THE PRESS FRIDAY, MAY 1, 1981. Wool board in the gun

Press, 1 May 1981, Page 12

THE PRESS FRIDAY, MAY 1, 1981. Wool board in the gun

The agreement signed late last year between the New Zealand Wool Board and one of the largest cotton mills in the People's Republic of China has been under debate at this week’s conference of the International Wool Textile Organisation. Under this arrangement the mill will be buying New Zealand-scoured wool for seven years and the board will help financially with equipment for a new woollen mill.

The International Wool Textile Organisation consists of representatives of national organisations interested in the merchandising, processing, spinning and weaving of wool and allied fibres under private enterprise. It brings together people from more than 20 countries — people who are customers for New Zealand wool.

The concern of at least some of these people, who have been traditional users of New Zealand wool, has been that the Chinese may have been given favoured treatment in the terms under which they have obtained the financial help from the board and in the supply of the wool. Furthermore, they have been fearful that the result could be cheap products made from New Zealand wool in China and put oh their traditional markets.

The board has clearly been mindful of these anxieties. It has made it clear that the wool is being sold through normal commercial channels, so that there is no ground for believing that the Chinese are getting any concession on this score. On the provision of financial help to the mill, the chairman of the board, Mr J. D. Mcllraith, has declined to discuss the details of a confidential agreement; but he has said that the amount involved is very small and it has been said that the interest charges are in line with current rates. Mr Mcllraith has said that the Chinese have indicated that the wool will be used mainly in products that will be consumed in China and, at the conference, he quoted from an article in a recent issue of the “People’s Daily” in Peking, in which it was said that exports of woollen fabrics had been controlled at about 10 to 15 per cent of total production to ensure that the demands of the domestic market were supplied.

Some of the representatives at the conference were not inclined to place too

much reliance on these statements and, ata time when world trading conditions in wool-type textiles are depressed, they questioned the accuracy of a claim in the article that some textile products were in short supply on the international market.

The Americans were able to talk about their market’s being inundated with wool sweaters from China, and in a paper about the trends in international trade in wool textiles in the period up to 1986-87, the managing director of the International Wool Secretariat, Dr Gerald Laxer, forecast that most of the planned increases in China’s raw wool imports would be destined for re-export in finished products. Referring to New Zealand wools, Dr Laxer said that a major use was in handknitting yarns and China was a country where both women and men knitted; he had seen people knitting while walking along the streets of Peking. The importance of the subject to the conference was underlined by the fact that the president of 1.W.T.0., Mr S. S. Nevile, raised it at the formal opening. His message was that there should be free and fair trade and free and equal access to raw wool supplies.

Some of the concern was alleged to stem from a lack of information about the board’s agreement with the Chinese mill and the debate served to emphasise the need for the board to be as specific as it can be about the implications of such arrangements.

The board, however, has to be commended for the energy it has shown in seeking to promote an expanded market for wool in a country that obviously has very great potential and which the board sees as a new and additional market where most of the wool will be consumed inside the country. The success of these efforts can be seen in the rising importance of China as a buyer of New Zealand wool. With due deference to the older markets for wool, it is very likely that the board’s stockpile would be a great deal bigger if it was not for the markets in China, the Soviet Union, and other East European countries. The points of view of both sides in the debate are understandable, and perhaps irreconcilable. They will certainly remain irreconcilable so long as a free market prevails.