Protective tariffs may be lost

Press, 9 August 1976, Page 6

Protective tariffs may be lost

PA Wellington Some industries are in line to lose their protective tariffs next year but are doing little about it.

The tariffs, which shelter New Zealand manufacturers from the lower prices of overseas competitors, are under review by a committee set up by the Government last year.

It will report to the Cabinet Economic Committee early next year with recommendations for tariff changes. The committee’ chai.man '(Mr N. W. taking) said he |was disappointed about the I lack of submissions from I manufacturers and importeis. I Without their help, the committee’s work was hampered. Manufacturers might be stripped of their protective tariffs without consultation. The review originally began as a five-year study by the 'Tariff and Development i Board, which has now gone lout of existence. It was lookling only at items subject to import licensing. i ’ 1975, the Government I decided that the review was taking too long, and was not ! broad enough, and set up the I committee to take over. The review became the

starting point of the Government’s industrial strategy. Industrial studies seeking to determine the best development programmes and resource use in the national interest are the next step. Many of the existing tariffs are more than 10 years old and were fixed by a mathmatical exercise.

The existing high rates have built up through technical classifications bearing little relation to the desirabilitv of import.

Manv were established at the time of import licensing, to stretch licences. A local manufacturer would stop importing made-up items and import them in parts to Le assembled in New Zealand. As demand grew, he would stretch the licence further by making some parts.

Much of New Zealand industry began this way.

But it can have its disadvantages, especially when a product can be made more efficiently overseas. The committee will try to determine a balance and set a tariff accordingly. Mr Laking said that much of New Zealand’s industrial

development between 1958 and the late 1960 s resulted from a combination of Government support and balance-of-payments problems. New Zealand was now in a situation where there was a balance-of-payments p >blem and licensing of 30 per cent of imports. Domestic industry did not realise its own strength and the inbuilt advantages it had over foreign competitors from just being in New Zealand. New Zealand was in a strong position in the domestic and export markets, particularly since devaluation last year.

The committee is almost certain to recommend the streamlining of the present tariff schedules which list imports and the applicable tariff item by item. These will be replaced by broad categories. Preferential tariffs for developing countries will not be directly affected by the review. But where an item is imported into New Zealand, mainlv at a concession rate, the committee may recommend the reduction of the full tariff to the concession level.