COMMENT FROM THE CAPITAL END OF IMPORT LICENSING SYSTEM IS NOT IN SIGHT

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

COMMENT FROM THE CAPITAL END OF IMPORT LICENSING SYSTEM IS NOT IN SIGHT

(From bur Parliamentary Reporter) WELLINGTON, April 14.—Suggestions that the import licensing system will be completely demolished within the next few years have been F? jec . x- the Minister of Industries and Commerce (Mr Marshall) and the Acting Minister of Customs (Mr Adams-Schneider).

They say there has been no change in Government policy concerning import licensing and suggest that a wrong emphasis has been placed by many people on the reference to import controls made by the Prime Minister (Mr Holyoake) la his announcement on devaluation made on November 21, when he said: “Devaluation, in association with an appropriate policy of protective tariffs, will provide an opportunity to overcome some of the inefficient use of our resources, and to remove the distortions which have resulted from the operation of the system of import licensing for nearly three decades.” Four months later, on March 29, a statement by Messrs Marshall and AdamsSchneider carried the sentence: "The licensing system, must, however, remain, and for certain hard-core items must remain indefinitely, as an integral part of the measures which continue to be necessary to protect our external reserves.” No Conflict

Soon after It was made, the Prime Minister’s statement had been taken by many people as meaning that he total abolition of import licensing was a matter of months rather than years. This mood of optimism on the part of importers and some manufacturers was recognised earlier this year by Mr Marshall. On February 21 he said that the policy of the Government to remove Items from import control progressively as conditions permitted had been advanced further by devaluation. This statement, which was closely related to Mr Holyoake's earlier statement, continued: “Devaluation has increased the price of imports, and therefore to some extent has reduced the demand for imports. At the same time it has given greater protection to the New Zealand manufacturer. Some Imported goods can therefore be more easily freed from Import con trol.”

Mr Marshall explained that this had led to public discussion in which the extent of decontrol had been debated, with advocates ranging from the complete removal of import licensing to the reimposition of controls for certain classes of goods. Mr Marshall’s Assurance In this atmosphere of debate, some manufacturers had formed the impression that tariff items covering goods made in New Zealand would be exempted from import licensing, which could mean that New Zealand industries might be harmed by

premature exposure to overseas competition. Mr Marshall then gave an unqualified assurance to the public, and to manufacturers especially, that the Government’s long-established policy of selecting items for exemption from import licensing would be followed. This policy is set out in full in the National Party manifesto published in 1966. This establishes an order for the consideration of items on which import licensing may be removed, and thus lays down a priority table qualifying the word “progressively” in Mr Marshall’s statement. The ‘order for consideration” is:— 1- Manufacturers’ raw materials and equipment Of a class not made in New Zea land; 2. Finished goods not made in New Zealand; and 3. The remaining raw materials and equipment and Other finished goods, after hearings and recommendations by the Tariff and Development Board (but only when adequate protective tariffs are in force). Since then the terms of the third paragraph have been extended by reference to the Tariff and Development Board or the Emergency Protection Authority. Another factor taken into account by the Government is the conservation of overseas funds. For this reason Mr Marshall stated on February 21: “Not all goods or raw materials of a kind not made in New Zealand can be freed in present circumstances." i Positive Measures When this matter was re-1 ferred to him a few days ago, Mr Adams-Schneider said there was no conflict between the Prime Minister’s statement and the one made by the Ministers on March 29. "The Prime Minister’s state ment did not set any date for the complete removal of import licensing,” he said. “Neither did it indicate the speed with which this would be carried out. It merely stated that the circumstances following devaluation provided an opportunity to correct positions which had resulted from the operation of import licensing over a number of years.” Since devaluation, the Gov-

ernment has taken the following actions to implement this policy:— 1. A substantial list of goods was exempted from import licensing in December, 1967. 2. The exemption of goods in the 1968-9 import licensing schedule involved 122 item codes. 3. Exemption is proposed in the 1968-9 import licensing schedule for a further 21 item codes “where there is local manufacture involved, but where opportunity is given for tariff protection.” 4. Items previously exempted from import control have been maintained in their exemption. Effect Of Exemptions The effect of these exemptions will be that this year approximately 50 per cent of the value of all private imports will be free of import licensing. Additional items were not exempted at this time because of the effect of such exemptions on overseas funds, and because of the assurances given to industry by the Government. These assurances are simply that, before import licensing is removed from goods made in New Zealand, manufacturers will be given the opportunity to seek tariff adjustment where they feel this is necessary. The word “indefinitely” in the joint statement made by Mr Marshall and Mr AdamsSchneider indicates that no date has been set for the complete removal of import licensing. I “The fixing of a specific date for complete removal is j not practicable in current ecoInomic circumstances or withlin any relatively short i period," Mr Adams-Schneider said in reply to questions by “The Press” parliamentary reporter. “The items regarded as ‘hard core' are those where there is substantial domestic manufacture, such as clothing and footwear, and where exemption from import licensing would lead to a considerable upsurge in the volume of importation. “However, the joint statement emphasises that it is the Government's intention to announce further items for exemption from time to time, with adequate opportunity for the industries concerned to be afforded tariff protection. “This policy is exactly in line with comments made by the Prime Minister."