THE PRESS WEDNESDAY, NOVEMBER 28, 1979. Another clothing exports row

Press, 28 November 1979, Page 20

THE PRESS WEDNESDAY, NOVEMBER 28, 1979. Another clothing exports row

The latest row about the clothing trade across the Tasman has many of the features of earlier disputes. The Prime Minister, Mr Muldoon, has said that manufacturers are “very worried” and that there would have to be talks with the Australians. Mr Bruce Goldsworthy, the deputy director of the Auckland Manufacturers’ Association, has been more specific on the point. He said that Australia was manipulating quotas so that those which New Zealand could not fill were being increased, and those in which New Zealand manufacturers were doing well were being reduced. What he did not say was that New Zealand has recently suspended licences to import Australian men’s suits and some women’s outer clothing.

Suspicions characterise the clothing industry. Mr Goldsworthy did not give an example of the manipulations he alleges are taking place, and without seeing the evidence it is not clear whether the complaint is about more than that some New Zealand clothing is not selling well in Australia. Because the quotas are set by categories it would seem possible that the categories might need to be brought up to date from time to time. In both New Zealand and Australia the clothing industry, already subject to the whims of fashion, employs many people in areas where they could get no other work, and is therefore politically sensitive. Manufacturers in both countries are sometimes given to extracting advantage from the sensitivity.

For the New Zealand consumer there is one interesting lesson from what has happened. Although some of the Australian clothing cost the importer far less than New Zealand clothing, the New Zealand consumer benefited little because retailers here were able to take advantage of bigger mark-ups. This, however, is not at the centre of the argument about trans-Tasman trade, although the Australian manufacturers would probably be happier if their advantages showed up in pricing.

The understanding under which New Zealand clothing is exported to Australia, and Australian clothing imported by New Zealand, was reached in April, 1977. Between 1973 and 1976 New Zealand’s exports of clothing to Australia had grown from S 3 million a year to about S2O million. At the same time Australian manufacturers were largely prevented from expanding their markets in New Zealand by New Zea-

land’s import-licensing system. Australia agreed to accept New Zealand clothing at the volume to which it had risen in 1976: in return, New Zealand agreed to grant licences on demand for Australian clothing, with the provision that imports would be monitored.

Just what it meant to monitor the imports was not spelt out at the time and the idea was apparently understood differently by New Zealand and Australian officials. Later it was made public that if Australian imports exceeded 4 per cent of the New Zealand market in any category then some action would be taken. That action was taken recently when New Zealand suspended licences for men’s suits and some women’s clothing.

It is characteristic of the manner in which too much Tasman trade is conducted that there was no consultation with Australia over the action. New Zealand and Australia are engaged in a serious exercise to determine whether they could benefit from establishing closer economic links. Arbitrary actions will not encourage a sensible approach to such a question. It would be silly if one section of the New Zealand—or Australian—industry prejudiced the approach to the issue. If there is one bone of contention between New Zealand and Australia over trade, it is New Zealand’s importlicensing system. The recent action will reinforce Australian objections. The quotas imposed by Australia on New Zealand imports are similar in their effect to import licensing, and it must be acknowledged that the quotas were reasonably generous and provided special access for New Zealand as well as enabling New Zealand manufacturers to compete for a share of world quotas.

The lesson that could be read from the latest incident is that the path to a smooth trading relationship will not be found in the practices that apply to the clothing trade. If Australia has been guilty of manipulating the quotas to New Zealand’s disadvantage, that was improper: New Zealand’s sudden suspension of licences for certain categories of Australian clothing was also improper. If such actions could be confined to one industry the harm they do might be limited. But they cannot. Suspicion and arbitrary actions can have reverberations throughout the whole Tasman trade. A rapid resolution of the present difficulties would be in everyone’s interests.