“Negative” Attitude To Tasman Trade

Press, Volume CV, Issue 31061, 17 May 1966, Page 7

“Negative” Attitude To Tasman Trade

“New Zealanders need to consider very seriously whether the present rather negative and restrictive attitude which is generally taken in this country to freeing trade with Australia, assuming that heavy protection is a major prerequisite for adequate industrial development, is really in the country’s own long-run interests,” says Professor F. W. Holmes, Macarthy professor of economics at Victoria University, in the latest publication of the New Zealand Institute of Economic Research, “Freer Trade With Australia?”

Professor Holmes says that to maintain full employment for a rising labour force, to provide for a continuing improvement in standards of living, and to shoulder international responsibilities in aid and defence, the country must achieve a great industrial and agricultural expansion. This expansion would involve greater output of things otherwise imported.

imports from Australia, New Zealand enterprises would have ample time to take steps to increase their efficiency and restrain cost increases to meet competition. “Government policies should continue to aim for growing demand and full employment, and be designed to assist individuals and companies to make necessary changes, for example, by financing the retraining or resettlement of workers or part of the cost of re-equipment of factories,” says Professor Holmes. Professor Holmes contends that the freeing of trade is likely to gain more public support and to be more fruitful for both partners if it is seen as part of a wide scheme of co-operation and integration of activity designed to facilitate development on both sides of the Tasman, increase exchange earnings, and economise in the use of overseas exchange. To these ends, he suggests greater co-operation in ensuring adequate transport services, both across the Tasman and to overseas markets, in raising capital for development, in defence and defence supply, in overseas aid and technical assistance and in tourism and trade promotion. He supports the creation of a joint secretariat charged with the duty of recommending to the governments the most fruitful types of joint action which might be taken in the mutual interest of both countries.

It would also demand an increasing contribution from manufacturers to earning extra overseas exchange required for equipment, materials, and essential consumer goods which cannot economically be made in New Zealand. Given this, if a significant number of industries cannot be developed over a period of years to the point where they can hold their own in free competition with Australian manufacturers, what hope is there that they will earn increasing supplies of overseas exchange for us, he asks.

“What hope is there that they will be able to sell over a tariff wall in Australia, let alone in competition with Australian and other manufacturers in alternative markets? What hope is there that they will be able to meet this country’s requirements at reasonable costs and prices?” Items In Agreement

Professor Holmes suggests that the new free-trade arrangement, with a large number of safeguards built into it for sensitive industries in both countries, would not represent any very significant change in economic relationships between the two countries if it were confined to the initial list of items included in it.

“Its importance in the longer run will depend upon how far and how rapidly the range of items subject to it is widened and supplemented by other measures of co-opera-tion between the two countries. Since protection would be reduced gradually, and only in respect of competitive