E.E.C. arrangements—“N.Z. in a fool’s paradise”

Press, Volume CXII, Issue 32846, 21 February 1972, Page 1

E.E.C. arrangements —“N.Z. in a fool’s paradise”

New Zealand was living in a fool’s paradise if it imagined that arrangements under which Britain was entering the Common Market would provide adequately for New Zealand’s future, said the Leader of the Opposition (Mr Kirk), who returned home at the weekend from an overseas tour, including a visit to Britain.

“It is true that, for only a certain term, Britain will remain the market for a large proportion of our agricultural products, but it is also true that unless we really undertake large-scale industrialisation, New Zealand’s future will be undermined by the outflow of our most highly trained and capable people, and by falling living standards,” Mr Kirk said.

Present policies seemed to read most hopefully the text of the protocol for British entry into the Common Market and fondly imagined that the British and Continental authorities shared that view, said Mr Kirk. “It is perfectly clear that they do not—and there are rude shocks in the offing for New Zealand, simply because it is not being realistic in its interpretation of the protocol,” he said. “For example, New Zealand finds itself in this sort of a cleft stick: the heads of agreement say that a review will be carried out in 1975 to determine the quantity of butter that can be sent into the E.E.C.—meaning the British market—after 1977, and that review will take place in the light of the extent that New Zealand has diversified her products and markets, and the extent to which the world has moved towards an agreement on dairy products.” This meant that New Zealand had to increase its sales of milk-based products, for example, in other markets. But because of the aftermath of drought, New Zealand would not be able this year to meet its full quota in the British market, and was being taxed on this score because prices were rising for the British consumer, Mr Kirk said. Question “urgent” “If we are to meet the British quota, it will only be by diverting milk products destined for other markets. Thus, on the one hand, we are told to supply the quota, and if we do, it will be held in 1975 that we have not done enough to diversify. “This is the sort of agreement under which New Zealand farmers must now live —and it has been hailed as a great triumph for New Zealand,” Mr Kirk said.

“As far as prices are concerned, there is similarly little reason for optimism. Indeed, so urgent is the question, I believe Mr Marshall should go to London to deal with this matter—whether he is able to arrange an amnesty within the National Party or not. “Political jealousies are :not sufficient reason fori leaving New Zealand interests exposed,” Mr Kirk said. “The position is that under the heads of agreement settled at Luxemburg last i year, it appeared that the five-year average price for New Zealand dairy products I could be a minimum.

“All this has changed under the protocol, which is !now the only agreement in i force as far as New Zealand products are concerned. “Under the heads of agreement, New Zealand was guaranteed a price: under the protocol, it is said that a price shall be fixed. It appears that unless some very good work is undertaken on which way the protocol operates over the five-year period, the average price will be a maximum, not minimum I as was alleged earlier. “The provisions of the protocol provide that a c.i.f. price shall be established at the point of landing for New Zealand for the transitional period. There is no indication whether this price will be adjusted annually or set for the five-year period.

“If the latter is the case, then each time sea freights are increased by the Conference Lines, the net amount paid under the five-year period to New Zealand will be reduced accordingly. “It is not hard to envisage that if this were done, the real value of the five-year price in net terms could be reduced by 30 per cent or more by the end of the period.”

Mr Kirk said that was an open question at present. Work on the conditions would begin in the next two or three weeks. Originally, the Government had expressed satisfaction on pricing procedures under the arrangements for British entry into the Common Market. Now, the protocol had changed conditions drastically. “It seems to me that, in the light of this, the matter is of sufficient importance for the national interest to supersede political in-fight-ing, and for Mr Marshall to pack his bags and go to London,” he said. Not written in Mr Kirk said those were not the only deficiencies of protocol. For instance, in the heads of agreement made in June last year, there was a guarantee of 71 per cent of milk equivalents being retained in the event of a transfer by New Zealand from one product to another. The guarantee of milk equivalents was not written into the protocol. Both the heads of agreement and the protocol expressed the hope that European countries would strive to follow orderly marketing policies and not carry out the dumping of subsidised products without the Common Market, Mr Kirk said. But it was only a matter of some 20 days since the E.E.C. introduced an export subsidy for bulk butter. Present E.E.C. butter stocks totalled 100,000 tons, the surplus this year being about 16,000 tons. Next year, it was expected

that this surplus would, further increase. “These facts alone should, be sufficient to bring home to New Zealanders how dangerous it would be to rely implicitly on the heads of agreement and the protocol as sufficient insurance for New Zealand’s future,” Mr Kirk said. “I had discussions with Mr Rippon, Britain’s chief Common Market negotiator, lasting an hour and a half. The first question 1 asked him was concerning the insertion of a term providing for a unanimous decision over matters affecting New Zealand in Britain’s entry. ... 1 am still convinced that this term was left out of the heads of agreement last year.” Mr Kirk said that if the term for unanimous agreement had been included, it would have made it harder for the heads of agreement to have been accepted in New Zealand and in the House of Commons. “There has been reference to the omission of this term as being for ‘presentational purposes’—a phrase which underlines the fact that in presenting the arrangements, the truth, the best-looking part of the truth, but not the whole truth was told.” It was clear that the insertion of the term making for a unanimous decision did not help New Zealand. Nor did it make it easier for Britain to veto an unsuitable arrangement; but it did reemphasise that some Continental countries wanted to return to the full provisions of the Common Market agricultural policy as quickly as they could after the five-year transitional period. That meant heavy pressures in some quarters on the arrangements for New Zealand —particularly from Common Market dairy interests and from the manufacturers of butter substitutes.

Without the unanimous decision term, anyone wishing to block an arrangement for New Zealand would run the risk of appearing utterly in-

transigent. But with the term now in, a procedure was established in which anyone could risk pressure but preserve access to veto.

“There are those who say the British could be counted on to veto an unsatisfactory arrangement—but that view should be critically examined,” Mr Kirk said. Such a veto could result ment at all. Second, Britain in there being no arrangeherself by 1975 could be committed to massive liabilities in adjusting her economy and exchequered to E.E.C. arrangements, and might herself be seeking some concessions. She could then be faced with a choice between her own interests and New Zealand’s —a situation which would negate the use of any veto. Finally, said Mr Kirk, the British Prime Minister (Mr Heath) at a press conference in July last had warned New Zealand that it could not count on a veto being exercised against an arrangement that New Zealand regarded as unsatisfactory. “Action needed’* “With all these developments, there is urgent need for official action on behalf of New Zealand,” Mr Kirk said. “I cannot emphasise too strongly that the importance of such action will be interpreted in Britain by the importance of t he person taking the action. “Last year, Mr Carter took up the question of the lamb

levy with the British Government and achieved no success. If the Prime Minister and former Minister of Overseas Trade, took action now the importance of the issues in the protocol to New Zealand would be realised. “This is all the more important when it is realised that with sheep meats the only guarantee we have is that further restrictions to the British market will not be implemented until after Britain enters the E.E.C.— January J next. “There is no assurance, for example, that there will be no further tariff over and above the 20 per cent Common Market external tariff which will apply. ‘No indication' “There is no indication whether the full 20 per cent tariff will apply on British entry or be phased in over the transition period, or at what rate that might be. “The New Zealand sheep farmer is already being subsidised by the New Zealand taxpayer because of rising costs,” Mr Kirk said. “One of these is a levy on sheepmeat imposed by the British, which will not at its maximum amount to one-half the Common Market full external tariff.” Mr Kirk said that the further uncertainties in New Zealand's agricultural products market in Britain underlined the importance to New Zealand of diversification and industrialisation as quickly as possible.