Foreboding about import pressure

Press, Volume CXVI, Issue 34123, 8 April 1976, Page 3

Foreboding about import pressure

(N.Z. Press Association) AUCKLAND, April 7. New Zealand would be in very serious difficulty’ if import levels needed to maintain economic activity were so high that the overseas deficit: could not be significantly reduced, the Prime Minister (Mr Muldoon) said today. His department was working on an analysis of private imports, but it was still too early to say what the true position was, he told the Bureau of Importers and Exporters in Auckland. “It appears clear that internal demand is being maintained at quite a high level, and it appears that consumption is still running at a level that cannot be sustained,” he said. “Investment, on the other hand, is probably well down, and that combination is not good. “I believe it will be a month or two before the pattern is clear, but if we should find that the level of private imports required to maintain the economy at a reasonable level of activity is so great that the external deficit cannot be brought down to manageable proportions, then we are in very serious difficulty indeed.” Mr Muldoon said that his “think-tank” experiment had proved very successful in the three months since it began.

i Another departure had been (the linking of the Foreign Affairs and Overseas Trade ( Portfolios by giving them to the Deputy Prime Minister (Mr Taiboys), who was “thus doomed to roam the globe incessantly for ever.” The Prime Minister said imports and exports together i made up 45 per cent of the ; country’s gross national product. Import prices With import prices rising i steadily, overseas companies ■ were going to find it more difficult to compete on the New Zealand market. Mr Muldoon said that on his impending world trip he would tell exporters that, “in] today’s circumstances, it will be necessary for them to shave their prices if they wish to compete in the New Zealand market, just as we are’ being forced to shave our prices in our export markets.”; “We cannot in the final analysis permit adverse terms; of trade to lower our standard of living in real terms bv the 8 per cent that was shown in the Monetary and Economic Council’s recent report without some kind of action: in return.’’ Such retaliation was pos-i sible in trade with both Japan and the Soviet Union. Mr Muldoon said the trade pattern in farm products with these two countries, with violent fluctuations from year to year, was not a “satisfactory basis for continuing trade relations.” He would make it clear >

while in Japan that New Zealand wished to establish and maintain a long-term trading relationship with that country, “based on continuous supply, with a cessation of the arbitrary exclusions” which had caused New Zealand too. much difficulty. He would tell officials of the Organisations of Economic Co-operation and Development in Paris that there must be give and take on both sides. “While New Zealand is delighted to be a member (ofi the 0.E.C.D.). we nevertheless are not prepared to have; our vulernable farm product exports used as some kind of balancing factor by the member countries while still, subscribing to the O.E.C.D. policy of no restraints on multi-lateral trade in other commodities,” said Mr Mui-1 doon.