Trade Policy—II COMMONWEALTH TIES v. COMMERCIAL GAIN

Press, Volume XCIX, Issue 29336, 15 October 1960, Page 12

Trade Policy—II COMMONWEALTH TIES v. COMMERCIAL GAIN

(Bv Our Commercial Editor)

The chairman of. the Meat Board, Mr John Ormond, has taken an even more uncompromising stand than Mr Nordmeyer on the question of “bartering” portions of the Commonwealth preference scheme for access to the European Common Market “New Zealand’s prosperity still depends substantially and for as long as we can foresee on her trade with Britain," he declared last week. Mr Ormond listed the duties payable on non-Commonwealth imports of agricultural products in Britain, but did not mention that no preference is granted on lamb and wool—New Zealand's most important exports. He did mention New Zealand’s “right of unrestricted, duty-free access” to the United Kingdom market. “New Zealand’s present guarantees of this are "just as much part of the Commonwealth preferential system as actual tariff margins,” he wrote. The “unrestricted right of dutyfree entry” is the only part of the preferential system of any real value to New Zealand today, according to many authorities on the subject. The lesser benefits of the preferential tariffs might well be offered in exchange for access to other markets, provided the right of duty-free entry to the United Kingdom market was retained. Professor B. P. Philpott, Professor of Agricultural Economics at Canterbury Agricultural College, has suggested that New Zealand might be in a better longterm position than she is now if her agricultural exports to Britain had to pay a tariff, while Britain’s imports from the Six were duty-free. The other conditions of the three-cornered “deal” envisaged by Professor Philpott were: Britain’s entry into the Common Market; a common external tariff (“not too high”) imposed by the Common .Market on imports of agricultural products (but no quantitative restrictions); and abolition of British preference on Commonwealth markets. Two Extremes

Mr Ormond and Professor Philpott represent the extreme views on this question, the one refusing any concessions on the principle of Commonwealth preference, the other accepting discrimination by Britain (as a full member of the Common Market) against other Commonwealth countries. Mr Ormond’s stand is rooted in the sentiment and trade practices of the 1920’5, while Professor Philpott’s is based on the assumption that the traditions of more than a century can be sacrificed for commercial advantage. The salient fact of the present situation is (to quote Mr Nordmeyer again) “that a climate of opinion is being created to make it easier for the United Kingdom Government to enter into closer association with the Common Market” This "climate ‘of opinion” is not confined to the United Kingdom. The German Chancellor, D» Adenauer, recently said he was “ready to find a way to continue Commonwealth free entry should Britain associate herself more closely with Europe.” The Italians have also expressed recqpt interest in the proposal, although the French continue to oppose it. Surprise and disappointment at New Zealand's .stand at the Commonwealth Finance Ministers’ conference was expressed in Rome, according to the Rome correspondent of the “Financial Times.” He reported on October 1 that any agreement between the Common Market and the Commonwealth would inevitably have to offer better opportunities for Commonwealth agricultural products in the Common Market, in exchange for better Commonwealth terms for Common Market industrial products. “It was thought in Rome that New Zealand could only stand to gain by any such agreement,” he wrote. Middle View

This view has been argued frequently in recent years by Professor F. W. Holmes, Professor of Economics at the Victoria University of Wellington. In his most recent address on the subject he outlined a joint Commonwealth approach along the following lines:

“The members of the Commonwealth would offer gradually to eliminate tariff discrimination against the exports of the Six to Commonwealth countries, including both their agricultural exports to the United Kingdom and their industrial exports to other Commonwealth countries.

“For their part, the Six would be asked to agree to British membership of the Common Market on the basis that Britain

would accept all the obligations which the Six themselves have incurred, other than those which would require Britain to abandon her traditional policy of free entry for Commonwealth foodstuffs or to raise substantially her tariffs on any materials or manufactured goods which are of major concern to a Commonwealth member. “In addition, the Six would be asked to undertake to accord to other Commonwealth countries increasingly more liberal conditions of entry for their exports to the Community. This would imply some moderation of their policies of agricultural protection, with more emphasis being placed on increasing the consumption of agricultural products and less on the exclusion of competitive imports.” This statement places Professor Holmes between Mr Nordmeyer and Professor Philpott. The “deal” he proposes appears to strike the best compromise between Commonwealth sentiment and commercial advantage. A hint that New Zealand might be prepared to consider such a deal was given by Mr Nordmeyer at his press conference on September 29: “This arrangement (United Kingdom entry into the Common Market on the basis of the exclusion of agricultural products) would be reasonably satisfactory to New Zealand.” (ConcJuded)