“Politics Dominate Trade Prospects”

Press, Volume CI, Issue 29803, 21 April 1962, Page 6

“Politics Dominate Trade Prospects”

Politics dominate New Zealand’s trade prospects, says an article in the “Meat Producer,” official organ of the New Zealand Meat Board, which discusses implications of Britain’s accession to the European Economic Community and the present effect of heavy farm subsidies in the United Kingdom.

“If the United Kingdom enters the European Economic Community the economy of New Zealand will be gravely set back,” the article says.

"There has been the argument that by entering the E.E.C. the United Kingdom c so modify E.E.C. policies of discrimination against outsiders. in particular Commonwealth producing countries, fhat our 'vital interests’ can be protected. “Nowhere is there any indication that our vital interests can be protected, and at some point very soon now the New Zealand Government will presumably make this clear.

"Reports suggest that the British Government is determined to go ahead with its merging of the United Kingdom into Europe. The struggle today is to salvage some small thing from the wreckage of the Commonwealth economic system. "Meanwhile the unhappy fact emerges that, E.E.C. or not, the United Kingdom

Government’s own agricultural policies may prove the greatest factor undermining New Zealand’s future.

“The United kingdom is spending at the rate of more than £350 million—more than the entire export income of New Zealand—to bolster uneconomic production of meat, milk and other farm produce. This is a deliberate Government policy, being pursued despite the evident concern among taxpayers, and it is a primary cause of the present setback to the New Zealand economy; “At the same time the United ■ Kingdom representatives in this part of the world appear to have been given the unpalatable task of preparing us for hostile action against our produce by way of restriction against our meat.

"It is implied that we are overloading the market, whereas it is the fantastically expensive policies of the I’nited Kingdom Government which have forced uneconomic in’rease in the flow of meat and milk on the United Kingdom market. “Th- United Kingdom Government appears to be embracing the system of the E.E.C.. which will involve offloading directly on to the United kingdom housewife the burden at present falling

on the Treasury for the maintenance of uneconomic farms in Britain. “Under the E.E.C. system, if Britain enters the Community, Government subsidies are to be gradually eliminated and prices to the British family for meat will rise very considerably. “On the face of it this might seem attractive to the suppliers, but that is certainly no so. The E.E.C. policy for agriculture, from which no departure appears likely to be negotiable—beyond gradual application in a short transitional period—involves for New Zealand a substantial tariff, probable import levy, and quota. These devices would remove our prospect of very necessary growth in our trade. "A quota would be a strait jacket for the New Zealand economy, which is dependent in the main on the sheep industry. Some rise in price would be only an illusory thing masking a fundamental setback by way of limitation of sales and a certain cutback in consumer demand. At the same time. Continental competitors would have substantial preference over us. ...

“Our problem is a political one, not one of trade promotion, in which New Zealand is already away ahead of other competing exporting countries.

“Though we are the world's largest meat-export-ing country, with a verygreat tonnage of exports, we have in seven years since the end of bulk purchase transferred nearly 30 per cent, of our tonnage of meat exports to other markets and about one-third of our meat export earnings comes from sales outside the United Kingdom.

“But it is in the nature of world trade in meat that the United Kingdom is the only country that has need of large imports. Other sections of the world meat-importing trade are none of them of such capacity. There are prospects, but they are longterm.

"It is sheer fantasy to assume that we can sell lamb in, large quantities in the East.

“There have been suggestions originating in France for the establishment of international commodity agreements on meat and dairy produce and the stockpiling of these products. In other fields these have held little comfort for producers. In the field of meat, it is difficult to see how such a scheme could operate without more harm than, good to producing countries. “Nonetheless, New Zealand will be a very interested participant in the conference which is to be called by G.A.T.T. to establish a ■group on meat,’ to examine problems relating to trade in the meat-of cattle and sheep.

"New Zealand will need all the resolution and diplomatic capacity the country can command in handling these political problems. No-one should be misled by rosy generalisations from people who would like to minimise the importance of these matters to our economy, nor by those who suggest this is just a matter of trade promotion and market research. This work is already well developed. “Our future will be determined. not only for the United Kingdom market, but for Ynarkets elsewhere, by political negotiation. The way will certainly not be easy," the article says.