Economist Upholds “The Press” On Conference

Press, Volume XCIX, Issue 29271, 1 August 1960, Page 5

Economist Upholds “The Press” On Conference

“The assumptions underlying the leading article in ‘The Press’ are quite correct,” said Professor B. P. Philpott, professor of agricultural economics at Canterbury Agricultural College. He was replying to a statement, published on Friday, by Mr J. K. Dobson, president of the Canterbury Manufacturers’ Association, in which Mr Dobson said that a leading article in “The Press” appeared . to be based on several inaccurate assumptions. Professor Philpott, a university delegate to the industrial development conference, quoted the following passage from the conclusions of the conference: “The feasible means of giving effect to the policy of economic expansion of industry is by a properly designed and adequate tariff, supplemented in special circumstances by import licensing but having regard always to the cost involved to the whole New Zealand economy. This would enable industry to operate at efficient and economic levels without imposing burdens on the community in general.” “Those delegates who assisted with the drafting of this important passage were fully aware of what was meant by ‘special circumstances’.” Professor Philpott said. Existing Industries’ Needs “Some existing industries would not be able to continue without import control, and it would be foolish to allow them to be destroyed by removing all controls. What the committee was anxious to avoid was the creation of any more industries which would require excessive protection,” he said. Import control “quite definitely is a limitation of competition in that it allows into the country just sufficient imports to enable prices to be maintained at the domestic producers’ level,” he said. Professor Philpott said it was not clear what Mr Dobson meant by New Zealand’s “commitments under international trade agreements.” “Our main commitment under international trade agreements is to the General Agreement on Tariffs and Trade, which expressly forbids the use of import controls.” Referring to Mr Dobson’s comments on maintaining New Zea-

land’s standard of living, Professor Philpott said it was hard to see how the standard of living could possibly be “affected” by excluding (by import controls) goods which are cheaper than those .produced locally, provided of course that existing industries manufacturing the goods were protected. “This is what delegates had in mind when the 'special circumstances' clause was framed. “New Zealand’s living standards, like those of other countries, are based on the policy of selling at as high a price as possible those products which we are more efficient at producing, even with our expensive labour; and on purchasing those products we need as cheaply as possible. The fact that certain of our imports are cheaper than the New Zea-land-made goods is, of course, due to the low productivity—and hence the low cost —of labour in the exporting country.” Measure of Efficiency The relative efficiency of the manufacturing industry and primary industry could be measured only by their relative competitive abilities on the open market, Professor Philpott continued. The leading article in “The Press" in no way differed from the recommendations of the conference in commending the principle of protection by tariff rather than by import control, he said. “With no import control, the height of a tariff is a true measure of the protection afforded to an industry. “In New Zealand’s case, it enables us to gauge the cost of manufacturing a commodity locally, compared with the cost of paying for the commodity on an overseas market with the proceeds of our export industries. In this way we can measure the relative efficiency of manufacturing industry and primary industry. “Industries which require too high a level of tariff—those which Mr Dobson wants protected by import control—are obviously the sort of industries which this country does not require. They in fact' reduce our standard of living,” Professor Philpott concluded.