Plea for retention of U.K. preference

Press, 3 December 1982, Page 17

Plea for retention of U.K. preference

Abolishing New Zealand tariff preference for vehicles and components from the United Kingdom could make our agricultural products more expensive in Europe, according to the British Government. The British Government also thinks the abolition of duty on completely knocked-down packs would strengthen the Japanese car industry as a monopoly supplier to New Zealand. This would enable prices for vehicles and spares to be manipulated at will, to the detriment of the consumer. These points were made in submissions to the Industrial Development Commission yesterday by the Department of Trade on behalf of the British Government. The Commission, chaired by Mr Ted Tarrant, is hearing submissions on its draft development plan for the motor industry, then will make a final report to the Government. In its submissions, the

British Department of Trade asked that the tariff preferences for the vehicles and components from the United Kingdom. be retained unaltered. To minimise the northbound shipping costs for New’ Zealand agricultural products. it was expedient to maximise United Kingdom south-bound vehicle exports which could use the same containers. The submissions said the British Government had recently received representatives from British shipping lines who had emphasised the importance of a continuing flow of vehicles from the United Kingdom to New Zealand. In terms of containers carried the annual northbound traffic to the United Kingdom numbered about 42,000, compared with some 15,250 which travelled southwards. Of the south-bound containers about 2250 (or 14.75 per cent) carried motor vehicles.

"If the volume of motor vehicles shipped to New Zealand were to be significantly reduced, it is most unlikely that the loss of revenue would be fully retrieved from other south-bound cargo. "This would certainly have a detrimental effect bn the level of freight rates required for north-bound New Zealand produce and would make New Zealand agricultural products more expensive in Europe," said the submissions. On the Japanese, the submissions said that once the need to compete across tariff barriers was removed, they were likely to seek an increase in their profits and hence raise prices. This, combined with the loss of $l7O million annual revenue which the import duty brought to the New Zealand Government, would render the abolition of duty a .move of doubtful benefit to the New Zealand economy, said the submission.