The spirit of C.E.R.

Press, 30 November 1982, Page 20

The spirit of C.E.R.

One of the points being raised against the Australian move to impose countervailing duties against New Zealand products and the more recent removal of the right to take Customs Department decisions in Australia to the Australian courts is that this is against the spirit of Closer Economic Relations. New Zealand manufacturers, entering into a new form of a trading relationship, with Australia, would want to feel that there was an element of good will on both sides about the agreement and that a severe blow against New Zealand exporters to Aust ralia even before ' the agreement was signed is far from a demonstration of good will.

But has either the letter or the spirit of C.E.R. been breached in a way that demands an extreme course such as a delay in signing the agreement? The nub of the sense of betrayal is in the argument put forward by Mr E. Richardson, president of the Manufacturers’ Federation during the week-end. He said: “under ...

C.E.R.... they (Australians) have accepted our export performance incentives until 1985 when they will be phased out. Having won that concession, they are now trying to stop some New Zealand exports by using the General Agreement on Tariffs and Trade code which outlaws export subsidies. They cannot have it both ways.” Annex V of the Proposed Arrangements for a Closer Economic Relationship between Australia and New Zealand, published in June, 1982, deals for three and a half pages with dumping. This section is part of the safeguards in the agreement. The section deals with what constitutes dumping and procedures for taking action against it. In the first appendix the following sentence occurs: “there is, however, a need for interim action to be taken by way of taking securities in certain circumstances.” Thus dumping, the imposition of countervailing duties, and the possibility of requiring cash securities are all covered by the agreement. An earlier section deals with subsidisation. It would be difficult to maintain that the recent actions by Australia constitute a breach of the letter ’ of the agreement. The position of the Australian Customs Department is such that it would, have been difficult, when Australian firms complained about the importing of metal roofing tiles and timber

from New Zealand, to have refused to investigate. The manufacturers on both sides of the Tasman were assured by their Governments that any administrative and legal procedures would be available to stop unfair practices. The published agreement does not say anywhere that because Australia accepted New Zealand’s export incentives until 1987 then no measures would be taken against New Zealand firms if they were considered to be harming Australian producers through subsidised exports. Both countries reserve the right to take action against the exporters of the other under the G.A.T.T. rules. Such action in New Zealand would be administrative. There is no appeal to the courts. Until the move last week in Australia when a regulation was introduced, an appeal to the courts was allowed. The point is particularly relevant to New Zealand because Australian courts have recently granted an injunction against the Customs Department in Australia which sought to make certain timber exporters in New Zealand pay cash securities against the possibility that they would be found to be dumping timber in Australia and be liable for countervailing duties.

The cases seeking countervailing duties are the first against New Zealand firms and there is no recognised administrative procedure for New Zealand and Australia to resolve the issues. Administratively the two countries have been caught on the hop. Little evidence exists for the view that Australia, having been aggrieved because of New Zealand’s retention of export incentives, has found a way of cancelling them out. The move to take appeals against departmental decisions out of the courts was not. directed against New Zealand but against freight-dumping from North America. When the Australian Department of Industries and Commerce did not consult New Zealand it did not observe the spirit of C.E.R. Even if the action was taken against other exporters to Australia, Industries and Commerce in Australia is not so large that New Zealandwould be simply overlooked. The timing of the Australian, move showed a gross lack of _ sensitivity. However,, extensive consultations are now being conducted and there should be a better understanding soon. In the meantime a delay in the signing would cause relations to worsen. No-one wants a return to the bitter spirit of N.A.F.T.A. in recent years.