The Press THURSDAY, MAY 16, 1968. Bilateral Trading

Press, Volume CVIII, Issue 31680, 16 May 1968, Page 12

The Press THURSDAY, MAY 16, 1968. Bilateral Trading

New Zealand’s trade policies have undergone a significant change this year. Officially, at least, New Zealand has looked with disfavour on bilateral trading, as a commitment to buy goods from a nominated country prevents New Zealand from shopping “around” and might invite retaliation by other trading partners. Until the collapse of the wool market 18 months ago this policy served New Zealand well enough, for it enabled our traders to buy on the cheapest markets and sell on the dearest. But the recently-announced purchases of pipes from India for the Kapuni gas scheme and of railway waggons from Jugoslavia clearly breach the principle of multilateralism, and a similar deal with Russia was hinted at by the general manager of the Wool Board (Mr J. D. Fraser) on his return from Moscow this week.

In each of these transactions, increased sales of New Zealand exports—milk powder to India, dairy products and wool to Jugoslavia—were an essential feature of the deal Mr Fraser said that Russia might increase its purchases of New Zealand wool, and added: “ There are areas of our trade which are not “subject to import licensing which might be filled “ with goods from Russia ”. Neither the Indian nor the Jugoslav deal was a barter deal, according to the Minister of Overseas Trade (Mr Marshall). Technically, he is correct, for the dictionary definition of barter is “the act or practice of trafficking by “ exchange of commodities ”, In each transaction, as the Minister carefully pointed out, the contracts for the purchase of imports and for the sale of New Zealand produce were between parties “ and will be “ for payment in cash and not by exchange of goods ”,

But bilateral deals they certainly are, and bilateral deals by their very nature exclude third parties which might have been interested in supplying New Zealand with the goods we have now contracted to buy elsewhere. Unfortunately, few of the “third “parties” show any interest in buying more New Zealand butter, cheese, milk powder, or wool at present; any country which commits itself to do so is in a strong bargaining position when trying to sell the New Zealand Government pipes or railway waggons.

It can scarcely have been coincidence that the day Mr Marshall announced the Jugoslav railway waggon deal Mr Muldoon complained of the failure of the General Agreement on Tariffs and Trade to provide for the orderly disposal of the world’s surpluses of primary products under international commodity agreements. This, no doubt, will be New Zealand’s reply to any G.A.T.T. member which complains of New Zealand’s breaching the G.A.T.T. restrictions on bilateralism. The answer will not mollify the Japanese, perennially dissatisfied with their adverse balance of trade with New Zealand. In the last two years, Japan’s imports from New Zealand have totalled $137 million compared with exports to this market of only $74 million.

Perhaps it was no coincidence, either, that several days after the Jugoslav deal was announced the Dairy Board reported severe cuts in Japanese orders for New Zealand milk powder and butter. New Zealand’s sales of dairy products to Japan last year earned 832 million; this year, apparently, they may be less than half that amount, as dumped surpluses from North America and Europe will displace much of the New Zealand produce. If there is any prospect of winning back New Zealand’s lost share of this market, New Zealand should consider granting more import licences for Japanese cars, or finding other ways of ensuring that Japan’s exports to this market are increased.