C.E.R. backed but full free trade doubted

Press, 1 June 1982, Page 12

C.E.R. backed but full free trade doubted

PA Auckland If closer economic relations with Australia are to prove acceptable to New Zealand, it. is essential that the impetus of manufacturing development is maintained, says the immediate past president of the Manufacturers’. Association. Mr L. H. StevehS. That was because the twin pillars of the economy were farming and manufacturing, and both had to be strong, he told the Onehunga Rotary Club. There was no way the farming sector could pick up the tax bill of manufacturers and those they suppported and still remain viable, he said. The association supported the expansion of Tasman trade, but it doubted if totally free trade between the two countries was desirable, or realistic. “One only needs to consider the dairy agreement that has been concluded as part of C.E.R. to confirm the position. I am not criticising the agreement, but its very existence proves the need for sensible and responsible restrictions. Full, free trade is the purist’s dream. Throughout the world today, it is conspicuous by its absence,” he said. Mr Stevens said that the association had suggested to both governments that a realistic approach was to introduce the access formula and let it run.

“Alternatively, if there must be a terminal date for quantitative controls, the proper time to make the final commitment would be at the five year review,” he said. There were sound reasons for this suggestion. The system of preferences maintained by the states were extremely effective barriers, as New Zealand knew. The Australian demand for equality was good in theory but the difference in the size of the two economies should be remembered. Marginal costing was the rule in international trade, and the country with the largest domestic market had a clear advantage. If New Zealand was to capitalise on C.E.R. it was essential that its inflation rate be equal to, or lower than, that .of its trading partners, he said. “In my book, C.E.R. will be seen to be working when there is a significant increase in manufacturing plants in New Zealand, set up to service Australasia and other parts of the South Pacific basin.” said Mr Stevens. “If we are to cultivate a climate for this to happen, we need appropriate fiscal and monetary policies, an incomes policy, and a protection policy that will encourage investment and lead to a boost in productivity. I believe manufacturers will accept the challenge of

C.E R.. but they will be. looking to the Government for policies that do not ask them to take on the rest of the world at the same time." he said. The, Government should not sign a C.E.R. agreement that contained a date to terminate quantitative controls, said the president of the Manufacturers’ Federation, Mr William Christie. Manufacturers' attitudes towards ending quantitative controls depended on the quality of assurance from the Government on safeguards, during the transition period, and afterwards, he said. A second factor was the extent to which the Australians eliminated non-tariff barriers, such as state preferences, and the "harmonising” of standards. . “Although some, of these matters are not within the power of the Australian Fed-: eral Government, we believe that unless there is perform- • ance by state Governments, New Zealand industry will - continue to oppose complete; abandonment of quantitative ■ controls," said Mr Christie. ■ He urged the New Zealand Government to consider azstrategy for protection,. against countries other than Australia. “It is our view that while. C.E.R. is being phased in, the Government ■ should move with extreme caution before reducing protection on thirdZ countries,” he said.