Trade Policy—I COMMON MARKET POSES DELEMMA FOR BRITAIN

Press, Volume XCIX, Issue 29335, 14 October 1960, Page 12

Trade Policy—I COMMON MARKET POSES DELEMMA FOR BRITAIN

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“The Imperial preference system is crumbling; this may be New Zealand's last chance to use it in bargaining for better access to the Western world's most rapidly expanding market.” This sentence concluded a series >f articles by the present writer in “The Press” in July last year on New Zealand's trade policy, with special reference to the European Economic Community (the Common Market). The subject of the Common Market has frequently appeared in the news since July last year, more especially in connexion with the Commonwealth Finance Ministers’ conference last month.

In an effort to clarify the background to reports from Britain, the Continent and Wellington, the writer visited Wellington last week to see members of the diplomatic corps and leading authorities on trade and economics. Impressions gained from these interviews are summarised in the following article in this series. Changes in 12 Months

The suggestion was made in these columns last year that the “Little Free Trade Area” (comprising Britain, Scandinavia, Austria, Switzerland, and Portugal) was only a “second best” for Britain, and that Britain and the other Commonwealth countries would achieve more by making a joint approach to the “Six,” the countries comprising the Common Market.

Support for this view can be found in recent reports of the desire of the “Seven” to negotiate with the “Six.” Professor F. W. Holmes. Professor of Economics at the Victoria University of Wel-

lington, has described the Free Trade Association as a "somewhat ill-balanced and artificial arrangement: the main cohesive factor among the members is a desire to reach an understanding with the ‘Six’.”

The Common Market, on the other hand, has gained considerable stature in the last year or so. Industrial expansion continues unabated, internal tariffs are being dismantled. Common Market exporters are beginning to loosen Britain’s hold on other markets, and United States capital is being diverted, marginally, from the United Kingdom to the Common Market.

These developments were discussed at the recent conference of Finance Ministers in London.

Mr Nordm ever, reporting on the London talks at a news conference in Wellington on September 29, said he found a “climate of opinion was being created to make it easier for the United Kingdom Government to enter into closer association with the Common Market” New Difficulties

Such an association may be more difficult to negotiate now than before Britain entered into a formal agreement with the other members of the Seven. Britain may also have to pay a higher price now than last year to enter into association with the Seven.

There are signs that some members of the Six are willing :o negotiate with Britain, and that Britain is reconsidering the value of the Commonwealth preference system to herself, to other members of the Commonwealth, and to the members of the Common Market. New Zeeland would be affected in many ways by Britain’s admission to. or association with, the Common Market. The first condition for Britain’s membership would certainly be the abolition of the present preference granted to Commonwealth supplies on the United Kingdom market and discrimination against non-Commonwealth suppliers on the United Kingdom market. New Zealand butter is at present admitted to Britain free of duty, whereas butter from nonCommonwealth suppliers pays a duty of 15s per cwt. The protection granted to New Zealand butter is therefore 15s per cwt. roughly 5 per cent, at current prices. The protection on New Zealand cheese is IS per cent., on boneless beef and veal 20 per cent. Specific duties of twothirds of a penny a pound on frozen beef and Jd per lb on chilled beef provide protection of 3 per cent, or 4 per cent, at current prices for New Zealand beef.

Of more importance to New Zealand than these tariffs is the unrestricted right of entry of New Zealand produce. Gains And Losses "There have been suggestions that the Commonwealth countries might be compensated with trade opportunities in Europe for the loss they might sustain by the United Kingdom going into the European Economic Community." Mr Nordmeyer said at his press conference. Mr Nordmeyer claimed that whatever gain might result from the cjoser liaison with the Common Market, New Zealand would almost certainly suffer a net loss. Mr Nordmeyer added, however, that he thought some concessions might be made (by the Six) to the United Kingdom “in view of the fact that her Commonwealth relations required her to continue trading practices that had ■been built up over a long period. The concessions might take the form of allowing the United Kingdom to enter the Common Market on the basis of the exclusion of agricultural products. This would be an arrangement reasonably satisfactory to New Zealand, because it is in agricultural products that our trade with the United Kingdom largely consists." he said. The opposition to Britain's joining the Common Market which is implicit in Mr Nordmeyer’s reported statements aroused surprised comments in Italy,” according to the Rome correspondent of the "Financial Times. “Some Italian experts even went so far as to express the view that perhaps Mr Nordmeyer was not really fully informed of the situation and his country's attitude caused considerable disaPP°intmeht.’’ the correspondent added. The "Economist” this week claimed that New Zealand's attitude had changed “now that the Commonwealth problem js being seriously broached. African members, who for a long time the British argument that the European free trade area was a good thing, have now appreciated that their own trade interest would best be served if Britain got into the European community and If they were associated with it on the same terms as the former French territories ‘‘By contrast, New Zealanders, who once appeared as advocates of an agricultural deal between the Commonwealth and Europe have recognised that reconciling their highly competitive exports of temperate farm products with the common European agricultural policy will be an extremely difficult task.” (To be concluded.)