BRITAIN AND THE E.E.C.—I A FURTHER EXAMINATION OF NEW ZEALAND’S SITUATION

Press, Volume CVI, Issue 31330, 29 March 1967, Page 12

BRITAIN AND THE E.E.C.—I A FURTHER EXAMINATION OF NEW ZEALAND’S SITUATION

(By

M. F. LLOYD PRICHARD,

, M.A., Ph.D., Associate Professor of Economic History at Auckland University I

Dr. Sutch in his articles on the European Economic Community makes some fair and incontestable comments but he over-emphasises some aspects and omits reference to other very important features of the consequences of the development of the Community.

Dr. Muriel Lloyd Prichard was Invited to comment on recent articles by a former Secretary of Commerce, Dr. W. B. Sutch, pointing to effects British membership of the European Economic Community might have on New Zealand’s economy. This is the first of three articles by Dr. Lloyd Prichard.

Dr. Sutch begins by noting the potential economic growth of the Community which he declares could rival that of the United States but he qualifies this statement by saying that any rivalry may b<« diminished because the penetration of Western Europe by the United States is well advanced. It should be remembered that European capital is also penetrating the United States, perhaps not to the same extent but sufficient tc warrant mention. Recently, too, the outflow of capital from the United States has been made more difficult by the interest equalisation tax. It should be kept in mind too that the Community was brought into being not merely to rival the United States, but aiso to present a strong front to Russia, and to be a bulwark against Communism. This factor influences the intentions and aspirations of the organisers of the Community and their attitude, in particular, towards Britain. Dr. Sutch argues that although the Common external tariff might not worry New Zealand much whether or not Britain joined the Community, the Community’s Common Agricultural Policy and the European Agricultural Fund certainly will. Level Of Prices

Dr. Sutch explains that the Common Agricultural Policy means the Community policy of common prices for E.E.C. countries for all farm products, processed or not. The level of prices will usually be higher than world prices or those ruling in Britain so that no producer of cheap farm products, or slump in world agricultural prices will hit the E.E.C. farmer. If imports are needed, their price is brought up to or above the E.E.C. farm price by a system of variable levies so that the greater the difference between the E.E.C. farm price and the price of the levy, the greater will be the import tax or levy. To get the money to operate the Common Agricultural Policy, member states will pay into a central fund to which also the returns from the levies will be paid. The fund will be used to buy up products to support their prices, subsidise the export of farm products to countries outside the Community and to pay farmers to modernise their methods. Now leaving out of account fo- the moment the possibility

of Britain entering the Community with all the uncomfortable implications for New Zealand, let us assume that the situation is the same as now and that New Zealand has only to cope with the present six members. How would New Zealand really be affected by the Common Agricultural Policy and the Agricultural Fund? Proper Perspective By showing New Zealand’s total exports and the share taken by the E.E.C. it is possible to get the relationships in proper perspective. Wool: Dr Sutch admits that wool would not come into the picture at all because there is no intention to apply any ban whatsoever on wool. This is just as well because the latest figures from the 1966 Yearbook (which will be the source of all statistical data used in this article) indicate that of New Zealand’s total exports of wool of 565 m lb valued at £l36m, the E.E.C. took 229 m lb valued at £54.6m. Belgium bought 44m lb (£10m), France 89m lb (£21.6m), West Germany 40m lb (£10m), Italy 38m lb (£9m) and the Netherlands 18m lb (£4m). Luxembourg’s purchases are insignificant. Other important buyers are Britain which took 162 m lb (£39m), the United States which took 85m lb (£l9m) and Japan which took 32m lb (£Bm). Meat: But beef and veal and probably lamb and mutton and other meats will be subject to the Common Agricultural Policy and the Agricultural Fund. What does the Community buy from New Zealand?

The latest figures show that of a total export from New Zealand of frozen and chilled beef and veal of 267 m lb valued at £29m, the dollar area, including Canada, Hawaii, the Philippines and the United States, took 210 m lb (£23m). The United States itself imported 196 m lb (£22m). The sterling area including Fiji, Jamaica, Trinidad, Western Samoa and Britain took 25m lb (£2m) of which the United Kingdom bought 20m lb (£l.Bm). The E.E.C. imported 10m lb (£978,000) of which Italy took about 50 per cent. The figures for frozen lamb and mutton indicate that the total quantity sold was 813 m lb valued at £s4m. Of this, the dollar area took 20m lb (£l.sm) of which the United States accounted for 11.6 m lb (£o.9m). The sterling area took 648 m lb (£46.5m) of which Britain took 642 m lb (£46.2m). The E.E.C. took 12m lb (£o.sm); this figure though not large is by no means as negligible as Dr. Sutch would have us believe. Other important buyers include Japan which took 93m lb (£3m) and Greece which bought 20m lb (£o.9m). The statistics for frozen pork show a total of 12.5 m lb exported from New Zealand valued at £l.3m for which Australia was the best customer buying 6m lb (£o.6m). Next in importance was the rest of the sterling area which bought 2.3 m lb (0.2 m of which Britain took just over Im lb (£o.lm). The dollar area was responsible only for a small quantity and the E.E.C. for 0.7 m lb (£71,000). Of other frozen meat sold

by New Zealand amounting to 59.3 m lb valued at £6m, the dollar area took 2.5 m lb (£o.3m); the sterling area took 46m lb (£4.7m) of which the United Kingdom bought 44m lb (£4.6). The E.E.C. took 7.7 m lb (£o.9m). Cattle hides and sheepskins: The data for cattle hides show that a total of 43m lb was sold valued at £2tn. The E.E.C. was the best customer, taking 23m lb (£lm) with Italy buying the most, about 18m lb. The sterling area took 5.6 m lb (£o.3m) of which Australia accounted for 3.3 m lb (£o.2m) and Britain for 2.3 m lb (£o.lm). The rest of the market was distributed airongst Japan, Norway, South Africa, Jugoslavia and Poland.

New Zealand exported 2.5 million dozen sheepskins (without wool) valued at £10.6m. The dollar market took 1.6 million dozen (£6.4m) of which the United States took the greatest part. Britain took 0.4 million dozen (£1.8m); the E.E.C. took 0.5 million dozen (£2m). Dried Milk: Total exports for dried milk were 1.4 million cwt valued at £5.5m. The dollar area took 183,000 cwt (£C.6m) of which the Philippines was the largest purchaser: the sterling area took 863,000 cwt (£3.3m) of which Britain took 784,000 cwt (£2.7m). The E.E.C. took 9000 cwt (£29.000). Casein: Of a total of 830,454 cwt valued at £5.7m, the dollar area took 170.000 cwt (£l.lm); the United States was the best customer buying 168,000 cwt; Britain took 145,000 cwt (£lm); the EE.C. took 307,000 cwt (£2m). The other important customer was Japan which took rather more than the United Kingdom—about £lm. Butter and Cheese: Total butter exports were 3.6 million cwt valued at £54.3m. The dollar area took 14,000 cwt (£o.2m); of the E.E.C. only Germany bought—sB,ooo cwt (£o.9m); the sterling area took 3.5 million cwt (£s2ml of which Britain took 3.4 million (£slm). The same situation exists in the market for cheese. Total cheese exports were 1.8 million cwt worth £17.5m. The United States took 79,000 cwt (£0.8m); the E.E.C. took 37,000 cwt (£o.3m) bought largely by Germany. The sterling area took 1.6 million cwt (£15.6m) of which the United Kingdom took 1.5 million cwt (£15.1m). Conclusion It is clear from the analyst that the European Economic Community is valuable to New Zealand as a market for wool which will probably not be subject to the Community’s restrictive policy, for cattle hides and sheepskins (without wool) and these too may be left untouched. Casein is also a fairly important export but New Zealand already has other important markets for this commodity. The data show that New Zealand has other much more important markets for her meat, butter, cheese and dried milk. What does emerge is the importance of the British market. (To be continued)