Tariff Protection For Industry Urged

Press, Volume CI, Issue 29854, 21 June 1962, Page 17

Tariff Protection For Industry Urged

The paramount objective in the interests of all sections of the community should be protection of local industry by tariff only—tariffs which might well, and with some justification, be substantial when new industries of considerable importance to the economy were initiated. This comment is made by Mr R. H. Clark, a past president of the Canterbury Chamber of Commerce, in the Chamber's latest economic bulletin on two methods of control of overseas funds on private imports—selective import control and exchange control.

Mr Clark says protection to local industry by tariff would automatically play its part in restricting expenditure of overseas funds on manufactured products. The achievement of. this objective would rest on consist-

ently adequate internal economic management, for which no form of import control was an effective substitute. Mr Clark gives the following objections, which he says are common to both selective import control and exchange control: (1) The cost of administration was high and the procedures ponderous. (2) To use unexpended balances fully both systems led to importing peaks before the close of the importing year. “This is a valid objection and places a heavy load on handling resources and manpower at certain periods of the year, interspersed with slack periods. Peaks of any kind negate efficiency in business and in this respect both systems are rigid and non-productive of an even- spread of importing as they dictate the usage of allocations within a defined importing year,” he says. (3) Continuing change in the level of permitted imports from year to year, as had steadily obtained since 1938. was basically bad as it caused local industry uncertainty in planning for capital investment in new plant and buildings. Both methods tended to be introduced without adequate supporting policies aimed at reducing the flow of internal expenditure, which was responsible for the balance of payments deficit and which the restrictions were invoked to rectify. “Perhaps this whole issue involves some clarity of thinking as to where our destiny lies.” says Mr Clark. “Does it lie in the inspiration, initiative and drive of (private enterprise or in bureaucratic controls? The dynamic inspiration of a measure of freedom of action is required to ensure the capacity, the will and the incentive to compete overseas. The best system must be that which dictates resilience to change, rather than a rigid system of import control which only promotes a static economy. Marriage of Systems ‘‘ln the marriage of the two systems discussed lies the best hope for the next two years,” he says. “This envisages a system which provides the maximum elasticity of exchange control within wide tariff groupings, supported by tariff protection, but with selective import control retained in respect of a few hard core items only, and directed to the protection of vital new industries in their early years of development.” Mr Clark says that so long as some restrictive system is necessary, none could be devised which would provide equitable and desirable automatic adjustments for growth, decline and new business. The Government’s idea that selective import control provided a more precise and administratively effective method was a myth —it led inevitably to maladjustments in supply, inefficiency in local industry and grave injustices to importers.