The Press MONDAY, APRIL 15, 1968. Pulp, Paper, And "Free” Trade

Press, Volume CVIII, Issue 31654, 15 April 1968, Page 8

The Press MONDAY, APRIL 15, 1968. Pulp, Paper, And " Free” Trade

The outcome of the dispute between the Tasman Pulp and Paper Company and Australian Paper Manufacturers, Ltd, is a compromise of benefit to the producers rather than the users of the commodities involved. Tasman has given up its plan to produce liner board for the Australian market, and Australian firms will continue to pay above world prices for this important packaging material. Instead of producing liner board, Tasman will expand its newsprint production and sell the whole of the extra output in Australia—presumably at world prices, and certainly at the expense of other countries at present exporting newsprint to Australia. Australian users will also take more New Zealand paper pulp in preference to pulp from other countries. New Zealand in recent years has become, with the exception of Canada, the largest supplier of newsprint to Australia. Of 266,000 tons imported by Australia in 1966-67, 133,000 tons came from Canada and 94,000 tons from New Zealand. Tasman’s plans to produce an extra 100,000 tons of newsprint can only mean the displacement of a similar quantity of other—mainly Canadian—exports to Australia. At current prices, this agreement assures New Zealand of increased export earnings of the order of $l3 million a year from newsprint alone. A hundred thousand tons of liner board would have been worth more than $l5 million a year; but the Australian market’s capacity to absorb liner board is much more limited than its capacity for newsprint New Zealand has gained at the expense of other countries; Australia has given away nothing of material value to its own producers. This is trade diversion rather than trade creation. The Free Trade Agreement which was in danger of foundering because of a squabble between two powerful companies on either side of the Tasman, has been saved. Businessmen on this side of the Tasman may consider this something of an achievement; but consumers in both countries should note that the agreement has so far brought them no benefit of any consequence.