REACTIONS TO REPORT Manufacturers Against Ending Import Curbs

Press, Volume CVIII, Issue 31614, 27 February 1968, Page 1

REACTIONS TO REPORT Manufacturers Against Ending Import Curbs

Recommendations made by the Monetary and Economic Council in its report yesterday (summarised on page 13) were welcomed by many sections of the community, but the proposal that import licensing should be abandoned in three years was opposed by manufacturers, the Press Association says.

They pointed out that the recently affirmed Government policy was to remove licensing on items of local manufacture only after adequate tariffs had been set as a result of an inquiry by the Tariff and Development Board.

The recommendation was welcomed by Federated Farmers, the Bureau of Importers, and the British Trade Association.

The Leader of the Opposition (Mr Kirk) said the council offered New Zealand a short route to economic suicide. He criticised its proposals to dismantle import controls and to reduce British preference.

The president of the Associated Chambers of Commerce (Mr E. N. Adams) said some of the measures were already part of Government policy. The council went further and it seemed the general plan outlined needed to be regarded as an over-all package deal, in the same way as the recent taxation reform proposals of the Ross Committee.

“Whether this or that particular proposal by the council stands or falls, what sticks out like a sore thumb is the undeniable necessity for New Zealanders to shake down quickly to the facts of life as we now need to live it,” he said.

“We face adversity and while we do not have to tighten our belts we do have to get off our seats and pitch into the job of applying our brains, muscle and planned energies to providing ser-

vices and producing more goods of better quality at cheaper prices in competition with skilled overseas competitors.” Export Plans The president of the Manufacturers’ Federation (Mr R. G. Speirs) said: “Manufacturers agree with several of the recommendations in the report of the Monetary and Economic Council, especially those following the council’s assessment of the present situation. “These include recommendations for the development of manufactured exports, which have a high priority with the federation, finance for industrial development, and the need to widen the range of competitive import saving industries. “The federation agrees on the need for tariff revision but strongly disagrees on the

complete abandonment of import licensing and the suggestion that this could be done in three years. “Adequate protection for industry must be maintained and in some cases this can be done only through the retention of import licensing. This fact is recognised internationally, as New Zealand knows through difficulties in marketing its own exports. Tariff Adjustment “The recommendation that abolition be completed in three years is even further removed from reality. New Zealand is a low tariff country and the present scale of duties is quite inadequate as a replacement for import licensing.

“An upward adjustment in tariffs could be made across the board, but this would have to be substantial. Without such action it would be impossible in the time to carry out the detailed review of tariffs which would be necessary.” Mr Speirs said the federation looked to the National Development Conference and its working parties for a practical programme, to meet the challenge of the future.

Removal Of Controls

The Dominion president of Federated Farmers (Mr P. S. Plummer) praised the council for again emphasising the essential need for the removal of import controls. The Government should take this step as soon as possible. Noting that the council recommended a review of the existing tariff structure, Mr Plummer said it should not be overlooked that devaluation automatically conferred on local industry a significantly increased tariff protection.

This should allay any fears local industry had about the removal of quantitative restrictions on imports. “In the meantime the essential need is for Government to act to restrain the encroachment of rising costs if the export industries are to achieve the objectives laid down by the council,” Mr Plummer said. Raw Materials

The president of the Bureau of Importers (Mr J. Hall) said the proposal to replace import licensing by tariffs would ease immediately importers’ problems of fulfilling the raw material requirements of local industry. , “At present manufacturers are having to compete for scarce materials and equipment and this is pushing up the price to the public,” he said.

"A tariff protection scheme would also tend to increase efficiency in local industry and thereby remove those inflationary hazards that go hand in hand with quantitative import licensing restrictions.” Because demand was down as a result of devaluation the climate was now right for making the necessary changes. The president of the British Trade Association (Mr B. G. J. Clarke) said the dismantling of import controls would assist British manufacturers and help New Zealand claims for the retention of her position in the British market. “The existence of import licensing has served to divert a considerable portion of New Zealand’s trade away from Britain because in many cases where supply is kept short by licence, even when the cost of

■the goods in the country of origin is the same, importers have found it more profitable to use their licences on countries other than Britain because higher duties are payable and consequently a percentage mark-up on landed costs shows a greater profit to the importer,” said Mr Clarke. “Disastrous”

The Leader of the Opposition (Mr Kirk) said that if the council's recommendations were adopted by the Government, the results would be disastrous for both employee and employer. “Far from providing for full employment,” he said, “the report offers policies that will create and maintain a permanent pool of unemployment, the council’s protestations notwithstanding.” Mr Kirk said the council talked about import substitution and then Wanted to destroy the very economic tools that had in the past been responsible for bringing about import substitution on a very wide basis. “What the council is proposing is that we move towards a free trade position for industrial imports even though it knows very well that larger countries, which have the capacity to totally swamp many New Zealand industries, are not according similar free trade rights for New Zealand agricultural exports,” said Mr Kirk. Mr Kirk said the council recommended that the British preference should be reduced, thus putting British exporters on the same footing as some other countries which did not take, or show any signs of wanting, New Zealand agricultural exports. “At a time when relations with Britain are particularly sensitive negotiations on butter quotas, the threat of Common Market entry and the need for special arrange-

ments for New Zealand are uppermost in everybody’s mind—the council’s proposal is staggering,” he said. Mr Kirk suggested that any official proposal to generally eliminate British preference was a “dangerous folly,” which invited retaliation. “Forty-five per cent of New Zealand’s exports are marketed in Britain and the great struggle, so far as New Zealand is concerned, is to preserve this position.” Overall, the report was a piece of imaginative orthodoxy which if carried through could only result in more unemployment and harder times for everybody, Mr Kirk said. Training Centres

The secretary of the Canterbury Organisation for the Unemployed (Mr G. M. Edmonds) said: “The recommendation that retraining centres be established for the unemployed is the only joy I to be found in the report. Even this request originated from our organisation last August. “As far as the other recommendations are concerned, the report is just the usual outburst of orthodox economic experts blindly clutching at any straw to justify their existence and salaries. “To claim that the basic causes of unemployment are lack of skills, obsolete skills, seasonal factors, lack of local opportunity, and human handicaps, shows the council’s utter ignorance of the matters in which it regards itself as an authority and its obvious confusion between causes and effects,’-’ said Mr Edmonds. The president ef the Auckland branch of the Retail Motor Trade Association (Mr A. H. Lockyer) welcomed the recommendation to abolish licensing on completely knocked-down motor vehicles this year and on fullyassembled vehicles next year. A tariff system would allow more vehicles to be brought into the country and it would give the individual more say as to the type of car he got, he said.