THE PRESS WEDNESDAY, JULY 6, 1977. Australia as a trader

Press, 6 July 1977, Page 20

THE PRESS WEDNESDAY, JULY 6, 1977. Australia as a trader

A reported estimate by the Australian Treasury that 430,000 people will be unemployed in Australia by early next year is more likely than anything else to influence Australia’s policy on imports from New Zealand. New Zealand and Australia each provide the other with its best market for manufactured goods and the level of unemployment in Australia makes the Australian Government heedful of manufacturers’ complaints that New Zealand has been making inroads into their domestic market. When Australia imposed quotas on imports of clothing made in New Zealand the most compelling argument behind the decision was the Government’s concern about employment. Although only about 4.5 per cent of Australia’s imports are restricted, protectionism is growing in Australia. Yet when a global quota is imposed a

quota will almost certainly be imposed

on New Zealand as well. That is what

happened over the clothing imports for which New Zealand had previously

enjoyed unlimited access The task for New Zealand negotiators will be to

protect the privileged position that is

still retained by New Zealand exporters.

Australia and New Zealand have both come under increasing pressure to admit more goods from South-East Asian countries, and these countries have cited New Zealand’s privileged position in the Australian market. Australia has an answer to the complaint when the items being traded are covered by the New Zealand and Australia Free Trade Agreement But if Australia’s policies are to be seen to be fair, justifying unlimited access for other New Zealand exports is much more difficult.

Enough similarities can be found in the economies of New Zealand and Australia to mask some important differences. One of the most significant differences is in the method of protecting secondary industry. New Zealand retains import licensing, a source of complaint by Australian manufacturers. Australia abolished import licensing and replaced it with tariffs controls in 1960. Australian secondary industry is of longer standing than New Zealand industry and the diversification of Australia’s markets began much earlier. In 1966-67 Japan replaced the United Kingdom as Australia’s best customer: Britain is still New Zealand’s largest market. Minerals account for about 30 per cent of Australia’s exports, and agricultural products about 46 per cent New Zealand agricultural exports are nearer 80 per cent of the total.

An important influence in the Australian economy was a general tariff cut in 1973. This produced a flood of imports from Asian countries which contributed to Australian unemployment. New Zealand, rather unfairly, received too much of the blame for the unemployment. In the trade with Australia, New Zealand will need to seek separate quotas or the extension of N.A.F.T.A. New Zealand is unlikely to get either advantage unless it gives way over some of its import licensing. Such a change of policy would have guarded support from New Zealand industry and our balance-of-payments problems would become worse unless New Zealand exporters can greatly increase sales to Australia. TransTasman trade is yet another economic front on which New Zealand is in serious trouble, largely because of recent trends in world trade.