Details of C.E.R. released

Press, 5 June 1982, Page 7

Details of C.E.R. released

PA Wellington Full details of the new Tasman trade agreement were released by the Government for the first time yesterday. The closer economic relations exercise, designed to replace the ageing N.A.F.T.A. (New Zealand-Australia Free Trade Agreement) with a virtual common market between Australia and New Zealand, is scheduled to come into effect from the beginning of next year and be phased in between then and 1995.

The fine print of C.E.R. which will progressively remove all existing restrictions on Tasman trade, contains little that is new.

All sector groups have been closely involved with the negotiations over the past two years, and a copy of the draft was obtained by the New Zealand Press Association in Sydney last month and widely publicised. The exposure draft confirms that all import restrictions on Tasman trade will end by 1995.

Liberalisation of trade will be gradual with base access levels increasing by 10 per cent each year in real terms — doubling access in seven years.

The draft said it was implicit in its whole approach that Anzac trade “takes place under conditions of fair competition."

Export subsidies and incentives affecting Tasman trade will finish by the end of the 1987 tax yea and special conditions will apply to certain agricultural products including dairy products, wheat, sugar/ citrus and some tropical products.

New Zealand will "share in future growth of the Australia market for cheese’’ and the old N.A.F.T.A. arrangement for New Zealand Cheddar exports will be absorbed into C.E.R.

The agreement will extend preferential Government purchasing arrangements across the Tasman, and New Zealand will "pursue discussions with the individual state Governments" on equal treatment under inter-state preferences. C.E.R., the document said, "should provide the impetus for desirable-industry rationalisation” with the slow phase-in,.allowing .time for investment decisions’ without “risk of substantial, disruption.”

Harmonisation will be encouraged in all areas and action will be taken to prevent restrictive trade practices arising such as standards. labelling and technical specifications which could frustrate the aims of C.E.R.

The new agreement will be open-ended but will be reviewed in detail by a council of ministers in 1988 — five years after it starts operation. The review would "consider whether the agreement is providing a satisfactory balance of advantage to both countries and whether its full potential is being realised."

It would also look at the situation following the decline in national domestic protection, in areas like industrial standards, economic policies and practices, industry co-operation and national and state Government purchasing. ’ The C.E.R. will absord all relevant aspects of N.A.FjT.A.. the draft said.

The draft exposure lists 22 items that will be subject to a modified liberalisation programme.

The- phase-in of C.E.R. to cover most items has already been agreed but negotiations are still going on several products.

On Cheddar cheese, the N.A.F.T.A. quota will be removed from the start of C.E.R. at the beginning of next vear. Processed

potatoes and canned and frozen corn will get accelerated liberalisation with an early end to import incentives to accommodate the simultaneous seasons in both countries.

Wine costing more than $2 a litre will be covered by the normal access formula while other wine will come into the agreement from 1986. when tariff phasing will start. The late start is designed to protect the New Zealand industry. Ceramic sanitary ware and substantial metal products will come under the agreement in 1985. Wool carpets will have a delaved entrv to C.E.R. until 1983. The Australian industry has been given protection against New Zealand-made whiteware and lawnmowers, and furniture will be included after 1987.

Tobacco, clothing and cars, along . with canned fruit, tyres.. electronic goods and ballpoint pens have still to be decided as the two governments await the results of detailed studies into these industries.

The draft contains changes to tariff phasing which it said "should be more equitable” than the original proposals. Apart from the exceptions agreed between the two governments all tariffs would begin to phase down from the start of C.E.R. on January 1.

“At that date goods with five percentage' points (of tariff) or less will become duty free. Annual tariff cuts will be implemented for other goods resulting in duty free treatment within one to five years ...” the draft said. • There would be no oneyear period of grace as originally suggested.

•“It is considered that the extensive consultations with interested parties, and the long notice of intended implementation more than adequately meet the intent of that suggestion” the draft said.-

The- draft makes provision for safeguards for those industries forced out of business by C.E.R. The safeguard classes are deliberately loose in their application but allow both governments to- consult before any remedial steps are taken or compensation paid out. .

Companies who believe they may be adversely affected may apply in advance. I .