingers with Australians, who lost a full division in Malaya. And now New Zealand is seeking Japanese trading friendship—possibly too late. At the next session of G.A.T.T., commencing on October 17, New Zealand representatives will be on their toes for another reason. There will be discussions on quantitative restrictions and these discussions will work two ways. First, New Zealand herself may meet some criticism. Second, and more important in the present trade pattern, New Zealand will be able to question France, Western Germany, and other countries on their practice of allowing agricultural products in from some countries and excluding those from New Zealand.