Mr Muldoon warns U.K. of E.E.C. protectionism

Press, 10 January 1983, Page 15

Mr Muldoon warns U.K. of E.E.C. protectionism

NZPA staff correspondent London

The European Community w'ould damage its individual members, the Western alliance. and the developing world if it moved any further down the path to protectionism. the New Zealand Prime Minister. Mr Muldoon, has warned It was distressing that the principle Western allies, which had so much in common in terms of democratic systems, individual freedoms, and shared perceptions of world security, were squabbling among themselves over trade, he said in an article in -The Times." "Retreat into a protectionist laager, especially, during the present recessionary times, is patently the wrong thing to do if the world economy is to be turned round." Mr Muldoon said. “All our societies bear to this day the scars from the injuries inflicted by that course in the 19305."

/"*4r Muldoon’s article is • K , of a series "The Times" is running to mark the tenth anniversary of Britain's entry into the European Economic Community. He said someone had once likened the benefits of E.E.C. membership to Hying saucers: a lot of people talked about them, few could claim to have actually seen them, and those who did were generally misbelieved. “That may be a jaundiced view of Britain in Europe." Mr Muldoon said. “But 10 years on. it seems a pretty fair summation of what Britain's membership has meant for its relationship with ‘third countries’ such as New Zealand. “That our bilateral relationship is alive, and indeed remarkabh healthy, is a tribute to hard work and

immense good will on both sides."

The most obvious and biggest effect on New Zealand of Britain's membership of the E.E.C, had been in trade.

Britain overnight in 1973 had become a member of a fiercely protectionist grouping. already more than selfsufficient in many of the goods New Zealand produced most efficiently, and looking to the British market to absorb some of that excess.

“Inevitably, New Zealand's access to its traditional market was severely circumscribed," Mr Muldoon said. “There can be no doubt that our economy has suffered." New Zealand’s butter exports had fallen from about 170.000 tonnes to 92,000 tonnes, with the prospect of being reduced to 87,000 tonnes this year. Cheese had gone from about 70,000 tonnes annually to a General Agreement in Tariffs and Trade quota of 9500 tonnes for the whole Community. Lamb was subject to a "voluntary” restraint at 245.500 tonnes in a market which in the past had absorbed more than 300,000 tonnes a year. “It has never been New Zealand's wish to remain in an outmoded colonial relationship with the United Kingdom." Mr Muldoon said. “Long before the decision was made which finally led to British E.E.C. membership in 1973, New Zealand had been actively seeking new markets for its primary products."

Its success was reflected in the falling share of total exports directed to Britain — from 53 per cent in 1960 to 36 per cent in 1970 (before Community membership), to 14 per cent last year.

“That dramatic reduction

has not been achieved without pain, and New Zealand would regard its present level of trade as an irreducible minimum." Mr Muldoon said.

“Markets simply do not exist elsewhere for the residual quantities of primarv exports sold on the United Kingdom market."

The E.E.C.'s Common Agricultural Policy was behind the difficulties that Britain's membership had created for New Zealand, the Prime Minister said.

“This guarantees European farmers unrealistically high prices for their produce and excludes efficient third country producers in order to prevent the operation of free market forces undermining that price structure,” he wrote.

"How the Community chooses to support its farmers, and at what level, is none of my business so long as the policies adopted affect only the Community. “It does become my business when those policies impinge directly on the economic interests of the country whose Government I lead, and this the Community does in a variety of wavs.”

It was unfortunate that Community preferences had sharply reduced New Zealand's scope to sell in what was formerly its biggest market. "It is doubly unfortunate that very high internal prices are reducing consumption of commodities such as butter to the point where there is not much of a market for anyone, including British farmers,” Mr Muldoon wrote.

What was most damaging for New Zealand was the Community’s practice of subsidising exports. Surpluses created were dumped on the.international

market with the aid of huge subsidies to compete with the efficiently produced goods upon which New Zealand depended for a living. The Community had now reached the stage where 40 per cent of its total budget went on the subsidies required to export its surpluses. Its agricultural exports had increased 164 per cent between 1973 and 1980 and now exceeded those of the United States. Mr Muldoon said that 10 years of “continuous stresses and strains" associated with a difficult trading relationship might have been expected to produce a coolness in other areas, too.

But. paradoxically, they had not.

“Our peoples are too similar and our shared experience too long for a rift easily to open.” Mr Muldoon said.

“That our attitudes remain essentially alike was never more plain to me than in observing the reaction of the New Zealand people to Britain's sternest test in recent years, the Argentine invasion of the Falklands. "We were no less unanimous than you in our reaction to the invasion." Mr Muldoon said the greatest concern he had now about British membership of the European Economic Communilv was that what Britain and New Zealand had in common might be eroded with time.

"It is not to be expected that those who profit most from the new system will long cling to the old values." he said.

“Already the British dairy farmers are seeking to exclude New Zealand imports. I fully expect that the British sheep industry will follow suit as it gears production to

ihe high new guaranteed price levels." Mr Muldoon asked: “Howlong can the British Government resist the pressures of its own producers added to the voices of those who see. wrongly, the maintenance of old friendships as incompatible with new alliances 9 "

New Zealand was grateful for Britain's advocacy in the councils of the Community and was aware of the problems encountered there. "1 must nevertheless express the hope that Britain will continue to fight within Europe for a more enlightened attitude towards agricultural production and marketing. and for more broadlybased recognition of the Community's international responsibilities." Itfr Muldoon said.

"The Community's decisions will have a profound effect on our future economic condition and will increasingly set the tone for our dealings with the country which gave us our nationhood. and with which we will spare no effort to maintain the strongest possible ties."