TRADE WITH BRITAIN NEW NEGOTIATIONS MUST BUILD ON TERMS OF 1971

Press, Volume CXVI, Issue 34072, 9 February 1976, Page 14

TRADE WITH BRITAIN NEW NEGOTIATIONS MUST BUILD ON TERMS OF 1971

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SIR JOHN MARSHALL

The visit of Mr Taiboys to Europe within six weeks of becoming Minister of Overseas Trade highlights the importance and priority which the new Government gives to preserving our place in the British market.

The newspapers have given a good coverage of the current situation of our trade in butter, cheese and lamb and of the present stage of the negotiations. Against that background a comparison of these negotiations with the earlier negotiations may give a perspective against which to assess our prospects.

There are, of course, significant differences and some similarities. In some respects the present negotiations will be easier and in others more difficult. The most obvious difference is that Britain in 1971 was an applicant for membership of the European Economic Community. She is now a full member of the Community. New Zealand is, however, still dependent on the advocacy of the British. We still do not negotiate direct with the E.E.C. This is because our rights and interests are still covered by Protocol 18 which is part of the Treaty of British Accession to the Community. Our trading rights are for access to the British market only, and not to the Common Market as a whole.

It is some advantage for us that Britain is now inside the Community. British Ministers will put our case in the Council of Ministers and not as themselves applicants for membership. Britain has a power of veto which could be used to stop any proposal which might be too damaging for New Zealand to bear.

Alternatively, any other member of the Community also has a veto to block any proposal which might be re-

garded as too favourable for our interests or too damaging for theirs. The decision of the Community on the terms of the extension of our Protocol must be unanimous on all major issues, as indeed was the case, after much hard bargaining, with Protocol 18.

In 1971 New Zealand had managed to get into the position where we almost had a power of veto on Britain’s entry. The British people as a whole were behind us. The press, radio and television were for us.

The majority of all parties in the House of Commons had made it clear to the British Government that Britain should not agree to join the Community unless satisfactory arrangements were made for New Zealand. The E.E.C. knew that. They wanted Britain to join and they made unprecedented concessions to us to achieve that objective.

Today the situation lacks that dramatic and compelling quality. The current negotiations are being conducted in a much cooler, more businesslike atmosphere. Britain will, I am sure, still put our case strongly. The British people still like our butter, cheese and lamb. But in the eyes of the E.E.C. the extension of our trading rights is now more of a commercial transaction than a matter of high policy.

More difficult

Another factor which makes our position more difficult is the composition of the enlarged Community, which now includes Eire and Denmark, both of whom have large numbers of dairy' farmers producing large quantities of dairy produce.

I Their Interests clash with lours in the British market land they join with France land the Netherlands as our ■ competitors, with a competitor’s concern to reduce the volume of New Zealand butter and cheese in a market already over supplied. In 1971 the supply position for dairy produce, I which the year before had a butter mountain iin Europe, had eased and I New Zealand was able to argue that production of milk was running at a level I which left a place for us in ithe British market.

Since then the production of milk has risen. Two years lago a huge surplus of butter I was sold to the Soviet Union lat great financial loss and with subsequent political criticism.

This year an embarrassing surplus of milk powder has accumulated in the Community. Furthermore, as prices of butter rise in Bnt-

ain, consumption of butter in Britain is falling and the Community claims that it lean supply all that is needed. All these factors make Mr Talboys’s task a formidable one.

On the other hand, there are some more favourable features. New Zealand has some contractual rights, established and accepted by the Community. We have a right to an extension of Protocol 18. This was confirmed at the E.E.C. summit meeting in Dublin last; year. The prospect of obtaining a fair price for our butter is much better now than in 1971.

One of the temptations which will be placed in Mr Talboys’s way is likely to be an offer of a higher price for a smaller quantity, which would leave us financially as well off, but with the problem of disposing of more butter or butterfat in other countries.

We must not lose sight of the fact that the British market is, for the present and foreseeable future, the only major market for our butter, and access to that market is essential for the stability and prosperity of our dairy industry. Mr Taiboys’ main task is therefore to try to obtain for the extension of the Agreement from 1978-1980 the maximum quantity at a fair price. He will also try to obtain a fixed quantity rather than annually reducing quantities. Our case has been weakened in this respect by our failure over the past three years to send to Britain the full quantities of butter and cheese which we are entitled to send.

There were climatic and trading reasons for this, but it does enable the Community to argue that our reliance on the British market has been over stated. We can reply that we have carried out our other obligations under the Protocol to diversify our markets and have done this conscientiously and successfully. But these markets are not as certain or reliable as the British market which is our only secure base on which the continuity of our dairy industry depends.

No urgency

There is no occasion for panic or precipitate action. It is of course desirable for the dairy industry to know as far ahead as possible the quantities of butter that can be exported to Britain. We know now precisely how much can be sent this year and next year. We know that a 3-year extension to 1980 will be given. Although the dairy in-j dustry will want to know its! fate as soon as may be. 1 there should be no sense of urgency. Mr Taiboys has some time up his sleeve, and that is an important negotiating advantage. In these circumstances Mr Taiboys is right and wise to regard this trip more as an exploratory than as a negotiating exercise. He will meet the Ministers and officials of the nine member: countries and of the Com-, mission in Brussels. He will put to them New I Zealand's case as he sees it., and in the light of that ex-, perience he will be able to; make his own assessment of the situation and follow that up through our very able representatives in the European capitals, and at the ap-, propriate time, with further! and possible final negotia- ; tions.

Sir John Marshall, a former New Zealand Prime Minister, was New Zealand’s chief negotiator in '971 when terms for the access of New Zealand exports to Britain were being worked out as part of the agreement under which Britain entered the E.E.C. In this article, the first of a series, Sir John Marshall discusses the present negotiations which will secure continuing access to Britain for New Zealand exports. Sir John Marshall is shortly to pay a private visit to Britain and further articles in the series will be written from there.